The Nigerian Maritime Administration and Safety Agency (NIMASA), said it has received the approval of President Muhammadu Buhari to disburse the Cabotage Vessel Financing Fund (CVFF) to qualified indigenous maritime operators in line with the Treasury Single Account (TSA) policy and the CVFF Guidelines of 2006.
The Cabotage Fund was established alongside the Nigerian Coastal and Inland Shipping (Cabotage) Act of 2003, to empower indigenous ship owners to enable them to acquire vessels to take control of the nation’s coastal and inland shipping business, otherwise known as Cabotage trade.
Sadly, 18 years after, the Federal Government is yet to apply the over $200 million accumulated in the fund into the acquisition of vessels, but with the presidential approval to disburse the fund, qualified ship owners would soon be able to receive cheap and interest friendly funds to acquire ships.
To begin the disbursement, NIMASA has called for Expression of Interest (EoI) from banks to act as primary lending institutions (PLI) for the disbursement of the fund.
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According to a publication by the agency tagged ‘Implementation and Disbursement of the Cabotage Vessel Financing Fund (CVFF): Expression of Interest as Primary Lending Institution,’ which was signed by Chudi Offodile, executive director, Finance and Administration of NIMASA, and sighted by BusinessDay, the Fund would promote the development of indigenous ship acquisition capacity by providing financial assistance to Nigerian operators in domestic coastal shipping.
He said the request for the primary lending institution is in line with the Federal Ministry of Transportation guidelines for the implementation of the Cabotage Vessel Financing Fund (CVFF) 2006, which specified the minimum requirement for the participation of banks as Primary Lending institutions (PLIs).
He listed the requirements to include that the PLI must have an existing relationship with NIMASA; have shareholders fund over N25 billion, and must have proof of substantial financial support in terms of credits extended to indigenous maritime operators.
Offodile stated that the PLI will be responsible for liaising with NIMASA in determining the risk acceptance criteria for the utilisation of the Cabotage Vessel Financing Fund or issuing of guarantees.
“PLI will participate in financing and management of specific projects where necessary to further secure repayment of the loan or obligation; be actively involved in on-lending monitoring and entire loan management, and any other financial advisory or ancillary services as the Fund may determine,” he stated.
Continuing, he further stated that the bank shall because of the Treasury Single Account policy of the Federal Government, also be prepared to open a dedicated account for each applicant who shall deposit a minimum of 15 percent of the loan request (sum applied for into the account); be committed to contributing between 10 – 35 percent of the loan request and also commit to a cumulative single digit interest rate.
He added that on approval of the loan request by the Minister of Transportation, NIMASA shall transfer its portion of the loan request into the dedicated account.
