$700m CVFF: Indigenous shipowners scramble for mergers over 15 per cent equity

NIGERIAN shipowners are currently in a state of confusion over possible mergers and collaboration following the mandatory demand for a 15 percent equity in the provision of the disbursement of the $700 million Cabotage Vessel Financing Fund (CVFF), checks by the Nigerian Tribune has confirmed.

Speaking with the Nigerian Tribune exclusively, a Board of Trustee (BoT) member of the Nigerian Shipowners Association (NISA), Mr. Tunji Brown lamented about a lack of collaboration among indigenous shipowners for mergers or even collaboration.

According to Mr. Brown,

“The reluctance by indigenous shipowners to unite under mergers during bidding processes has left them vulnerable to competition from international firms.

“However, the recent initiative by the Nigeria Shipowners Association to establish NISA Ocean Transport Limited aims to consolidate Indigenous shipowners, positioning them to compete effectively against foreign entities for Cabotage opportunities.

“NISA already envisaged the issue of merger among indigenous shipowners, and that’s why, two years ago, the association formed a company called NISA Ocean Transport Limited.

“The company is a wholly owned Nigerian company where every shipowner can subscribe via merger or collaborative initiative.

“Any shipowner that agrees to be part of the company will deposit their financial resources in the company. It is under that company that everybody who subscribes to merger will apply for CVFF.

“NISA members already know about this, even though we are not shutting the door to members of other associations. But you know in the ship-owning sub-sector, merger issues can be cumbersome.

“Under the NISA initiative, every member of the merger under the NISA Ocean Transport Limited will not have more than 5 percent stake in the company.

“We are also not saying other members who can actually go on their own should not go ahead. The NISA merger initiative is for those who cannot single-handedly provide the 15 percent stake required to access the fund.

“Although we have not seen substantial merger interest from members, we are very optimistic that many of our members will key into the merger initiative because that’s the only way we can pull resources together to raise the 15 percent equity fund.”

Also speaking with the Nigerian Tribune exclusively, another chieftain of NISA and Managing Director, Peacegate Group, Ayorinde Ade-doyin distanced himself from any merger talks, stating that he does not believe in the disbursement process.

In the words of the Peacegate Managing Director,

“How many Nigerian ship owners can raise the 15 percent required to access the CVFF fund? 15 percent of $25 million, that’s about four point something million Dollars. Where would shipowners get that from? The CVFF to me is like, government just want to hand over money to the banks again, because many will struggle to repay.”

When reminded that the Bank of Industry is involved, the Peacegate Boss explained that, “Whether Bank of Industry or Bank of Shipping, what I’m saying to you is, there’s going to be a lot of issues. Majority will not be able to buy, and again, part of the condition, I can tell you, is going to be that shipowners must have contract. Can you get contract for a vessel that you don’t own? You will need to have a vessel for you to be able to bid for a contract.”