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Shipping: Stakeholders bemoan cabotage, rail system failure

By 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]