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Shipping Industry Groans Under Debt

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The global decline in oil price which has affected patronage and the non-implementation of the Cabotage law, among other challenges, has impacted negatively on the fortunes of the majority of Nigerian ship owners, as their non-serviceable bank loans for ship purchases pilling up at Nigerian banks have risen to N5 billion.

The indigenous ship owners have also decried the harsh business conditions which they operate in, which they claim has thrown at least half of operators out of business.

Former president of the Nigerian Shipowners Association (NISA), Chief Isaac Jolapamo, who raised the alarm over the non-serviced loans for ship purchases, said most of his colleagues were having a hard time repaying piled up loans in the banks.

Fidelity Bank had listed Panafric Ocean & Energy Ltd, owned by the secretary-general of NISA, Tunji Brown, on the bank’s delinquent credit facilities list with N220.7 million.

Also, Asset Management Corporation of Nigeria (AMCON), had in 2015, put the outstanding debt of Rangk Ltd, an indigenous shipping company owned by former military administrator of Lagos State, Capt. Ndubuisi Kanu, at N4.50 billion.

Mofas Shipping Line, which has Johnson Oyewole Fashawe as board member, was also on the list of delinquent bank debtors released by AMCON in 2015.

LEADERSHIP recalls that Brown, in an interview, had lamented that the nation’s shipping sector was no longer as lucrative as it used to be.

“We (indigenous ship-owners) are seriously affected. We are unable to get jobs. Banks are running after us to pay back loans. We are not able to access loans anymore because loans already provided to ship-owners are not being paid so we are facing a difficult time,” he said.

Despite stringent appraisal processes and due diligence adopted by financial institutions in ensuring that only experienced shipping professionals have access to funds, many banks still have lots of non-performing loans.

Also confirming ship-owners indebtedness to bank, the former president, Indigenous Shipowners Association of Nigeria (ISAN), Chief Isaac Jolapamo, said the inability to get jobs by the indigenous ships worsens their plight.

He said, “The bad debt in Nigerian banks today of ship purchases is, conservatively, between N3 billion and N5 billion.

“Having owned and managed ships in the past three decades and half, I can conveniently say that ship ownership and management in Nigeria is not a profitable venture because of so many factors. We have put the horse before the cart.

“Go and check from NPA how much import they had last year; not one tonne of that import came with a Nigerian vessel. Ask NNPC how much crude they exported last year; not one litre of that crude came with a Nigerian vessel. Go to Central Bank and ask them how much they paid for freight in the last five years. If those things happen, then we are on the right path,” Chief Jolapamo stated.

The former NISA president urged government to step in and “reverse the trend” as the shipping sector remains strategic to re-jigging the economy, conserving foreign exchange and creating jobs for the teeming populace.

“In which economy do you have that amount of debt profile in one particular industry and nobody is doing anything to turn it round? It could be turned round. Solutions are very easy; it is the willpower of government to say we want to do this,” he added.

Chief Jolapamo who also noted that shipping stands on a tripod – vessels, funding and jobs – further disclosed that the struggle for Nigerians has been for access to the numerous jobs available.

“If you want to go to the bank and borrow money to buy a ship and then the ship stays there one day without doing jobs, you are in trouble, not to talk of months or years,” he stated.

He stressed the need for strict enforcement of the Cabotage law in order to stimulate growth, pointing out that: “Instead of the Cabotage law to be made to work for the people it is meant for, it is working better for the foreigners.

“I will pay 15 per cent duty to bring in a ship that I bought for maybe $15 million, while a foreigner will just put down a deposit, a paper! 1 per cent deposit for a vessel that is going to trade and he gets better jobs. Until such a time when there is willpower from policy makers to say this is our own let’s do it.”

Also speaking on the situation in the sector, the President of Al-Dawood shipping, Chief Niyi Labinjo said most of the ship owners have resorted to selling their landed property to enable them service their bank loans, while others have lost prime property to the banks.

“All the companies are also heavily indebted to banks and are mostly unable to service the loans they took to buy ships,” he stated.

LEADERSHIP learnt that indigenous shipping companies like Equatorial Energy, Oceanic Energy, Morlap Shipping, Peacegate, Pokat Nigeria Ltd, Al-Dawood Shipping, Potram Nigeria Ltd, Joseph Sammy, Genesis Worldwide Shipping and Multi-trade Group, all in Lagos, that were once thriving businesses are now either completely dead or comatose.

The ship owners also blamed the massive retrenchment in the sector on the inability of the federal government to meet its joint venture obligation with the international oil companies which are major partners with the marine logistic companies.

 

Nigeria Losing $5bn To Absence Of Tax Appeal Tribunal

A Lagos-based lawyer, Donald Egho, has said that the federal government is losing a whopping $5 billion in revenue as a result of its failure to reconstitute the various panels of Tax Appeal Tribunal (TAT).

According to Egho, the failure to reconstitute the TAT means those taxes due to the federal government will remain suspended for as long as there are no panels to resolve the disputes.

The lawyer told journalists in Lagos, yesterday, that the development is robbing both the state governments and the federal government of urgently needed revenue.

Egho, a taxation professional, said:  “The continued failure of the federal government to urgently reconstitute the various panels of TAT means those taxes due to the federal government will remain suspended for as long as there are no panels to adjudicate on the disputes, thereby robbing both the states and the federal government of urgently needed revenue.”

“As long as taxes are disputed, they remain in a state of abeyance, pending the determination, one way or the other, by the tribunal,” he said.

According to Section 59 (1) of the Federal Inland Revenue Service (Establishment) Act 2007, TAT is empowered to settle disputes arising from the operations of the Act and others as spelt out in the fifth schedule to the FIRS Establishment Act.

It has jurisdiction to entertain disputes arising from the Companies Income Tax Act; Petroleum Profit Tax Act, Personal Income Tax Act, Capital Gains Tax Act, Value Added Tax Act; Stamp Duties Act; Taxes and Levies (Approved list for collection) Act, as well as other laws, regulations, proclamations, government notices or rules related to these Acts. Appeals lie from the decisions of the TAT to the Federal High Court (FHC).

LEADERSHIP learnt that TAT is meant to ensure fairness and transparency of the tax system, minimise the delays and bottlenecks in adjudication of tax matters in the traditional court system and generally improve taxpayer’s confidence in the tax system in Nigeria.

The lawyer cited the case of the Federal Board of Internal Revenue versus Cadbury, a matter which arose from the operations of the Value Added Tax law, which was still pending before the Supreme Court 15 years after the tax dispute arose, with the taxes remaining unpaid.

He noted that the habit of using litigation to frustrate the collection of taxes was further emboldened with the apparent negligence of the government to urgently reconstitute the panels of TAT.

Egho said: “Unless the government takes the business of taxation and its operations seriously, all the talk of diversifying the national economy from its sole dependence on revenue from the sale of crude oil will remain a dream.”

He also criticised some state boards of internal revenue for imposing arbitrary and illegal taxes and levies on the public, knowing that taxpayers currently had no avenue to take their frustrations to.

According to Mr Egho, this could lead to a breakdown of law and order if these antics are not checked by the government.

LEADERSHIP recalls that the various panels of TAT wound up their operations in the month of May 2016, having completed their constitutionally mandated tenure of six years.

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