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Nigeria Shipping Line: Yet Another Pipe Dream?

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As Nigerians await the planned resuscitation of the Nigerian Shipping Line by the federal government, two years after it was initiated, some experts have alleged that the delay seems to be portraying the exercise as another white elephant project. YUSUF BABALOLA writes.

The resuscitation of the Nigerian Shipping Line and the National Airline was conceived by the Federal Ministry of Transportation at almost the same time but why the national airline has been recording considerable amount of successes that had led to the unveiling of the name and logo, the Nigerian shipping Line still remains a mirage.
The national airline which is named Air Nigeria is scheduled to begin operation by December 2018 , and designed for government not to be involved in running or deciding who runs it because investors would have full responsibility for its operation.
But, while the national airline is gathering momentum with date of operation set by the government, uncertainty still becloud the resuscitation of the Nigerian Shipping Line two years after government’s assurance.

For instance, when the chairman of the Ministerial Committee on the Modalities for the re-establishment of Nigerian Shipping Lines, Mr. Olu Olusoji, submitted his report two years ago, the minister of transportation, Rotimi Amaechi, immediately constituted an implementation committee, which he said would be headed by the chief executive officer of the Nigerian Shippers’ Council (NSC), Mr. Hassan Bello.
To the minister, the shipping line had become expedient to constitute the implementation committee immediately because government attaches premium importance to the revival of the national shipping line, adding that it would greatly impact on the socio-economic development of the country.
Amaechi said the international regulator and willing investors in the industry had given Nigeria August 2018 , as deadline to put all the necessary framework and foundation for viable international maritime activities which would attract foreign investors.
But, rather than succeed, the resuscitation of the shipping line suffered from withdrawal of would be investors from the shipping line due to government’s unfavorable policies and archaic fiscal laws to missing out on investors window to set up the shipping line and huge revenue leakages due to lack of functional national shipping line.
It was gathered that in 2014, Nigeria lost $2.2 billion that year because of the absence of a national shipping line. If 50 per cent out of the 5,000 ships that landed in Nigeria in 2014 were Nigerian ships and managed by Nigerians, the country would have saved $2.2 billion.
Nigerian seafarers that would have been engaged to work on the fleet would have been earning about $3,000 per month, so these are the losses the economy missed by not having ships carrying Nigerian cargoes on the international waters.

Also, one of the investors, a Singaporean shipping firm, PIL Shipping Line withdrew from the Memorandum of Understanding (MoU) it signed with the Nigerian government on the formation of the shipping line due to Nigeria’s stale fiscal rules that impose a 14 per cent tax on new ships acquired by Nigerians and the seeming lack of willingness to scrap the tax informed decision to withdrew from the MoU.
Speaking recently, the president, Shipowners Association of Nigeria (SOAN), Engr Greg Ogbeifun, who frowned at the current Nigerian fiscal policy which stipulates that a vessel owner bringing his ship into the country should first of all pay a duty charge of 14 per cent out of the total cost of the vessel to Customs, a practice he noted was not obtainable in other developed countries called for overhaul of the nation’s fiscal law.
“The PIL pulled out because the Nigerian fiscal policy does not make an establishment where fleet of that nature will be competitive in global trade.
“The fiscal policies are tax laws, tonnage tax laws, and other laws that affect international shipping, and we had to, as a body, appoint a company as consultant to do an international study of what other countries and rulers create. What did they do to be able to establish fleets that are trading globally? That study revealed that most of those countries first of all, declared zero duty.

“If you are a national and you acquire a vessel and you are bringing that vessel into the country, your duty is zero; but in this country, the duty payable on an average if you are bringing in a vessel is about 14 per cent of the value of that vessel. So, if you take a vessel of $80 million, a crude oil tanker, you pay $80 million and then you have to pay another 14 per cent of the value to be able to import it into your country because you are flying your flag.
“You are going to be competing with the current foreign countries who are carrying your cargo and who didn’t have to pay such duty in their country. Their commercial terms for carrying the cargo will be cheaper than yours. So, you cannot be competitive internationally.
“That is just an example of why PIL said in their writing that Nigeria must review the fiscal policy if they must continue in that relationship,” he explained.
He advised that the authorities must create a more enabling environment that would not only ensure a level playing field, but also empower Nigeria’s indigenous operators in the shipping sector to place them in a position to compete with their foreign counterparts.
While receiving the report from the Olu Akinsoji – led committee which was set up to draw up the template for the establishment of a new national carrier in June 2017, the minister of transportation, Chibuike Rotimi Amaechi, had stated that investors gave August 2018 deadline.
“Investors have given us August 2018 as deadline on this issue. And we have said government is going to use part of the cabotage fund in this direction.
“We must also advise on how to choose who qualifies to benefit from the fund because the 60 per cent that we have must be accessed from the cabotage as part of their equity contribution,” he said.
Amaechi’s plan for a new national carrier is anchored on the private sector whereby 60 per cent would be owned by local investors while their foreign counterparts are expected to hold 40 per cent stake.

He had assured stakeholders of government’s political will at ensuring that the new project gets cargo to carry, adding that the present government was determined to do everything possible to ensure that the new national carrier succeeds.
On presentation of the report from the chairman of the committee in June last year, the minister had immediately constituted an implementation committee headed by the chief executive officer of the Nigerian Shippers’ Council (NSC), Mr. Hassan Bello.
The committee is to screen shipping operators interested in acquiring part of the 60 per cent for Nigerians, and 40 per cent foreign ownership in the proposed national fleet.
Ogbeifun, who said the committee has commenced work, also expressed confidence that the new national fleet, unlike the old one, would be a success.
He pointed out that Amaechi, had assured of government’s political will at ensuring that the new project gets cargo to carry.
Nigeria and Singapore recently reached an agreement to establish a private sector – driven national carrier with stakeholding of 60 to 40 per cent respectively.
However, since the report was submitted, nothing has been heard from the ministry of transportation, even as the August deadline given by investors has come, thereby raising fears that the effort may yet be another pipe dream.




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