Tag: shipping policy

THE Federal Government is to adopt a new shipping policy to replace the Cost, Insurance and Freight (CIF) system in national interest, it was gathered.

For now, goods are bought from Nigeria on FoB basis, but the country trades with others under CIF.

FoB, sources said, gives importers the opportunity to pay for the shipment and landing costs of their goods at the ports.

The government, a source close to the Ministry of Transport said, was adopting the CIF because it gives the seller the right to arrange for the shipping of goods to a port of his choice, and provides the buyer with the documents to collect them from the carrier.

The source said the problem faced by indigenous owners was the failure to enforce the Nigerian Maritime Administration and Safety (NIMASA) Act, 2007, almost 10 years after its enactment.

Nigeria, he said, is the only country still using FoB and NIMASA management is not happy with this, adding that it is pushing for a change.

He said indigenous shipping firms had over the years been grappling with lack of cargo support, leading many of them to close down.

A maritime lawyer and don, Mr Dipo Alaka, said the country was losing billions of naira from the continued use of FoB .

Alaka described the government’s plan to adopt CIF as “good”, adding that the FoB policy was uneconomical.

Nigeria, he said, loses billions of naira from the continued use of Free-on-Board (FoB) policy.

FoB, he said, is a trade policy that gives the buyer the opportunity to pay for the shipment and landing costs of the goods from the port of origin. He urged the government  to adopt CIF for the lifting of crude oil.

A member of the group, Mr Segun Ogunsanu, said he policy was being used to the detriment of the economy, despite the NIMASA Act and other legislations, such as the Cabotage Act, 2003 and Nigerian Content Act 2010.

Ogunsanu said the adoption of either the CIF or FoB policy by the Federal Government should be based on how the policy benefits  the parties involved in the transaction.

The intention of the Cabotage Act, he added, is to give indigenous shipping firms the support to enable them to compete with their foreign counterparts, who have usurped the shipping of cargoes on the international shipping route and the coastal and inland region.

Stakeholders in the maritime industry have faulted the nation’s shipping policy on waivers,  which they alleged has hindered the implementation of the Cabotage law.

They said great effort is still needed on the part of the Minister of Transport, Rotimi Amaechi, to prepare the country for challenges facing the industry.

Speaking at a ’forum organised by importers and clearing agents in Lagos last week, the Managing Director, Sea Logistics, Mr Rufus Olanipekun, expressed concern that foreign shipping lines will continue to exploit the country because of the selfish interest of a few,  and lack of a functional shipping policy that identifies the strategic challenges of the maritime sector.

Olanipekun said there had been  lapses in enforcing the Cabotage Law and domesticating all international treaties and conventions that relate to the sector.

He lamented that the Cabotage regime is yet to be implemented to meet the expectations of stakeholders in the industry.

Olanipekun also recognised a wide gap between the intention of the Act and the system which is yet to empower indigenous operators to take advantage of the Cabotage law.

The performance of the Federal Government on trade facilitation, high port charges, infrastructure, safety at sea, protection of the marine environment and enhancement of maritime law and security, Olanipekun said, falls below expectation. He said the ports are performing below expectation despite their concession.

He said the Federal Government needed to do more to reduce piracy and armed robbery on the waterways.

Olanipekun said foreign shipping companies are still dominating the nation’s maritime industry to the detriment of local ship owners.

Another stakeholder and Chairman, JM investment, Mr James Joseph, said conspiracy hinders Cabotage implementation

He said the implementation of the law would have been easier, but for conspiracy between some past officials of the Ministry of Transport and foreign ship owners.

Joseph said the law could be easily implemented if the Minister of Transport musters enough political will to do so.

“The Minister of Transport needs to see to the full implementation of the cabotage law before he leaves office. We are aware that some individuals within and outside the government are trying to frustrate the implementation.

“My suggestion to the minister is that he should make sure every ship that calls at the nation’s ports should first declare arrival to the Nigerian Ports Authority (NPA), NIMASA and the Navy. By doing so, it would become easy to implement the law,” he said.

Joseph said the implementation of the law should not be a problem if the government musters the necesary political will.

Poor policy implementation, he said, is the bane of the sector.

“No government agency needs to go to the jetty to arrest a ship. NIMASA for instance, can ask any ship to tell her its point of loading. So, if it is offshore Lagos or offshore Cotonou, the agency can then verify if it is on the list of Cabotage registered vessels. Therefore if the Minister is determined, implementation should not be a problem.”

Joseph said Nigerian ship owners must be supported with good policies by the government and banks so they can buy vessels to carry out coastal trade.

The Coastal and Inland Shipping Act, 2003, he said, is a protectionist law enacted to create exclusive areas of operation in the coastal trade for indigenous operators.

“Much as it is estimated that marine transportation offshore alone has a potential annual revenue/profit of millions of naira as against coastal trade in commodity and products, it is believed that harnessing the opportunities of effective implementation of Cabotage will provide a springboard for indigenous operators to acquire requisite capacity and expertise in launching them into global shipping.

“The target is for Nigerian carriers to have a share of about $4.5 billion per annum gross value of freight in and out of Nigeria. Only 20 per cent share of the market will stimulate the local economy to the tune of about $600 million gross per annum,” Joseph said.

The Cabotage regime, he said, covers ship building, ship ownership, manning and registration. Unlike the Cabotage Law in most other maritime nations of the world, he observed, Nigeria’s Cabotage law provides for waivers. Indigenous operators, he said, have complained that the waiver clause has helped make implementation of the law difficult, inefficient and faulty.