$700m CVFF: Banks requirement may force ship-owners into fraudulent contracts — Maiguwa

The Chief Executive Officer of Bricks Murstern Mattoni Limited, Mr. Emmanuel Maiguwa has stated that with the Terms and Conditions set by some commercial banks involved in the $700m Cabotage Vessel Financing Fund (CVFF), many indigenous shipowners might have to rely on fraudulent contracts to access the funds.

Speaking with the Nigerian Tribune on the challenges facing the CVFF disbursement, Maiguwa said: “Some of the banks who were shortlisted by the Nigerian Maritime Administration and Safety Agency (NIMASA) for the CVFF disbursement are demanding for a new-build vessel and a bunker as a criteria to access the fund.

“Here in Nigeria, unless somebody has a contract and a commitment, meeting that requirement is almost impossible. In the Nigerian market today, it is highly risky for you to wait for 12 months to have a new-build vessel and still expect that your contract will still be there. Nobody gives you a contract to provide a vessel in the next one year. Anybody who gives you a contract expects the vessel immediately.

“So, you see that the model being adopted by the banks does not support acquisition of existing vessels but a new-build. When you talk about a new-build vessel, you have to consider the building stage before the sea-trial stage and then deployment stage before the registration stage. This period can consume up to 20 months. So, who gives you a contract and waits for 20 months?

“With the commercial banks demand, we might have a situation where fraudulent contracts will begin to emerge just for people to access this loan. And when people access the loan using fraudulent contracts, what happens at the end of the day is that they struggle to pay back, leading to a situation where the loan becomes threatened and the banks call for what we call ‘Loan Restructuring’.

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“Now I want you to understand that it pays the banks when the borrower is not able to repay back the loan within the agreed time frame because this leads to Loan restructuring. What this means is that instead of paying back within five to ten years, the borrower is now tied to the loan for 15 to 20years. This is additional business for the banks because they now have additional years for the borrower to pay back the loan interest.

“Crook banks will never be interested in a model that allows the borrower to repay the loan on time. They will always be interested in a default so that the borrower will continue to have his loan re-adjusted.

“From what I have seen so far, the parameters put in place by the banks involved in the CVFF are not accurate, and it will be very difficult to repay the loan.”