Lagos (The Punch) – Amidst complaints by local shipowners that they are being sidelined in the coastal distribution of wet cargo, including petroleum products, an investigation by our correspondent has revealed that the reason foreign ships are preferred above local ones is that the local ships lack good maintenance and efficient management.
Reports had cited some indigenous shipowners complaining that the vetting regime set up to select ships that should be involved in the coastal distribution of wet cargo pitched them against foreign-owned ships who were preferred in the distribution or in selecting ships that would carry it out.
They said that the practice deprived them of participating in the carriage of petroleum products found to be very lucrative, lamenting that Nigerian ships were just sitting idle on the sea without working.
Responding, the Chairman, Shippers Association of Lagos State, Mr. Jonathan Nicol, said the indigenous shipowners could not benefit from the coastal distribution of wet cargo because they did not own big vessels.
He said if they pulled their resources together and bought one big vessel, they could then benefit.
Nicol pointed out that the same situation applied to the Cost Insurance and Freight scheme, which local operators were complaining they were not benefiting from.
According to Investopedia, the CIF is an international shipping agreement used in the transportation of goods between a buyer and a seller.
In the CIF agreements, insurance and other costs are assumed by the seller, with liability and costs associated with successful transit paid by the seller up until the goods are received by the buyer.
The responsibilities of the seller include transporting the goods to the nearest port, loading them on a vessel and paying for the insurance and freight.
In some agreements, goods are not considered to be delivered until they are actually in the buyer’s possession. In others, the goods are considered delivered (and the buyer’s responsibility) once they reach the port of destination.
“You cannot benefit from that scheme unless you own your own equipment,” Nicol stated, noting that that was why the foreign vessels were better placed to enjoy the CIF than Nigerians.
A master mariner, Captain Taju Alao, told our correspondent that the ships tagged ‘foreign’ were actually hired by Nigerians to distribute petroleum products because Nigerians did not have ships that were in good shape to do the work.
According to him, in instances where Nigerians offered their own ships, they were not as well managed and maintained as the foreign ones.
He said those who hired the foreign ships were the ones who had secured distribution contracts.
Alao said, “Nigerians cannot afford to buy new ships; and in cases where the ships are in good condition, the management of the ship will be lagging. Shipping is not a local business, it is international and Nigerians have to realise that; but most of us run shipping business in our usual Nigerian way of doing everything. Over many years of running tankers, our fees are not going up. We need to ask ourselves why.”
He explained that in hiring crew members, local shipowners did not also pay well’ and when that happened, the crew either would vandalise the ships or leave to find employment with foreign-owned ships.
Local operators often lament that lack of finance prevents them from acquiring new ships that could make them more competitive in the sector.
The Chairman, Shipowners’ Forum, Margaret Onyema-Orakwusi, said financial institutions, especially the commercial banks were not lending to shipowners at a single-digit interest rate, pointing out that the cost of funds had been a major challenge to the financing of vessel acquisition in the country over the years.
“There is a huge gap in indigenous ownership of vessels in Nigeria, largely due to lack of funds to acquire new vessels or refurbish the existing fleet.”
The situation, according to operators, is compounded by the delay in the disbursement of the proceeds of the Cabotage Vessel Financing Fund to indigenous shipping companies to improve on their fleet expansion.
The Nigerian Maritime Administration and Safety Agency in custody of the funds had at various times been blamed for the delay in the disbursement.
But the Director-General, NIMASA, Dr. Dakuku Peterside, in a recent media briefing absolved the organisation of blame when he stated that NIMASA was not responsible for the disbursement of the funds.
Meanwhile, Peterside has said that following discussions from a stakeholders’ meeting between the shipowners and the agency, they may get the approval to lift crude.
He said this will be achieved through the change in trade terms from the Free on Board to the CIF.