Why shipping investors shun Nigerian flag for vessels —Ogbeifun

Having just been appointed chairman, Benin City River Port Technical Committee by the Edo State government, the chairman/CEO of Starzs Investments Company Limited, Greg Ogbeifun, spoke to selected maritime journalists on happenings in the Nigerian maritime sector.  TOLA ADENUBI was there. Excerpts

What’s your view on the secure anchorage system?

Every country has got its own laws, and as much as possible, we must all operate within the laws of the country. Does the law of Nigeria allow the operation of a secure anchorage for vessels by a private firm? The answer is no. I believe that it is on this premise that the Nigerian Ports Authority (NPA) has cancelled the secure anchorage system. From what I see, NPA took that decision on behalf of the ship owners who use the secure anchorage. Do you know that every day, every ship that uses the secure anchorage pays $2000? That is a huge cost element that is borne by the ship owner and the ship operator. If stopping that dedicated secure anchorage is going to save the ship owners approximately $60,000 a month, I think what NPA has come up with is commendable.

Having said that, I will like to believe that the NPA is a responsible government agency and must have thought it through why a dedicated secure anchorage was set up in the first place. The NPA has said that it is engaging with the Nigerian Navy to improve the safety of our general anchorage. The NPA MD even said that the agency is acquiring patrol vessels to be able to engage the Nigerian Navy much more. I think the NPA, the Nigerian Navy and the Nigerian Maritime Administration and Safety Agency (NIMASA) are not folding their arms. They are doing something in that direction; let us encourage them to do it.

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Why doesn’t Nigeria have shipping lines in the mould of the Maersk Line?

You know we have a committee on national fleet of which I am a member. However, Nigeria does not have an enabling environment for the establishment of a global fleet in the mould of the Maersk Line, Grimaldi, CMA-CGM of this world. First, our tax laws need to be reviewed. Secondly, there has to be a genuine desire by government to support private sector initiatives to grow into a global trading firm. Thirdly, Nigeria has to urgently restructure our national registry and our flag administration.

I have decided to take the bull by the horn to establish a Nigerian crude oil tanker fleet, knowing full well all the challenges that I have identified. I am not setting up a crude oil tanker fleet because I want to go into business; I am setting up the crude oil tanker fleet because I want to highlight the possibility, the benefits and the challenges. I will give you an example. Every ship is classified with a classification society, and most classification societies require that there must be annual or bi-annual surveys and inspection that must be carried out on ships periodically. There are bi-annual, intermediate and five years class renewal. For this survey and inspection to be carried out, your flag administrator must have enough surveyors of international standards such that if a ship, flagged Nigerian, registered Nigerian, has taken some cargoes to Japan, and it’s due for an annual survey and inspection while in Japan, the flag administrator must have a surveyor in Japan to do the survey and inspection.

Does Nigeria have such surveyors globally? The answer is no. One of the things our flag administrator should have done is to identify where in the world Nigerians are exporting or importing goods from. After identifying where Nigerians export or import from, our flag administrator should then engage those nations to accredit their surveyors to work on behalf of the Nigerian flag. This is done globally, and many countries are looking for such opportunities because it also generates revenue for them.

That is just one problem. Another has to do with our tax laws. If Starz was to own one VLCC crude oil tanker that will be trading globally, flagged Nigerian and registered Nigerian, Starz will have to pay full duty. When the National Fleet Committee was set up, we did a global study and found out that all maritime nations collect zero duty from vessels flagged and registered in their countries. For many of these maritime nations, the first five years are tax-free for vessels registered and flagged in those countries. Why do these countries do this? They know that global trading is capital-intensive, so they make the first five years tax-free so that operators can pay up their loans and run the business adequately.

What is happening in Nigeria? Even when a ship has no contract or business, government puts a noose around your neck to pay all forms of taxes, and at the end of the day, operators abandon the ship, sack all the workers and move elsewhere. That is why we are where we are today. That is why many Nigerians, in order to survive, buy ships and register them in the flag of other countries like Liberia. There is also what is called tonnage tax. What a vessel pays as tonnage tax is commensurate with the size of the ship. So, you can imagine what I will be paying if I bring in a VLCC crude oil tanker and register/flag it Nigerian. In many maritime nations, tonnage tax is next to zero. Those countries make up revenue lost from zero tonnage taxes from the taxes the employees onboard such vessels pay. Yes, Nigeria is looking for money, but when you kill all businesses with tax, the economy will never grow.

You said Nigeria does not have enough surveyors globally, but we have the Association of Marine Engineers and Surveyors (AMES) of which you are a member. What are they doing about this?

It’s not the job of AMES to appoint surveyors for Nigeria globally. I was in Port Harcourt working for a British firm when the German Register knew about a Greg Ogbeifun, and wrote to me, asking me to be a non-exclusive surveyor for them. The Germans must have done their due diligence because I don’t know how they found out about me. The moment the German Shipping Registry appointed me, Bureau Veritas came calling. Lloyds Registrar also appointed me as an acting surveyor in the early 80’s. It wasn’t I that went to the Germans, it was the Germans that came for me in the 70s.

If our flag administration knows what they are doing, they would go out there and engage these people properly, and bring them in. Most of the AMES members are the ones who come to my shipyard to carry out surveys and inspection of ships that people bring to be repaired. You can be a registered surveyor, but do you have the prerequisite. That is why many of these big international shipping firms won’t allow some surveyors to carry out inspection on their vessels. Many of the young guys parading themselves as surveyors in Nigeria today have not even obtained their  chief’s certificate, yet they call themselves surveyors.

But NIMASA has set up a committee headed by Ilori to re-strategise Nigeria’s ship registry. Are we on track in that direction?

It is now an implementation committee. After their inauguration, I called Ilori and told him that I wanted to set up a global fleet that must be registered and flagged Nigerian. How can his committee come in? Ilori replied me that it’s still confidential. What is confidential? If the essence of restructuring is to attract global shipping into Nigeria’s registry, the place to start from is to ensure that people know that Nigeria’s ship registry is getting re-strategised. Every step we take positively on our ship registry, we ought to let the world know. People in China, Hong Kong, London have a check list; and if they don’t know that Nigeria is re-strategising her ship registry, then we won’t be achieving anything.

I asked Ilori to put everything online so the world can see, He is telling me it’s still confidential. What is confidential? If you press a button, you will see the Liberian ship registry online; you will see the London ship registry online. So, as I am sitting here right now, I don’t know what is happening with the implementation committee on ship registry. If, for example, that implementation committee has sent delegations to Liberia or to England, asking to appoint non-exclusive surveyors because Nigeria is improving her flag registry, it should be online. That shouldn’t be confidential.

Nigerian Tribune