$25m CVFF loan can’t purchase standard ship, stakeholders claim

By Adaku Onyenucheya

Stakeholders in the shipping industry said the $25 million maximum peg for the Cabotage Vessel Financing Fund (CVFF) loan to qualified indigenous shipowners cannot purchase a standard ship.

Findings revealed that purchasing a standard and state-of-the-art cargo vessel costs not less than $50 million to $100 million in the international market.

The Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Bashir Jamoh, had earlier said beneficiaries of the CVFF are entitled to get a $25 million maximum each from any of the five Primary Lending Institutions (PLIs).

Further findings revealed that the agency pegged the amount at $25 million to save the fund from extinction.

It was learnt that this decision was informed by how the Ship Acquisition and Ship Building Fund (SASBF) of the defunct National Maritime Authority (NMA) was killed.

The experience of its management in the disbursement of the SASBF showed that, while some genuine shipping operators borrowed the money and paid it back on time, others did not pay back the principal and accumulated interests.

The Chairman of the Institute of Chartered Ship Brokers (ICS), Dr. Chris Ebare, said the $25 million CVFF loan cannot purchase a standard vessel, noting that the amount can only purchase a fairly used seaworthy vessel.

Ebare disclosed that getting a state-of-the-art vessel with the required international standards is not less than $50 million to $100 million.

He said many indigenous shipowners cannot acquire standard ships, which has made it difficult to compete with international shipping lines that have been monopolising the lifting of crude oil in the country.

Ebare advised the shipowners to collaborate and bring their funds together to form a shipping husbandry like other maritime nations in the world, such as Greece, Singapore, Norway and a host of others.

According to him, the law permits up to 54 persons to form a shipping husbandry.

“It would be a good start for them if they can get $50 million to $100 million to purchase a very good vessel that can go from Nigeria to China, Europe and America and can also meet international standards.

“But if the beneficiaries can come into what we call shipping husbandry; which means all of them will come together. Let’s say about six or seven of them are beneficiaries, they can form a company like they normally do in Greece and other countries,” he said.

The President, the Nigerian Shipowner Association (NISA), Sola Adewumi, said access to the cabotage funds depends on how the shipowner can convince the PLIs in terms of his or her contribution.

Adewumi noted that, although the Cabotage Act states that the shipowner must provide 15 per cent to access the fund if he or she can provide 30 per cent or more the bank might offer the shipowner/lender something higher than the $25 million pegged loan.

Speaking on NISA’s plans on getting the CVFF through partnership, Adewumi noted that members have decided to collaborate to get the loan and acquire some ships, as well as appoint a manager to run the affairs of the shipping line floated by the association.

Also speaking, a ship owner, Sola Olatunji, said, while the CVFF will catalyze the growth of the industry, the problem should be put on the front burner to engender constructive engagements between the stakeholders and the regulatory agencies.

Olatunji noted that stakeholders would continue to make contributions and partnerships to acquire vessels and make the process of CVFF transform the sub-sector of the economy.

He also noted that at the appropriate time, NISA would engage relevant stakeholders and come up with the final position on a resolution that should benefit all indigenous ship owners.

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