The CVFF was created under the Coastal and Inland Shipping Act 2003 as a pool of funds from which Nigerian ship owners can borrow money at single digit interest rate to acquire ships for coastal trade. Recent statements from the supervising ministry in charge of the fund disbursement, and an indigenous ship-owners group indicates a possible power play that might take a long time to resolve, writes TOLA ADENUBI.
In early August 2021, the Minister of Transportation, Honourable Rotimi Amaechi told guests seated at the wreck removal exercise of the Nigerian Maritime Administration and Safety Agency (NIMASA) that the presidential approval for the disbursement of the N136.5bn Cabotage Vessel Financing Fund (CVFF) had been withdrawn. However, two months later, an indigenous ship-owners group, the Nigerian Shipowners Association (NISA) told newsmen that the presidential approval for the disbursement of the CVFF has not been withdrawn.
According to the Chairman, Board of Trustees, Nigerian Shipowners Association (NISA), Chief Isaac Jolapamo, “Contrary to the Minister’s announcement, information gathered by NISA indicates that the presidential approval for the disbursement of the fund had not been withdrawn.
“I have also written to the Minister requesting for the actual total amount of money that has been contributed to the fund since its advent in 2003.”
On comments by Amaechi that Nigerian ship owners don’t have ships, Jolapamo said, “I don’t think I want to delve into that today. There has been propaganda in the entire place that some ship owners don’t have vessels. I will want to put it to you today that a ship owner is a ship owner forever because before you emerge as a ship owner, you must have met some criteria.
“Many of us had vessels decades before the advent of cabotage. We fought for the cabotage law with the hope that we will be better off. Some of us who had up to five to six vessels thought by the time the execution of the cabotage fund would kick off, most of us would have gotten up to 20 vessels.
“And what government does is to achieve continuity but now, the reverse is the case just because of the unnecessary propaganda that has trailed the so-called cabotage. This propaganda has crippled the purpose of the fund in that it has made it very difficult for most ship owners to continue to own vessels. You know, a ship owner is like a senator of a republic. Even though he finishes his tenure, wherever he goes, he is still being called a senator.”
Battle of wits
For industry observers close to the Federal Ministry of Transportation, the utterances of the indigenous ship owners might spell doom for the expected disbursement of the CVFF, at least during the present life span of thie current administration. According to the industry observer who wouldn’t want his name in print, “Are the indigenous ship owners saying that the Minister of Transportation was lying when he said the presidential approval has been withdrawn?
“Amaechi is blunt and we have known that for years. He says it the way things are. If the Minister can openly say that a presidential approval for CVFF has been withdrawn, then he meant what he has said. I don’t know where NISA got information from that what the Minister said about the CVFF is not true. But I know that there was a time the Minister asked the indigenous ship owners to write a protest letter over plans by the Minister of Finance to label the CVFF fund as a public fund. Did they (indigenous ship owners) write such letter? No, they didn’t.
“Even the group of indigenous ship owners that are countering the Minister of Transportation assertion on the CVFF is not the group that has been active for some years now. This is a group of indigenous ship owners that had been embroiled in different leadership crises for years and suddenly woke up from slumber because the Minister said the Presidential approval had been withdrawn.
“Why didn’t indigenous ship owners write a protest letter when the Minister of Finance was carpeting the CVFF under government funds? Obviously, there were divisions then, and they quickly had to close rank because they suddenly realized that they might lose out following the presidential withdrawal of assent for disbursement.
“Now that they (NISA) have said that contrary to the Minister of Transportation, the presidential approval has not been withdrawn, let’s see how they go about getting the fund since they are highly connected in the presidency to know more than the Minister.”
Shipowners with no ships
On the comment by the NISA BOT Chairman that once a ship owner, one is a ship owner for life, the industry observer explained that such arrangement does not suffice over the CVFF disbursement arrangement.
“Are you saying that money released by government for the National Assembly today, former senators or lawmakers benefit from such money because they are senators for life? We are talking of indigenous ship owners that may have gone bankrupt or indebted to various financial institutions.
“Have you forgotten what happened to the Ship Acquisition and Ship Building Fund, (SASBF) of the early 1990’s? This was how people mounted pressure on government then to disburse and the money was disbursed. What came out of such disbursement? We heard stories of indigenous ship owners acquiring luxury properties in posh locations without actually buying ships. If they (indigenous ship owners) truly bought ships with the SASBF, where are the ships?
“If the Minister of Transportation says it is only in Nigeria that we have ship owners without ships, then he knows what he is saying. For government to be skeptical about releasing the CVFF, it means the government is not comfortable releasing such funds to indigenous ship owners who don’t own or have any investment.
“Let’s even look at the CVFF today. The fund is about $136.5 billion. How many vessels can such a fund buy? The indigenous ship owners are in different groups and each group membership is not less than seven or 10 members each. How many vessels can $136.5 billion buy for these groups of indigenous ship owners? What is the certainty that if such money is released, all of them will channel it towards fleet renewal effort? Don’t forget that some don’t even have ships at all. For such categories of people, how will they get ships that can comfortably compete for cargoes now that Nigeria is set to commence the African Continental Free Trade Area (AfCFTA)?”
The CVFF is an accumulated fund that represents a two per cent contribution by indigenous ship owners on every contract done in Nigeria’s maritime sector. The disbursement of the fund is backed by the provisions of Section 42(1)-(2) of the Cabotage Act 2003, which aims to promote the development of indigenous ship acquisition capacity by providing financial assistance to Nigerian operators in domestic coastal shipping. However, since its establishment more than 18 years ago and with more than USD250 million accruing into its account, no ship owner has been able to borrow from the CVFF due to lack of government approval.
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