NIMASA’s new Cabotage Compliance Strategy boosts indigenous participation
There is light at the end of the tunnel for Nigerian ship owners as the Nigerian Maritime Administration and Safety Agency NIMASA adopts strict compliance measures under the Coastal and Inland Shipping Cabotage Act. The agency has also opted to synergise with relevant government agencies towards achieving the goals of the Cabotage and Local Content policies, reports FRED FRANCIS.
To say that Nigeria has not totally achieved the aims and objectives of the Cabotage policy is to state the obvious. The Coastal and Inland Shipping Cabotage Act 2003 was enacted to enhance the participation of Nigerian ship owners in the lifting of refined petroleum products within the coastal and inland waters. This is given that many of them have not been able to build the required capacity to operate within the more competitive, highly technical and capital intensive deep sea shipping. So the Cabotage policy was designed as an economic interventionist scheme to check foreign domination in the country’s deep sea and coastal inland shipping business.
For instance, current statistics show that there is an overwhelming foreign domination of the nation’s deep sea shipping and oil and gas industries, as only five per cent of the $5billion annual freight earning is retained in the country.
The situation is even more worrisome given that more than 15 years after the enactment of the Cabotage Act, foreigners still dominate the domestic shipping market, accounting for the $3billion estimated annual marine related spending in the oil and gas production activities in the country.
This is an indication of extreme capital flight, which implies that foreign operators in the shipping and oil and gas industries take away over 95 per cent of the $5billion generated through the shipment of petroleum products and other imports while only paltry five per cent is retained in the country.
As part of efforts to curtail this age-long trend, the Act provides that vessels to be used in the coastal and inland shipping business must be built in Nigeria, owned and manned by Nigerians and not much has been achieved in this direction. The Act however provides for a waiver clause, which allows foreigner to provide certain services which Nigerian operators may lack the capacity to undertake. Though some milestones have been recorded over time, the core aims and objectives of the policy have yet to be achieved.
In the light of this, the current management of the Nigerian Maritime Administration and Safety Agency NIMASA, the nation’s Maritime Administration also charged with the responsibility of enforcing the Cabotage policy in August last year introduced a new Compliance Strategy for Cabotage Implementation in the country. This was designed to curtail the issuance of waivers and ensure full implementation of the Cabotage Act, 2003 in order to secure more jobs for qualified Nigerians in the maritime industry.
Under the new strategy, foreign vessels are to make special waiver applications for Captains, Chief Engineers, Chief Officers, First Mate in the absence of qualified Nigerians, which would be considered on merit on the condition that such organisation has made plans to train a Nigerian and put in place a transition plan to ensure that the Nigerians take over the jobs within one year.
The agency had in line with this new strategy issued a Marine Notice suspending considerations for applications for the grant of waivers on manning for prescribed categories of officers in vessels engaged in Cabotage trade.
The implication of this is that the agency no longer considers applications for grant of waiver on manning requirements for vessels engaged in coastal trade with regards to Second Officer, Second Engineer, and Second Mate down to able seamen, ratings and stewards.
Prior to the introduction of this new strategy, the Director General of the agency, Dr. Dakuku Peterside led members of the management team to meet with the Oil Producers Trade Sector OPTS in Lagos where he encouraged the industry players to draw up a five-year strategic plan for the cessation of application and issuance of Cabotage waiver and also pursue the utilisation of Nigerian-owned vessels for marine contracts.
It was however gathered that some shipping lines in connivance with some International Oil Companies OICs in their usual manner ignored the new directives of the agency, which left it with the only option of clamping down on vessels that do not comply with the provisions of the Cabotage Compliance Strategy.
The agency actually wielded the big stick when it last year detained a Motor Tanker, MT Navigator Capricorn, a Liquefied Petroleum Gas LPG carrier, for allegedly contravening some sections of the Cabotage Act 2003.
The DG had while commenting on the detention order, which was a last resort, said the agency will no longer entertain applications for any form of waivers under the Cabotage Act, particularly from the oil firms operations, insisting that such does not help the growth of the Nigerian maritime industry and economy at large.
“Our laws forbid foreign vessels operating in our territorial waters save for compliance with the Cabotage Act. There shall be no sacred cows when we commence clampdown on erring vessels. We want to increase the number of Nigerians who participate in the marine aspect of your business and we are working closely with the Nigerian Content Development and Monitoring Board NCDMB to have a joint categorisation of vessels operating under the Cabotage Act in order to ensure the full implementation of the Act.
“The whole essence of these measures was to ensure that Nigerians are not deprived of the jobs they are qualified for after showing evidence of requisite qualifications for the job, which the Cabotage Act 2003 was enacted to check”, Dr. Peterside also said.
Available records show that the detained vessel was first boarded by operatives of the agency in October 2018 during which all infractions under relevant sections of Cabotage were noted and communicated accordingly to the charterer/owners representatives and subsequently issued a 90- day grace period to comply.
Investigations further showed that at the expiration of the 90- day grace on January 31, 2019, the charters/owners representative could not address the infractions, having been earlier made to write an undertaking to remedy the notable infractions when the vessel was issued a detention warning in October the previous year, which led to its detention.
In addition to its new compliance strategy, the agency is currently in discussion with the Federal Ministry of Finance and the Nigeria Customs Service on the need to create a special tariff regime for Nigerian ship owners importing vessels and vessel spare parts into the country.
This is with a view to addressing the present situation whereby Temporary Import Permit mainly granted foreigners attracts only one per cent duty payment while Nigerians importing vessels pay as much as 13 per cent duty, a development that makes it almost impossible for them to compete. The agency has also made appreciable progress in its discussions with the Central Bank of Nigeria CBN to make it possible for Nigerians in the maritime industry have access to single digit loan facilities to enhance their competitiveness with their peers abroad.
Experts believe that a situation whereby the oil and gas sector of the Nigeria’s economy accounts for over 90 per cent of the foreign exchange earnings but contributes less than 20 per cent to the Gross Domestic Product GDP, and less than five per cent of total employment generation in the country was a misnomer.
The NIMASA DG, who strongly shares this view said: “Industry statistics show that Nigeria generates an estimated annual cargo throughput of 150 million metric tonnes with freight earnings in excess of $5billion in her international trade transactions. Over 95 per cent of this income is earned by foreigners; this is in addition to the job deprivation of citizens that comes with it.
“The same dominance by foreigners is also extended to the domestic shipping market, where the estimated $3billion annual marine related spending in the oil and gas production activities is earned virtually by these same foreign operators.
“This is a situation of so much activity and so much money, but little impact on the lives of Nigerians, which accounts for the high level of frustration and restiveness in the country especially in the oil rich Niger Delta region. With this in mind, the Federal Government of Nigeria came up with the Coastal and Inland Shipping Cabotage Act, 2003 in the maritime industry and the Nigerian Content Act 2010 in the oil and gas sector to tackle these challenges”.
In addition to these efforts by the agency to ensure strict enforcement of the Cabotage Policy, it is also synergising with relevant government agencies and organs as seen in the case with the Federal Ministry of Finance, Customs and the CBN. It is also effectively interfacing with the Nigerian National Petroleum Corporation NNPC and the NCDMB with a view to ensuring that the indigenous operators are given a fair deal in the scheme of things.
While commenting on the need for effective synergy both in the maritime and oil and gas industries, the DG said: “Strict implementation of the Local Content Policy and the Cabotage law, the maritime industry would do a lot of good to Nigeria’s economy and we all would be better for it. These two Acts have presented a clear opportunity for Nigerian entrepreneurs to gradually build their capacities and take over the marine logistics business of the oil and gas industry in Nigeria.
“The opportunities are there, the opportunities are real, only those who take advantage of them today would reap in the future”.
With these initiatives, it is certain that there is definitely light at the end of the tunnel for Nigerian operators but only those that develop the requisite capacities would reap from these.