‘True test for Nigeria’s maritime security efforts will come after October’

Mallam Aminu Umar is the immediate past chairman of the Nigeria Ship-owners Association (NISA). In this interview with TOLA ADENUBI, he speaks on issues confronting Nigeria’s maritime domain. Excerpts.

Has the maritime sector, since Covid-19, benefited from any government palliative?

Many of the indigenous ship-owners groups have made presentation to the Nigerian Maritime Administration and Safety Agency (NIMASA). The Director General has been engaging us, but nothing has been forthcoming yet. With how vital shipping is to Nigeria, we believe that the maritime sector should be at the fore-front of palliative beneficiaries. Yes, the health sector and agricultural sector are important but shipping is also very important. We have read in the news of government incentive to the aviation sector, which runs into billions of Naira, and that leaves us to wonder if the aviation sector which was closed down during the Covid-19 pandemic is more important than the shipping sector. With the importance of shipping to the nation, we expect more from government. On the Cabotage Vessel Financing Fund (CVFF), which has not been disbursed, the maritime sector needs have outgrown the fund. Yes, the CVFF is important as an intervention fund for ship-owners, but the fund alone cannot cater for the needs of the maritime sector. The maritime industry is too big for the funds in the CVFF. I think it’s important for commercial banks to support shipping in Nigeria because globally, it is banks that finance shipping.

But banks have had issues with ship-owners over loan default in recent past. What is the problem?

Yes, some Nigerian ship-owners have had issues with commercial banks, which led to the Asset Management Company of Nigeria (AMCON) seizing some shipping assets. However, to me, this is not peculiar to the maritime sector alone. There is no sector where we don’t have loan defaulters. If we are going to look at it in terms of volume of money involved, what is happening in shipping cannot be compared to what has been happening in the oil and gas sector or the manufacturing sector. I think the banks should not always blame the ship-owners. The banks need to look inwards, and ask themselves if they are giving ship-owners the kind of loan facility that can be repaid. Structure of a shipping facility is totally different from that of a trading facility. You cannot give somebody who buys a ship and have to repay in five years and somebody who buys a commodity and trade it out within six or 12 months, the same type of loan facility. That is the problem we have with most bank loans. Most of the loans are structured to fail. We have engaged the DG of NIMASA on this bank loan issues, and he has assured us that post Covid-19, he will be having a meeting with most of the bank heads to look for a way out. To me, if the banks are not comfortable giving loans to ship-owners, then it will be difficult to develop shipping in Nigeria regardless of whatever intervention funds government injects into the sector.

Concerning insecurity, the DG of NIMASA, Bashir Jamoh, has received commendations from the International Maritime Organisation (IMO) for his efforts in tackling the menace headlong. As an operator in Nigeria’s maritime sector, what is your assessment of efforts geared towards tackling maritime insecurity thus far?

Yes, there is an improvement. We have seen some arrest which to me is unprecedented. NIMASA and the Navy have intensified efforts to tackle maritime insecurity on our waters, and I think it is commendable. If we compare 2020 to 2019, we can see fewer vessels attacks and kidnappings happening on our waters, which I think is commendable. However, for us in shipping, we look at maritime security improvement from two angles; rainy season and dry season. In shipping, during the rainy season, there are high tidal waves in the waters. During this time, the sea is always rough and visibility is very low, so it is always not easy for small crafts and boats to navigate the waters because there is no calm.  This period when the sea is not calm usually starts from May to October. After October, the water begins to experience some calm, even though visibility still remains poor due to harmattan during the day time. At nights, visibility becomes better because you can see light at night. So, during rainy season, insecurity on our waters usually reduces because the water is rough for small boats. Don’t forget that pirates attack vessels using small crafts, so because of the roughness at sea during May to October, the attack normally reduces. We expect a very robust security plan in the Gulf of Guinea (GoG) ahead of the dry season because the true test for the new NIMASA management will come after October. Yes, the DG has done fantastically well; however, we should not relax because attacks have subsided. During rainy season, attacks reduce and increase in the dry season when the waters are calm. After October, we will be able to really say if the effort geared towards maritime insecurity has really been helpful. For now, I cannot really give a verdict. Nigeria has put together a Deep Blue project, but it has not been launched. Hopefully, when it is launched, we expect it to correct all the anomalies on our waters.

The Secure Anchorage Area (SAA) operated by Ocean Marine Solution Limited (OMSL) has been in the news of recent. What’s your view of the SAA?

Yes, vessels still berth at the SAA. The SAA is located between 10 to 15 miles away from the Lagos anchorage. The SAA is a certain area that is secured and created about 15 to 20 nautical miles away from the breakwater. Although OMSL ensured that the SAA is secured with patrol boats and other vessels, that area is not the only place where we have patrol boats manning. We also have patrol boats manning the Lagos anchorage area. The difference between the SAA and the Lagos anchorage area is that while one is private and vessels pay to stay there, the other is devoid of any payment if vessels want to stay there. It’s like a private car park and a public space where cars park. While vessels pay to stay in the SAA, the Lagos anchorage area is free.

Why has government not been able to dismantle the SAA despite efforts by the Nigerian Ports Authority (NPA); and why would ships prefer to stay in the SAA where they have to pay instead of staying in the Lagos anchorage area which is free?

The answer is that many vessels that call at Nigerian ports are under contractual obligation by their insurance companies not to go beyond the port of Lome, which is considered safe enough by these foreign insurance companies. For a vessel to bring cargoes to Nigeria, the vessel would have been warned by her insurance firm that Nigerian waters are a dangerous place to visit. If the vessel insists that she must come to Nigeria to deliver cargoes, and her insurance cover is valid, then the insurance firm will give the vessel a condition that she must stay inside the SAA while in Nigerian waters. The insurance firm will give the vessel a condition that if she fails to stay inside the SAA and gets attacked, no indemnity will be paid to the vessel owner. These are the conditions given by insurance firms to ships that call at Nigerian ports, and that is why the SAA assumed prominence for vessels that call at Nigerian ports. Otherwise, why would a vessel prefer to drop anchor in the SAA and pay when there is an option of free place to stay in the Lagos anchorage area? Many of the ships are under contractual obligation with their insurance firms, and that is why government cannot scrap the SAA overnight. If the SAA is scrapped overnight, most ships will stop at Lome and refuse to come into Nigeria waters again because their contractual obligation with their insurance firm says, if they must come to Nigerian waters, then they must stay inside the SAA, or at most, stop at Lome anchorage.

OMSL had done its homework as regards the SAA by informing the various foreign countries and institutions like Lloyds Registers and others that there is a secured place in Nigerian waters where vessels can drop anchor and be safe from attacks. Many insurance companies have vetted this OMSL claim and thus take these into consideration when they enter into contract talks with vessel owners. That is why today, 90 per cent of vessels that stay in Lome are destined to come to Nigeria. For these vessels, their destination is Nigeria, but their insurance does not allow them. The moment any of these vessels cross Lome and heads towards Nigeria, her insurance premium triples. If she is paying $100,000 as insurance premium, the moment the vessels crosses Lome, the insurance premium triples to $300,000. Aside the insurance premium tripling, the insurance companies slam stringent conditions on the vessel that crosses Lome and heads towards Nigeria waters. Such conditions include staying inside the SAA. If the vessel violates these conditions, then she loses her insurance cover. So you see how SAA became prominent and why government could not scrap it when the NPA tried to do so.

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