Expectations by indigenous shipping companies that the Nigerian Maritime Administration and Safety Agency NIMASA would commence the disbursement of the over N261billion Cabotage Vessel Financing Fund CVFF any time soon may have been dashed as the agency may need more time to clear some legal impediments.

Created under the Coastal and Inland Shipping Cabotage Act 2003 and domiciled with NIMASA, the CVFF is derived from two per cent deductions paid by shipping operators on every contract awarded under the Act, which regulates carriage of refined petroleum products within the country’s inland and coastal region. Under the Act, carriage of such wet cargo should be exclusively for indigenous lines to enable them build capacity.

Former Director General of NIMASA, Temi Omatseye, while speaking at a recent stakeholders meeting organised by the agency in Lagos, hinted that the real reason the fund had not been disbursed is because some of the provisions of the Cabotage Act 2003, which prescribed the guidelines for the disbursement are in conflict with some provisions of the Banks and Other Financial Institutions Act BOFIA 2002.

This is however contrary to earlier claims by the immediate Director General of the agency, Dr. Bashir Jamoh that the reason for non-disbursement of the fund was a disagreement between the agency and the five Primary Lending Institutions PLIs over the interest rate regime on the counterpart funds to be provided by the PLIs, which were selected by the agency.

According to Jamoh, while the five PLIs had requested for 7.5per cent interest rate, the agency offered 6.5 per cent benchmark, a disagreement that could not be resolved before the end of the lifespan of former President Muhammadu Buhari’s government, which had pledged to disburse the funds to enable the indigenous shipping lines acquire vessels.

Omatseye, who is a lawyer, argued that under the guidelines for the disbursement, NIMASA would play the dual roles of review and risk assessment, which he insists contravenes some sections of the BOFIA 2002, which needed to be cleared before the disbursement could be carried out without backlashes.

Recall that former Minister of Transport, Mu’azu Sambo had in December, 2022 announced that after the initial challenges posed by the introduction of Single Treasury Account TSA, President Buhari had approved the disbursement of the fund.

It was in the light of this approval and assurance that the government of Buhari was committed to the disbursement of the fund to improve the lot of the indigenous shipping lines that NIMASA appointed five new PLIs comprising Union Bank, Zenith Bank, United Bank for Africa UBA, Polaris Bank and Jaiz Bank.

Under the guidelines for disbursement of the fund, which adopted a counterpart funding arrangement, NIMASA would provide the 50per cent of the total cost of any vessel to be acquired, the individual PLI will provide 35per cent while the indigenous shipping company is expected to provide the remaining 15per cent of the total cost of the vessel.

This new arrangement, is a total departure from the defunct Ship Acquisition and Ship Building Fund SASBF, under which the fund was provided 100per cent by the then National Maritime Authority NMA as a revolving loan, but which could not continue because the first set of beneficiaries could neither service nor pay back the loan, which many of them saw as their own part of the national cake and treated as such, which led to the scrapping of the fund by the Sani Abacha-led Military regime.