Foreigners have taken over maritime sector of Nigeria—Omatseye

By Funsho Olojo

Temisan Raymond Omatseye, a lawyer, seasoned maritime expert and former Director General,the Nigerian Maritime Administration and Safety Agency (NIMASA) has addede a new feather to his cap.

He was recently elected as the President of African Ship owners Association(ASA).

In this interactive discourse, Omatseye said he would use the new association to position ship owners in Africa in international maritime industry.

He also took a swipe at the lack of government commitment to grow the industry in Nigeria which he claimed has been taken over by foreigners.

What informed the formation of the African shipowners association?

The setting up of the African Shipowners Association has been in the offing for about two to three years now. It all started when there was a conference of Maritime Administrators in Africa which was held at Johannesburg, South Africa. It was hosted by the South African Maritime Administration and in that meeting, it was decided that there was need for us to begin to look at the possibility of taking charge of the cargoes that come out of Africa generally. It was at that meeting that after looking at some statistics, it was realized that Africa is a major cargo owner but not a participant in actually doing the freighting of these cargoes. So, Association was formed as a result of the need for Maritime Administrators and Ship Owners to collaborate together being driven by the African Union, to see how we can take more control of cargoes coming into and leaving Africa.

What do we hope to see with your emergence as the president of African shipowners association?

One thing has happened already and that’s the establishment of a Maritime Directorate at the African Union.

After the United Nations General Assembly, the next biggest organization is the International Maritime Organization (IMO). IMO consists right now of 172 countries of which Africa has about 42 or 43 member countries. Zambia I hear just joined as a member of IMO. You also realize that in the IMO Council, Africa has only four seats. We are the largest block with the smallest representation. That is because Shipping was not been taken seriously by our central body which is the African Union.

The African Union right now has shared the issue of Shipping into different epartments- Maritime Security, Policy, Cargo etc. At Addis Ababa, we decided that there must be a Maritime Directorate within the AU. That’s being set up first so that all maritime issues can be focused on a Maritime Directorate.

The AU right now has an observer status at the IMO, and we want to have a central body where all maritime administrators come together to push positive maritime issues through the AU to the IMO because the voice of 40 sounds louder than the voice of one.

Interestingly enough, the heads of government in 2013 had approved this but there was nobody in Addis Ababa driving this on behalf of the Shipping Community. Now, we are back and have set up Strategic Task force to drive it and we got commitment from the African Union.

The next thing we are pushing for is to get the Heads of Government to agree that all exports out of Africa must be on a Cost, Insurance and Freight (CIF) basis and all imports on a Free on Board (FOB) basis.

Also, all African Shipowners irrespective of their country must have a right of first refusal. This is because we need to begin to take control of the cargo and raw materials leaving Africa, and the finished goods coming back to Africa. You cannot exclude us and determine the cost, insurance and freight of every cargo here because it has a direct impact on our communities.

The shipping sector in Africa has been a recurring concern. Nigeria as the giant of Africa is yet to take charge of the affairs of its shipping sector. Are African countries doing well and reaping the fruits of shipping and maritime development?

I will shock you a little bit here. We seem to be looking ourselves in a mirror calling ourselves a giant whereas other little ants have over taken us. We seem to be leaving in past glories. Growing the Shipping sector purely has to do with commitment. Why do I say this? If you look at a country like Ethiopia, Ethiopia is a landlocked country by virtue of the Eritrea taking over the ports. Ethiopia is a country that has a national shipping line. It has 16 vessels operated by the Ethiopian Shipping Line.

I was quite amazed in my recent visit to the African Union where the Managing Director of Ethiopian Shipping Line told us very clearly that the Ethiopian Maritime Sector functions basically to take care of its economy.

He talked constantly about commitment by government. Everything he said boiled down to it. They have Ministers heading the board of Maritime Agencies. They have the Minister of Transport on the board not politicians. The Deputy Prime Minister is involved in Maritime. That’s how they maintain the sector.

When they were having the issue of piracy, and insurance premium were shooting up, they were able to maintain freight rate and the International Shipowners followed. There was a deliberate attempt by the International Shipowners to increase the freight rate but they could not because the Ethiopian National Shipping Line was there to step in and maintain the normal rates. So, they were able to move cargoes to places like Djibouti, Mombasa, getting through to Ethiopia at a reduced rate, and they maintained their insurance cost. Now, because other shipping lines from other countries like the Maersk, the MSC’s of the world want to maintain cargo, they had to follow line.

It is not the same in Nigeria. We have lost total control! We don’t determine our freight rate, we don’t determine our insurance… we don’t determine anything! Because, we have basically handed over our Shipping sector to the International community. That’s wrong! And we call ourselves the Giant of Africa.

With the amount of crude oil we export, the amount of containers we bring in, the amount of rice we import, the amount of fertilizer and all the other things we import, you will find out that Nigeria is the only country that does not carry a drop of its crude oil within Nigerian Flagged Vessels. We don’t carry a drop of finished products or a grain of rice on Nigerian Flagged Vessels.

You will be shocked to know that of all the cargoes going in and out of Africa, Africa only controls 0.03% of them. Now, we are the major exporters of bauxite, iron ore, oil and gas etc. We export a lot of raw materials but none of that is carried on any African flag vessel, as a matter of fact, no African except for Ethiopia owns vessels. These are the things we want to change.

On the agenda of the African shipowners association (ASA) is the drive for Cabotage, a programme which has been ridiculed in Nigeria. How do you hope to get it right in other African countries?

You have it right; Nigeria has been ridiculed on this. One of the beautiful things about Nigeria is that we have the best policies but we never implement them. I keep saying it, the Cabotage Act is an excellently drafted law but unfortunately it has not been implemented. Why?

The Federal Republic of Nigeria is what we call Nigeria. The Nigerian National Petroleum Corporation (NNPC ) is a government owned institution, and if I’m correct,  it  is 100% owned by the Federal Republic of Nigeria. What I don’t understand is that what the right hand is doing, the left hand does not know. Why should the Federal Republic of Nigeria pass legislation and an arm of government which holds majority of the cargo deliberately disobeys the law? If NNPC begins to drive the issue of Cabotage, their Joint Venture partners will begin to respect the law too.

You can’t just assume that foreign vessels are better than Nigeria flagged ones. If  the NNPC feels that there aren’t enough vessels, then there’s Section 13 of the Cabotage Act that says that any vessel that wants to work within the Nigerian waters shall be registered or issued a license by the Minister of Transport.The question now is how many licenses have been issued? I learnt none. Now, even NNPC, if they are committed to it as government institution should, they would request to see those licenses.

These issues do not only have economic implications, they have security implications too. So, these are the challenges we face. It is not a question of being a law; the question is that the people who disobey the law, who are the major cargo owners are the government themselves. We need to get government to align with the Law. Government needs to commit to the Nigerian people and to Nigerian Shipowners.

In Kenya from 2004 to 2011, on freight rates payments for cargoes going in and out of Kenya they spent 16billion USD. That is Kenya. As a matter of fact, I’m even scared of asking the figures for Nigeria.

But we are told foreign vessels are issued waivers to operate within our coastal waters because Nigerian flagged ships are not a par with them…

That’s an excuse. First of all, no waiver has ever been issued. You cannot waive Cabotage.

Once a cargo drops on any part of Nigeria or moves within the shoreline of Nigeria, it’s a Cabotage cargo.

Cabotage stands on four legs; Built, Registered, Owned and Manned. You may request for waiver on Built because Nigeria is not building vessels now. That’s acceptable but you cannot waive registration. You must flag it Nigerian flag, and even though is close registry, there are ways around that. Ownership, you cannot miss because Cabotage says there are three categories of Ownership- Category A, B, C- 100% Nigerian, Joint Venture or Fully Foreign. The only other thing you have to waive is Manning which means that there’s a certain category of crew that you can man for because we may not have sufficient professionals to run that vessels.

So, you can’t waive Cabotage. All that has been issued are receipts. The Minister of Transport has not signed any waiver. Then, when you talk about the issue of not having the right quality of vessels, how can a Nigerian Ship owner own the right kind of vessels when he does not have the cargo for him to show the right cash flow? What you do is very simple because the Nigerian Shipowner goes to the same bank with the foreign Shipowner. If you want to borrow money in Singapore or Europe or anywhere else in the world, there is a clear cut behind the door subsidy which means they give you a facility for 3% sometimes, it is even lower. They spread payment to 20-25years. That is what the United States government does, and that is what places like Singapore do. At the back end, they are supporting their steel industry, their ship building industry etc.

Now, when Nigerians want to buy vessels, they also go to the same Maritime Fund institutions and borrow money at 3%-4%. The process requires that a local bank in Nigeria to give a guarantee on the money. The Nigerian local bank which wants to give you a guarantee on the money adds 4%. By the time you take the money, it’s 8%. Then you add management fees and other fees, you will be pushing up to about 10% whereas the guy you are competing with has already borrowed his money with about 1.5% or 2%. So, naturally, when you both tender, his cost is already reduced. And the oil company says they are looking for the lowest bidder. How can a Nigerian be the lowest bidder when you have not created that environment for him? We have to become more patriotic and deliberately encourage Nigerian Shipowners.

 Is the African Shipowners association pushing for an African maritime development bank?

There is a convention called the UNIDROIT / the Cape Town Convention. It was signed in Cape Town in 2009 or sometimes earlier. The Cape Town Convention has to do with the issue of the securitization of assets. Industries within it right now are the Aviation, Space and Railway. I don’t know how our railways are financing their assets right now. We should take advantage of the Convention.

In effect, the UNIDOIT Convention says that an aircraft owner, let’s say Arik, can borrow money to buy airplanes on the condition that the Nigerian Civil Aviation Commission which is the government side guarantees that, in an event of none payment, they will make available the planes for the organization to repossess. This also means that the interest rate is low because you are borrowing directly.

So, we were pushing to pass a similar convention but were told by the UNIDROIT Assembly which is based in Italy that all we need to do is to add a protocol and include Shipping and Marine Equipment. We are in the process of that now. There’s a general meeting coming up in UNIDROIT in June next year to approve it. Only four Africa countries are members of UNIDROIT and Nigeria fortunately is one of them.

Once that is done, the game begins. Then, we have access to vessels. We can go to any Shipyard, and once the Nigerian Maritime Administration and Safety Agency (NIMASA) signs off on it, it is like the Federal Government signing on it, they will give you your vessel. If it comes to Nigeria and you cannot pay, NIMASA takes the vessel and returns it back to them. That’s what we are working on. I don’t think we need a maritime bank to drive Cabotage.

The problem we have with Cabotage Vessel Finance Fund (CVFF) is not about the fund itself, it is the management of the fund. I think the mistake that was made in the CVFF was in the regulations. Regulations were set up in a way that too much control was placed within the hands of public servants who are not in the business of dishing out loans or even managing vessels. What we need to do is to change the CVFF regulation, send it to the National Assembly for endorsement and then, it becomes a law.

I also think we should set up a Vessel Leasing and Financing Company backed by the Maritime Administrator. What happens with that is that the CVFF all goes into this Vessel Leasing and Financing Company (VLFC). Now, this VLFC can then go ahead to countries like South Korea etc. and bare boat charter vessels for Nigerian Shipowners… brand new vessels. That way, the vessels belong to NIMASA and all they will be doing is chartering them to you.

 Where the cargo and ship are not secured at sea, maritime trade is at risk. Given that some countries like Nigeria are yet to enact laws that should deter criminals, how do you expect to tackle piracy and armed robbery at sea?

When the issue of Somalia pirates came up, there was a multinational task force but even when they caught the guys, they didn’t know what to do with them. It is the same problem we have here in Nigeria because now, if a pirate is caught, he is handed over to the Police and many at times within five days, the guy is back to the sea doing the same thing.

One of the questions I asked at Addis Ababa last time was on the situation of the multinational task force which has to do with the sea. There is a meeting that goes on between heads of Navies within Africa where they talk about this but nothing is happening. There’s a lot of motion but no movement. It is affecting Shipping but then, the issue of piracy starts from the shore. People don’t live in the middle of the sea waiting to capture ships. So, there has to be collaboration between the on shore people and those off shore. And although poverty is no justification, we must tackle poverty on shore.

We need to also go digital and rely more on satellite coverage in our quest to curb piracy and armed robbery at sea. You will also be surprised to know that many of these attacks are also done by International fishing people who scare our own vessels away so that they will continue to remain out there. We hear attacks are even sponsored. Yes, our boys from the shores are coming in but I think we can manage that. We just need systems that will engage them, and give them jobs. We need to think of how we can begin to use these men that call themselves ex-militants. They are the ones who know the waters and the criminals. Nobody leaves the shore with a speed boat without some guy in that village knowing they are going to attack so, so and so. So, there has to be collaboration between the people offshore and those on shore-the State Security and Maritime administrator. We can track down their activities with the satellite and engage the Air force, the Navy, the Joint Task Force etc. There must be an exchange of information between our Intelligence Bureaus so that they know exactly what’s happening. Once people begin to see they are being watched, they will reduce what they do.

I hear in Somalia, the issue of piracy has been handled. Piracy there has reduced drastically. What is remaining is on the Gulf of Guinea. We are expecting that will happen at the Lome Heads of Governments meeting because Maritime Security is one of the top priority discussions.

The Shipowners are the ones who are suffering this the most. I don’t know whether you are aware that once you go five degree east, your insurance cost goes up drastically because you are in a war risk zone. You spend between 1,000 and 2,000 USD every day once you cross the Escravos area. Nigeria pays a minimum of 100 million to 150milion USD annually on war risk policy for cargo vessels- the LNG vessels, crude carrying vessels etc. So, we need to take ourselves off the war risk zone.

What does the recent ban of 113 tanker vessels from Nigerian waters portend?

The world is a global village, and when you want to ban someone, you don’t just publish it because you put their reputation at stake. The ban is causing a major issue internationally. What we are trying to do is to get International tanker organization to liaise with Africa Shipowners and the Nigeria Shipowners Association while we also engage the NNPC to find out what’s going on. Then, we are going to call for a roundtable meeting because we need to know what criteria were used in banning the tankers. What have they done? Nobody knows. We have also heard that many of those vessels have not even come into Nigeria in a very long time.

Now, we know what happens out there. On the issue of crude theft, we Shipowners know what happens out there. People are not breaking pipelines. They are being done by ships. That’s why we are asking government to get Nigerians who we believe are more patriotic to protect the interest of Nigeria involved in cargo lifting. That’s why we are also saying that we should carry our crude and gas on a Cost, Insurance and Freight (CIF) basis. You can hold onto Nigerians if they participate. No Nigerian man will pack all his family away because he wants to steal crude. Where is he running to? He has to sell at the International market…he has to take it somewhere. Engage us, no matter what; if we are not patriotic, we are at least 95% patriotic.

There are 3,000 tanker vessels worldwide; you ban 113 which is almost 5% of worldwide tonnage. Who is going to come? The people that control the Shipping Industry are not more than 50. And I can assure you that 20% of those 50 are affected. Now, if they decide they are not coming to pick up Nigerian crude, are we going to drink our crude? I saw INTERTANKO’s statement on this that Nigeria has to explain but who are they going to meet? Who is there? Who is going to respond? Who is going to be held responsible for this? If Nigerian economy shuts down tomorrow, who are we going to hold responsible?

Right now, we are trying to say no, no, no, this cannot happen gentlemen! We need to talk. In every war, you end up talking so, why don’t we start talking now before the war begins and they soon stop bringing in tankers to Nigeria. I have taking it up personally and I’m engaging the NNPC.

Many more nations are waking up to their maritime potentials and competition will surge among African nations. How important is it that Nigeria strips itself of sea blindness?

One of the things we are pushing for in Africa is to create hubs because we believe very much in national, regional and continental Cabotage. And you cannot fight the hands that feed you so, there’s no way anyone in the Shipping Industry can wake up and take on International Shipping Community. We are not even saying that. All we are saying is at least give us 10% or 15% of the business. There’s however an area we can take control of. We can take control of our coastal cargoes.

What we are hoping will happen in a place like Benin which is a natural deep sea port is that a Maersk vessel for example comes in with 14,000TEUs and dumps it there and from there, only African flagged vessels distribute them to other ports in Lagos, Warri, Calabar, Port Harcourt and possibly, Duala. He cannot hop ports. That way, we will develop capabilities. If cargoes come to Nigeria, Nigerian flagged vessels will have a right of first refusal. If we don’t have the capabilities, then we look for anyone in West and Central Africa to do it. If we don’t find, we go to the Continent of Africa. That’s why we are looking at developing the Pan African fleet.

We need to start home first, protect our coastal shipping first then maybe in the future; we can begin to develop to bring bigger vessels into Nigeria.

On the issue of Nigeria being the central hub within Africa, we cannot be everything. Right now, we do not even have the capacity because if vessels come in now, they will berth at Apapa. Apapa is a mess. We need to sort out that problem first before we begin to think of that, and then other people’s cargo will get stuck here. Where are we going to receive those vessels? Lekki and Ibaka have not started. I hear they want to set up one in Badagry. Let them start, its competition. But as far as I’m concerned, sometimes, there are some things you just have to let go. We can collaborate with them at Benin to reduce the cost because we don’t know when our own ports will be ready. Eventually, everything will be driven by price. The big vessel then determines where they will use as a hub. There, the competition starts but if you have an inefficient port operation system, nobody will come even though most of the cargo will be coming to Nigeria. I’m not sentimental about this, the bottom line is that these guys are here to make money, and they will go to only where they can do a quick turnaround of their vessels.

The potential of Nigeria as a maritime state

Let me tell you how it works. Right now, Nigeria is the one keeping the Greek economy going. The only thing keeping the Greek economy right now is shipping … and probably tourism which has dropped by 50%. If we fully utilize our potentials, the ripple effect on the Nigerian maritime sector is insurmountable.

First of all, manpower development, not only do we train for our own selves nautical engineers, cadets, seafarers but we also have people we can ship out. There’s a shortage of 250,000 seafarers worldwide and one seafarer takes care of a minimum of five people. Once you begin to do that, you can begin to look at the development of our steel industry. Places like Ajaokuta can begin to make flat steel. The ripple effect on the economy will be quite tremendous.

With an efficiently run maritime agency, the cost of goods will also drop. Now, we are picking up products from Lome and bring to Lagos. If we had storage here, we can have a better control of our logistics and transportation. People just read on the papers that Apapa-Oshodi road is blocked. Nobody has sat down to tabulate the effect of that on the Nigerian economy. It is crazy.

We need to develop maritime academies here. On the income from seafarers alone, Philippines get about 25billion USD every year from people who are sending money back home to their families. We do not have all this. We are training 2,000 seafarers and we do not have where we can put them for sea time because we do not have vessels. So, even if we train which is going on right now, these guys can’t get their certificates of competency. There are no vessels on which they can train except the LNG vessels.

Look at this scenario. Nigeria LNG owns 24 vessels. I hear they are receiving some more in the next few weeks. Maybe they might get 30. Nigeria LNG Company is owned by Bonny Gas Transport (BGT). BGT sits in Bahamas but it is 100% owns Nigeria LNG. Now, when they want to pay freights, they pay to BGT in Bahamas which is taxed too. So, what do we really gain from Nigeria LNG? The Gas goes out, the Freight goes out, and the Insurance goes out! What do we see apart for the cadets they train? We hear they want to build a shipyard and they say they are only proposing, only supporting. They dry dock their vessels every two years. Where do they do it? They have to collect their bunkers, where do they get it from? They are only stationed in Nigeria but everything is outside Nigeria.

My darling President has a lot of work to do and I don’t envy him. And, I know he can do it. Regulatory agencies need to be given the free hand to operate within the ambit of the laws that created them. The beauty of it all is that PMB is someone who will not be pressurized into doing what should not be done. I believe strongly that he will restructure everything. He puts square pegs in square holes and I feel he is a project manager. He is someone who will project manage you, give you your task and those misbehave will be punished. I know he is also the kind of person who will lift you up if you perform so, he is the kind of person we need. I see a very bright future.