90% of  shipping companies close shop despite $150m cabotage fund

About 90 percent of the indigenous owned ships operating on Nigerian waters are currently closing shop, while the remaining 10 percent are struggling to survive due to their inability to compete with their foreign counterparts in Nigeria’s sea-borne trade.

This is happening at a time when the Cabotage Vessel Financing Fund (CVFF), which results from the 2 percent surcharge on every contract sum performed by Nigerian vessels, including money generated from tariff, fees from licences and waivers under the coastal trade, has grown to over $150 million (N24bn).

CVFF, currently in the custody of the Nigerian Maritime Administration and Safety Agency (NIMASA), is meant to be benefited by Nigerian ship owners and shipping companies to enable them acquire new vessels.

In a recent survey conducted by Ships and Ports Communications Limited, out of the 12 indigenous shipping companies that was visited, only two companies are currently operating viable businesses, while the 10 representing 83 percent of the companies surveyed are either completely dead or are in comatose condition.

The companies include Equitorial Energy, Oceanic Energy, Morlap Shipping, Peacegate, Pokat Nigeria Limited, Al-Dawood Shipping, Potram Nigeria Limited, Joseph Sammy, Genesis Worldwide Shipping and Multi-trade Group, all in Lagos; Niger-Delta Shipping in Warri, Delta State, and Starzs Investment Group in Port Harcourt, Rivers State.

Reacting to this, Niyi Labinjo, general secretary, Indigenous Shipowners Association of Nigeria (ISAN), who confirmed that the Nigerian shipping companies were facing troubled times, said all the companies are heavily indebted to banks such that they find it difficult to service bank loans, which they took to buy ships.

Labinjo, who is also the president of Al Dawood Shipping, said most of the ship owners have resorted to selling their landed properties to enable them service their bank loans as others have lost some of their properties to banks.

BusinessDay investigation reveals that indigenous ship owners have over 200 ocean-going vessels and 700 offshore supply vessels, with about 90 percent of the vessels currently lying idle without contracts to execute. The remaining 10 percent secure contracts, usually on short-term basis. This makes it difficult for indigenous ship investors to recoup their investment.

Studies have also shown that Nigeria, as one of the world largest oil producing countries, does 2.4 million barrels per day, amounting to over 60 million barrels per month, yet indigenous ship owners operate below optimal with less than 20 percent of Nigerian flagged vessels participating in crude oil lifting jobs.

The survey further reveals that Genesis Worldwide Shipping, which used to have six ships years back and Joseph Sammy Nigeria Limited that lost its only surviving ship ‘MT Kemepade’ to theft early this year, are among the companies struggling to survive.

Industry analysts blamed this sorry situation to poor implementation of the Cabotage Act, non-disbursement of CVFF, and lack of implementation of the fleet maintenance and repair scheme by the NIMASA.

However, Calistus Obi, executive director, Maritime Labour and Cabotage Services of NIMASA, told BusinessDay about a month ago that six indigenous shipping companies (names withheld) had been selected as first set of the beneficiaries of the fund.

“The documents, which are currently awaiting presidential approval for the disbursement from the fund to commence, have been studied and approved by the Federal Ministry of Transport,” he said.

By: AMAKA ANAGOR