N44bn inaccessible vessel financing fund angers shipowners

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Image result for N44bn inaccessible vessel financing fund angers shipownersOperators in the local shipping industry have expressed anger over their inability to access the Cabotage Vessel Financing Fund that was established by the Cabotage and Inland Shipping Act 2003 to provide finance to operators to maintain vessels, purchase new vessels, stay in business, build capacity and create employment.

The fund is derived from two per cent of the revenues of the shipowners and has been in operation since 2004. However, none of the operators has been able to access the fund.

According to the Act establishing the fund, the Minister of Transportation is empowered to establish guidelines for the disbursement of the fund to eligible operators. After approval from the National Assembly, the fund can then be disbursed.

The Act also stipulates that selected applicants will send in their companies’ applications for the financing of the procurement of ships to the Nigerian Maritime Administration and Safety Agency, and NIMASA will send the applications to the banks warehousing the fund.

The banks are in turn required to carry out a credit risk analysis on the projects of the applicants and if the applicants are creditworthy, the banks will make recommendations to NIMASA that the transactions are worth funding.  NIMASA will then forward the recommendations to the minister to review, approve and send for disbursement.

An indigenous shipowner and the Managing Director/Chief Executive Officer, Starz Marine Engineering Limited, Greg Ogbeifun, said the one and only time the fund ever came close to being disbursed was during the administration of former President Goodluck Jonathan.

He said, “Six companies went through that process and they were recommended to the minister then for the review of and approval for disbursement. Instead of the minister to carry out the function that he was authorised and empowered by law to carry out, he took the file of these six companies to Mr President.

“Mr President looked at the amount and said, ‘What! You mean we have this sort of money sitting down somewhere?’ And then they called the Director-General of NIMASA and they said, ‘What are you doing down there with all the money in your possession?’

“The rest is history and that was the end of the nearest attempt to disburse the fund. Now, the fund has been transferred to the Treasury Single Account and it is becoming more difficult to access.”

Ogbeifun said the number of operational indigenous shipping companies in the past few years had reduced by about 43 per cent because the operators could not access funds to maintain their ships or purchase new ones.

“The vessels are laid up; the banks have repossessed some of them. They cannot dry dock because of our financing challenges,” he recounted.

According to operators, this in part accounts for the dominance of the shipping sector by foreign firms.

“Our participation in the shipping industry is quite low. There is huge revenue of over $7bn annually involved in shipping but Nigeria is losing out on that,” the Chairman of the Shipowners Forum, Margaret Orakwusi, said.

Absolving his agency from blame over the non-disbursement of the fund, the Director-General, NIMASA, Dr Dakuku Peterside, said the power to disburse the fund was not with NIMASA.

He added that the Minister of Transportation, Mr Rotimi Amaechi, had also said he was not approving the disbursement until he had reviewed the guidelines and was sure the fund would not go the way of the Aviation Intervention Fund or other intervention funds.

He also promised that the disbursement of the fund, which he said had grown to $124m, would commence in 2019.

Stakeholders are in doubt about the sincerity of these claims and they are also worried that the funds may have been mismanaged.

In a chat with our correspondent, the Chairman, Nigerian Maritime Expo, Mr Ayo Adedoyin, said the Cabotage fund had become a political tool, which was raised every four years and killed immediately after.

He said he and many others had lost faith in the fund, adding that most of the pioneer contributors had since gone out of business and the only people benefitting from the fund were the custodian banks, which  had been trading with the money for the past 14 years.

Stakeholders argued that the fund was shrouded in mystery, maintaining that it was not true that only $124m had accumulated into it.

Adedoyin called for transparency, saying that the best thing was for the government to make the account open and detail how much had gone into the account each year and for the contributors to be the ones selecting beneficiaries and not the government.

In September, members of the Nigerian Shipowners Association raised fresh questions about the $300m allegedly missing from the fund.

The President of the association, Aminu Umar, who spoke with journalists shortly after the association’s annual general meeting in Lagos, stated that a five-man committee had been set up to commence an investigation into the fund to unravel the facts and ensure those who mismanaged the fund were punished.

He said, “We want to know what has happened to the $300m we have contributed so far and the one that was contributed before 2015.”

He said the Cabotage Act had been on for 10 years and the figures being given today represented the money contributed from 2015 till date.

He said, “We do not know if it is more than $300m; we are just estimating that it could be $300m or more. From 2015 till date, the CVFF has come up to over $160m and when you calculate six years backwards, I think we should be looking at more than $300m.”

In contrast to the CVFF, the Nigerian Content Fund, which was established in 2010 by the Nigerian Content Development and Monitoring Board, has accumulated $700m and operators said it had been able to support six industry players.

It also recently seeded $200m to the Bank of Industry to give as loans to operators.

The fund, which is derived from one per cent contribution of shipowners and other operators in the oil and gas sector, had been hailed as very transparent by the operators.

“Everything is on the NCDMB website, the amount, procedures for applying and the number of beneficiaries,” Ogbeifun said, requesting that if operators could not access the Cabotage fund, they might as well stop contributing to it.


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