Business Hilights
Tracking Nigeria's Headline Business News Online

Experts list five factors frustrating growth of indigenous shipping in Nigeria

Five reasons have been revealed as being the major clogs in the wheel of progress for indigenous shippers, thereby frustrating them in playing the big role in West and Central African coastal trading.

In an interview with the managing director of NBE Oceaneering Limited Port Harcourt, Chief Chris Igbojekwe, he listed the factors to include banks non-performing loans, current fluctuations in the global oil market, lack of patronage, unavailability of forex and non-implementation of the Cabotage Act.

He decried the observed lip services and fake international displays by some agencies of the federal government in the sector, saying deception cannot help the nation’s shipping industry and this is time to point it out.

He revealed that due to frustrations, major shippers have no other option than to sell off their properties in choice areas of Lagos, Abuja and Port Harcourt to repay huge debts they owe banks.

He disclosed that several players in the downstream oil and gas sector have lost about 60 per cent of indigenous shipping companies, 70 per cent has gone under in the upstream sector.

The companies, in his views, find it difficult to meet their credit obligations to crews and loans to financial institutions.

Explaining more on the challenges facing local shippers, President, Nigerian Ship owners Association (NISA), Aminu Umar, said the upstream sector is badly affected by the cash crunch.

He stated that most vessels at seaside along CMS, Snake Island and Sea School have been taken over by banks due to indebtedness of the owners to financial institutions.

According to him, “Even though there are no statistics on ground, I can tell you that about 60 per cent of indigenous shipping firms operating in the downstream oil and gas sector of the economy has been liquidated.

“Also, the upstream is affected as about 70 per cent have been liquidated because they can’t meet their financial obligation and when I mean gone down that means  they can’t meet their credit obligation, they can’t meet their day to day running obligation, they cannot meet technical obligation of maintaining those vessels to be able to stay with their certifications”.

“You can see vessels at CMS; you don’t need someone to tell you. More than 70 per cent of all the vessels at CMS have been taken over by banks. When you go to sea school or Snake Island you will see vessels that have been taken over and have become wrecks. Most of them have been taking over by banks because their owners cannot meet up with their credit obligations. This is what has happened to indigenous shipping companies”.

Giving an example, he Umar said “For instance, if you take a helicopter up or take a boat to offshore of the port area you will notice a lot of vessels that are laid off. They are completely cold lay, i.e the engines are off, the crew have been removed because the owners cannot pay salaries or some have been taken over by financial institutions. Numbers of vessels that have been taken over by banks are so much that it is difficult to count”.

Giving antidote to the problems, he called for immediate disbursement of the maritime Fund and Cabotage Vessel Financing Fund (CVFF), saying time has come for NIMASA to do the needful before the situation gets messier.

“We believe if ship owners have a greater credit facilities like Cabotage Vessel Financing Fund (CVFF) at a low interest rate, it will be easier to meet their financial obligations”.

He, however, complained that loans were not forthcoming to operators in the indigenous shipping sector.

“Unfortunately, the loans taken by commercial banks are coming with high interest rate that no one can meet their obligations anymore because of the fall in freight earnings. So, I believe we have so many ship owners that have lost their businesses to banks,” NISA boss averred.