Foreign shipping companies make $16bn in one year

  • 01-Feb-2019
  • Foreign shipping companies make $16bn in one year

Foreign shipping companies operating in Nigeria collected freights amounting to $16.15bn in the country in 2017, our correspondent has gathered.

Data from the Nigerian Maritime Administration and Safety Agency have shown that the freight paid to ships carrying wet and dry cargo to and from Nigeria and Europe, using the NIMASA benchmark freight rate of $92.5 per metric tonne and the Nigerian National Petroleum Corporation’s benchmark of $18 per metric tonne, totalled $9.09bn in 2015 and $16.15bn between 2016 and 2017.

The National Bureau of Statistics reported that in the third quarter of 2018, N4.82tn (representing 99.4 per cent) exported goods were transported by sea while N3.96tn imports (representing 94.9 per cent) also came in through the sea.

Although Nigeria is one of the highest producers of crude oil, the country is not involved in lifting of its own crude, according to the Nigerian Shippers Council.

Also, no Nigerian flagged vessel is involved in general cargo transportation.

The dominance of the shipping sector by foreign shipping lines had remained an issue of concern to stakeholders in the maritime sector for years.

This is more so as the Cabotage Act states that only a vessel wholly owned and manned by Nigerian citizens, built and registered in Nigeria shall engage in the domestic coastal carriage of cargo and passengers within the coastal territorial inland waters, or any point within the waters of the exclusive economic zone of Nigeria.

Foreigners are not excluded from doing business under the Act, but can only do so under the observation of certain ‘waivers.’

The current situation in the shipping industry clearly shows the failure of the Nigerian Cabotage Act, according to operators in the local shipping sector who have variously bemoaned the state of poor funding in the sector, saying they could operate effectively with more funding.

The operators had specifically lamented the lack of disbursement of the $300m Cabotage Vessel Financing Fund, which was established for the purpose of aiding them to buy new vessels and maintain old ones.

Responding to the agitations, the Director-General, Nigerian Maritime Administration and Safety Agency, Dr Dakuku Peterside, maintained that the challenge of the local shipping sector was too much to be handled by the CVFF.

While presenting the 2019/2020 maritime forecast in Lagos on Tuesday, Peterside said that the agency was making arrangement to get other finance models for the shipping sector.

He said, “It is a known fact that shipping is capital-intensive. The CVFF is not adequate to address the huge demand for the maritime asset, so in addition, NIMASA is looking at other ship financing models.

“That is why we have been engaging with the government at the highest level to push for special intervention fund, special interest rate and other incentives that will drive optimal performance in the sector.

“We shall not relent in our drive to put the right framework together to help beneficiaries and investors have a good return on investment.”

Last year, while speaking during a stakeholders’ workshop, the  Executive Secretary, the Nigerian Content Development and Monitoring Board, Mr Simbi Wabote, advised shipowners to invest in tugboats, security patrol vessels, jargon barges and crew boats, saying that  these were  cheaper vessels and  that they  would be in demand between 2019 and 2023.

He said, “These ships account for 66 per cent of marine vessel requirements.  Crew boats, security vessels, guiding support vessels, account for 49 per cent of vessels that will be in demand over the period 2019 to 2023.

“In the next five years, industry spend on tugboats and other vessels is projected to be $1.6bn, or 51 per cent of total spend, and the annual spend is projected to be $641m over 519 marine contracts in Nigeria between 2019 and 2023.”

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