Unfavorable crude oil trade policies, high taxation and poor business practices have been identified as major impediments to the successful establishment of the long-awaited National Fleet, commissioned at the beginning of the President Muhammadu Buhari’s administration in 2016.
The call for the establishment of National Fleet became essential following the need for Nigeria and Nigerians to take their pride of place in the nation’s lucrative shipping business, largely dominated by foreign-owned ships.
BusinessDay understands that since the demise of the Nigeria National Shipping Line (NNSL) in the 90s, the country has not been able to establish shipping lines that will fly Nigerian flags, thus the domination of the business by foreigners.
For the success of the project, the Buhari’s administration in 2016 set up a National Fleet Implementation Committee (NFIC), which said it is currently clearing some of the impediments that would pave way for the establishment of a sustainable National Fleet in Nigeria.
Hassan Bello, chairman of the committee and executive secretary/CEO of the Nigerian Shippers Council (NSC), who spoke in an interview with newsmen last week, expressed worries that a total of $9 billion in terms of freight on dry cargo was earned in Nigeria in 2015, all of which went to foreign ship owners due to the absence of a vessel on Nigeria’s fleet.
According to him, this has had serious negative implications on creating jobs for Nigerian seafarers and cadets including women, the banks, insurance companies, shipbuilding and ship repair yards and the overall economy, a development that makes it urgent for the country to have an enduring national fleet.
“At the course of the work of the committee, which is a 3-year programme, it was established that there exist some major impediments in terms of laws, policies, taxes and business practices that must be cleared to create the necessary environment for the National Fleet project to work,” he said.
To achieve this, it was gathered that the NFIC is working with the National Economic Management Team headed by Vice President Yemi Osinbajo, Department of Petroleum Resources (DPR), Federal Ministry of Finance, the Nigeria Customs Service (NCS), Nigeria Investment Promotion Council (NIPC), Federal Ministry of Budget and National Planning, Federal Inland Revenue Service FIRS and the Nigerian Maritime Administration and Safety Agency (NIMASA) to achieve this objective.
Findings show that laws such as carriage of the nation’s export on Free On Board (FoB) in place of Cost, Insurance and Freight (CIF), is injurious to the nation’s economy as well as the high import duty rate of 14 percent on imported vessels and vessel spare parts, hinders the takeoff of the project.
This makes Nigerian shipping lines uncompetitive with their foreign counterparts, who acquire vessels with less than 3 percent interest and less than 2 percent import duty rate.
Meanwhile, Bello stated that the National Fleet is going to be private sector-led as the Federal Government is not putting down a kobo.
“When we create the necessary environment that would make the fleet to thrive, we also create incentives that would be attractive to the investors because it is not just acquiring ships that would shut down tomorrow but we want a National Fleet that would stand the test of time”, Bello added.
Shipping, he said, contributes a paltry 0.1 percent to the nation’s Gross Domestic Product (GDP), which is far less than the contribution of the Nollywood industry, and is an aberration, given the vast maritime endowments at the disposal of the country, most of which are untapped.
He also disclosed that with the involvement of NIMASA, the National Fleet, when fully operational, would be given a National Carrier Status, which implies that it would carry all government cargo, which would include crude oil, various materials for rail and power projects as well as other sundry cargo belonging to government agencies.
Olu Akinsoji, a shipping expert, had in a different forum, confirmed the National Fleet would be 100 percent private sector-driven.
He said the role of government is to create a conducive environment, which would in turn make the shipping business attractive to indigenous players to participate.
It is expected that the emergence of the shipping line would provide Nigerians the opportunity to own different categories of oceangoing vessels such as crude tankers, containerised vessel, bulk cargo carrier, general and dry cargo carriers among other type of vessels.
It would also help Nigeria to domesticate over N2 trillion lost in capital flight annually to foreign shipping companies that dominate Nigerian shipping business.