Worried by the underdeveloped state of indigenous shipping business in Nigeria, ship owners have called for the review of the Federal Government’s fiscal policy that imposes high Nigeria Customs Service (NCS) duty of 15 percent on vessels imported by local ship owners.
According to them, imposing as much as 15 percent import duty on a vessel brought into the country to fly the Nigerian flag, would make it difficult for Nigerian ship owners to effectively compete with their foreign counterparts, that pay as little as 1 percent duty in their own country.
They believed that such situation gives advantage to the foreigners to be at the top of shipping business, already dominated by foreign owned vessels, as it not only enable them to own quality vessels but also allows the foreigners to give better pricing to customers.
Greg Ogbeifun, President of Ship-owners Association of Nigerian (SOAN), said in Lagos recently, that high customs duty of 15 percent on vessels imported by its members in situation where vessels flying foreign flags are required to pay as little as 1 percent, makes it difficult for Nigerians to compete.
He said it was grossly unfair for Nigerian flagged vessels to pay much more customs duty than vessels flying foreign flags. He disclosed that the association has gone to the Presidency to register their protest over the high import duty.
Ogbeifun, who also described the situation as unfortunate, said that payment of higher import duty on vessels has put Nigerian ship-owners at a very disadvantaged position and given the foreign vessel owners a competitive edge.
“There is a contention between the Ministry of Transport and that of Finance, while the Transport Ministry is working towards reducing the payment of such high duty on vessels built abroad and imported into the country, the Finance Ministry through Customs, wants to maintain the duty in a bid to meet or surpass its targeted revenue collection,” he said.
Continuing, he said: “There is a fundamental problem with the industry and we must put our fingers on the issues affecting the industry. Already being a Nigerian flagged vessel, you are at a disadvantage and this is not good for the industry. We must look into the law as regards to this issue.”
Ogbeifun also complained that the current Nigeria’s fiscal policy which stipulates that ship owners bringing ships must pay a duty charge of 14 percent out of the total cost of the vessel to the Nigeria Customs Service (NCS), was a major reason, the Singaporean shipping company known as Pacific International Line (PIL), that signed a memorandum of understanding (MoU) with Nigerian government to set up a national shipping line, recently withdrew its partnership.
“The duty payable on an average if you are bringing in a vessel is about 14 percent of the value of that vessel. So, if you bring in a crude oil tanker vessel of $80 million, you will be expected to pay $80 million and then in Nigeria’s port, you have to pay 14 percent of that value to enable you bring in the vessel,” he explained.
Recall that since the demise of the foremost Nigerian National Shipping Line (NNSL) in the 90s, Nigeria has not had any deep oceangoing vessel to fly Nigerian flag in foreign nations and also benefit from the nation’s lucrative shipping business.
Consequently, industry analysts believed that opportunity abounds for Nigeria to genuinely take its rightful place as maritime capital in the West African region.
“Nigerians need to invest in the ownership of different type of vessels to participate in shipping. Therefore, there is an opportunity for Nigerians to have several ships including tankers, crude or products, containers, dry cargo or bulk carriers,” Adewale Ishola, a foremost master marine, said.
He noted that Nigerian Fiscal Policy on importation of vessel does not make establishment of shipping fleet competitive in global trade.
Ishola listed other unfavourable fiscal policies that hinder the growth of indigenous shipping in Nigeria to include tax laws, tonnage tax laws, and other laws that affect international shipping.
He said that a recent study conducted by local shipping firms, shows that unlike Nigeria, most countries first declare zero duty on importation of vessel to encourage growth in shipping business, before thinking of profiting from revenue generated import duty.
