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Shipping: Stakeholders bemoan cabotage, rail system failure

By BusinessNews Staff on September 22, 2014

Stakeholders believe that failure of government to provide functional rail link to the ports in the face of gridlock in Apapa and Tin Can Island areas all these years, and non-implementation of Cabotage Vessel Financing Fund (CVFF) 18 years after suspending the Ship Acquisition Fund, portray government as not demonstrating enough commitment to indigenous shipping development, reports Francis Ugwoke

The much talked about commitment of the Federal Government to the development of the nation’s shipping industry does not impress the stakeholders in the industry. To the stakeholders, there is so much promise than action. Shipping industry operators who spoke to THISDAY said that government and its agencies are simply paying lip service to the development of the sector. The reasons, according to the stakeholders, are that not much has been achieved in the sector. Apart from the port reform, which was to concession the terminals to private investors, development of core shipping has remained a mirage. Indigenous shipping is not growing. Many of the shipowners who were doing well before have been hit as a result of lack of business as they are denied patronage. It does not matter the much talked about local content law and cabotage shipping regime.

Government had in establishing the Nigerian Maritime Administration and Safety Agency (NIMASA) decades ago, then as National Maritime Agency (NMA), provided for the development of indigenous shipping. NMA, as it was then called, had introduced many measures to promote shipping. Part of these was Ship Acquisition and Ship Building Fund (SAASBF) through which local shipping companies were given loans to acquire their own vessels. The idea was for them to be able to compete with foreign firms that were dominating the trade. Following default in the repayment of the loans, government suspended the SASBF over 18 years ago. Since then, government has not been forthcoming with the money being generated every day from ships calling at the nation’s shores which ought to be used to develop indigenous shipping.

In the area of goods delivery, it is about 18 years also since the collapse of the rail system in the ports, and no solution has been found. Few months ago, there was an attempt to resuscitate the rail link, but it is yet to work properly. This scenario is responsible for the heavy congestion in the ports that has also affected the link roads with traffic gridlock everywhere within the ports. In recent time, Apapa has been a nightmare for workers, businessmen and residents because of the gridlock. This has also affected the value of properties in the area.

Indigenous Shipping Development
Having suspended the SASBF due to the failure of the first beneficiaries to pay back their loan, one expected that it was a matter of time for the authorities to address the issues involved. But it is now over 18 years and nothing has been done in concrete terms. The implication is that there is no serious growth in the local shipping industry, as many who had ships have had to auction them. The law establishing NIMASA provides that two per cent of the three per cent ship dues collected from all vessels calling at the nation’s territorial waters should be set aside for local shipping development.

NIMASA had as part of the reforms to ensure that beneficiaries of the fund do not default , involved commercial banks in managing the fund. This was after renaming the SASBF to Cabotage Vessel Financing Fund (CVFF). But several years after, no firm has benefitted from the fund. About two years ago, NIMASA forwarded names of some companies who are to benefit from the fund to the Ministry of Transport. The latter had also forwarded the same to the Presidency. But two years after, no word has been heard from the Presidency on those few names that have been selected for the CVFF fund. This was confirmed by NIMASA officials. Not much is also known as to what is exactly the value of the fund. A senator, who is a member of the Committee on Maritime, had disclosed that the fund was worth N180million. But industry stakeholders are worried that the amount does not represent what ought to have accrued all these years that the SASBF was suspended. Yet, the biggest problem is that even the $180million may have been used for other projects other than for indigenous shipping development. To stakeholders, this attitude does not display commitment to the promise by government to develop local shipping in a way to be able to compete with foreign firms,

Cabotage Shipping
In 2003, stakeholders, including NIMASA, then as NMA, had worked hard to get the Cabotage Law passed by the National Assembly. Under this arrangement, local shipping operation is supposed to be limited to local companies. This was celebrated as one policy that will promote local shipping development. But not much has been achieved so far. From day one, indigenous firms did not get the cooperation of government’s NNPC and multinational oil firms to help this policy to succeed.

The matter was made worse with the weak regulatory instrument of the apex shipping agency on those operating illegally on the territorial waters. For many years, indigenous shipowners association was involved in policing the defaulters, until the body could not handle such cases any longer. Now, the coast appears to be very clear for illegal operators. Although they are supposed to be given waivers, the process is being abused.

Indigenous shipowners are full of fury that waivers are given to ships even in cases where Nigerian firms have capacity. The allegation is that local shipping firms do not have seaworthy vessels to participate in some of the trade. Some of the local shipping firms who were able to acquire vessels did so by looking for other sources of revenue. Those are the ones that receive patronage from NNPC and oil majors, mainly because of their contacts. Other local firms have not been lucky even with all the efforts to acquire seaworthy vessels.

Failure of Functional Rail System at Ports
It is about 20 years that the rail link at the Apapa’s premier port collapsed. It is expected that considering its importance to efficient cargo delivery, government ought to have done everything to resuscitate the system. But the reverse is the case all these years. Not even the reform in the ports has brought back the rail system.

All these years that congestion had been a major challenge at the ports with the attendant gridlock on the roads linking the ports, government could not consider rehabilitating the rail system. Few months ago, there was areport that the rail system was working and that with it so many containers would be transported to the far North. But investigation shows that the Apapa rail system is epileptic. It has not worked as designed. This has in effect affected the planned take-off of Inland Container Depots (ICDs) which would rely on rail. The rail system, would also have been a solution to the gridlock at the ports, as many containers would have been taken to Ikorodu Lighter Terminal from where trucks can go and pick them for various destinations.

Stakeholders’ Fury
Industry stakeholders who spoke to THISDAY said that government had not demonstrated seriousness in its claim of commitment to develop the shipping industry. President of National Association of Government Approved Freight Forwarders (NAGAFF). Dr. Eugene Nweke, said that if government was serious in addressing years of congestion in the ports, it would have made sure that the rail system is working.

According to him, the failure of the system was the reason for the gridlock on the roads leading to Apapa and Tin Can ports. He said that since the rail is known for mass movement of containers, the current gridlock at the Apapa ports would have been taken care of with the rail.
“Let me tell you the gridlock in Apapa and Tin Can port will be over once there is a good rail link to the ports. It means that the containers on arriving the ports are moved by rail to a designated place. Even a good functional rail system linked to the ports will also discourage tank farms that are all over the place in the ports.”, he said.

Nweke added that government cannot be serious about the much expected ICDs without good rail system linked to the ports. He called on the government to consider the ICDs project being championed by the Nigerian Shippers Council, adding that the Nigerian Railway Corporation (NSC) should consider the project and make the rail link to the ports functional. On the indigenous shipping development, a maritime lawyer, Mr Emmanuel Ofomata, said that it was high time government ensured releasing money to shipping companies that had been okayed to benefit from the fund.

Ofomata added that continued inaction on the part of the government on the fund was not the best as indigenous shipping growth would continue to suffer. In his view, there can only be growth in the sector if local firms can be assisted with soft loans to enable them acquire sound vessels that can trade.

[This Day]

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