Nigeria: Ovbiebo - Maritime Sector Urgently Needs Intervention Fund

18 November 2019

After years of neglect and policy inconsistency that has stagnated the industry, the MD/CEO, Tamrose Ventures Limited, Mr. Ambrose Ovbiebo, in this interview, says steps like the disbursement of the Cabotage Vessel Financing Fund, industry specific-intervention fund, asset acquisition incentives, manpower development, among others, if implemented will accelerate growth of the marine sector, while the full benefits of the blue economy will be felt nationwide. Eromosele Abiodun brings the excerpts:

You were in the banking industry for some years, what motivated you to venture into marine logistics?

I came into the maritime space for two main reasons both of which incidentally have taken a rather patriotic or nationalistic hue. The first, which is our raison d'etre, was to change the indigenous narrative in the maritime space by redefining indigenous marine logistic service standards. The second reason which really is an off-shoot of the first, was to show that Nigerians can match the multi-national services for service in this industry, thereby restoring our national dignity and pride (not to mention in the eyes of the international oil and gas companies) and eventually, the world.

Permit me to tell you a short story that inspired the above ambitions. Prior to my entry into this industry, I was an Energy Desk banker for many years with a number of customers in the maritime space. On numerous visits with my customers to the IOCs who they worked for, the story was always the same - old and poorly maintained assets, near lack of organisational structure, and other factors culminating in appalling service delivery standards. The disdain for these indigenous businessmen was palpable. In fact, I was often told that the engagement of my customers' services were in most cases forced by statutory requirements and in some cases, if given the choice, the IOCs would gladly pay them not to work so as to engage competent people to do the job - a more cost efficient model on the long run especially for critical tasks. The sense and truth in these "sermons" did nothing to sooth the sting of national embarrassment. After numerous encounters like this, I felt there was a need to change this narrative; to show that we can do this not just to better what is being associated with the indigenous companies, but to compete favorably with any other multinational company from anywhere in the world. That's the reason we are in this space and we aspire to own it.

Having been in this business so far, what can you point to that you have done to change the narrative you just highlighted?

We entered the marine space in November 2010 with the arrival of our maiden vessel - TMC PRIMUS. At that time, the indigenous marine industry was characterised by old and poorly maintained tonnages, run by lifestyle-oriented owners. Of course, the resultant output was very poor quality services. Our strategy at entry was quite easy: brand -new vessels, world-class service delivery standards. That strategy has worked and has continued to work. I am happy to also note that from 2010 when we came into this industry till date, the quality of indigenous tonnage has improved dramatically. I know for a fact that indigenous companies have acquired over 60 brand-new vessels in the last decade and more are being added on a continuous basis. That is on the age and quality of the assets alone. With improved organisational structure and entry of more enlightened and energetic young men, service quality has also improved dramatically. Today, Tamrose and a few other indigenous companies are ranked among the top percentile of high performers within the marine spread of various IOCs - an exclusive preserve of multi-nationals like Bourbon and Tide Waters in time past. So to answer your question pointedly, that notion has changed and will continue to change for the better.

Talking about service delivery, can you relate it to NNPC's notion that Nigerians cannot participate in the lucrative crude-lifting business because they don't have vessels?

I don't think the NNPC would be fair to indigenous entrepreneurs or right, to make such comments. Our being Nigerian is not a limitation. I want that fact clearly understood. If there is anything that we haven't been able to do as indigenous businessmen, it is because the environment has not been conducive enough. It is because the government has not been supportive enough. It is because the ecosystem and infrastructure that made it possible for the foreign companies doing that business today are completely lacking in Nigeria. So, to say that Nigerians are not able, I don't think is a very fair statement. First, there is a need to separate capacity from capability. Nigerians are very capable of running and maintaining large crude carriers whose operations are not any different from other marine vessels owned by indigenous companies. The challenges have always included the financial capacity of indigenous companies to acquire these assets under the prevailing almost hostile financial market conditions (a VLCC cost upwards of $80 million today and for funds sourced at above 20 per cent per annum, without guaranteed patronage and timely payment by NNPC, indigenous investor's faith is best imagined). Government and NNPC are making giant strides in empowering indigenous players in the upstream sector. I am optimistic that their effort will eventually get to the area of crude lifting too.

What's your advice to the federal government in this regard?

Government remains the biggest business in Nigeria today with the highest repository of some of our brightest minds in all fields. I think what has remained consistently missing these past 59 years is a sincerity of purpose to put our collective national interest over parochial interests. First things first: why are we unable to participate in lifting crude? Is it because we do not have the manpower? Is it because we do not have the asset? Is it because we do not have the know- how? All of these can be acquired if there is sincerity of purpose on the part of government to grow this industry. We can't keep mouthing rhetoric without being sincere to ourselves. How many intervention funds are there to support serious players in this industry? The Cabotage Vessel Finance Fund (CVFF) is a classical example of government's seeming insincerity; despite being funded by indigenous ship owners via a direct debit at source of two per cent of our revenue, how many indigenous players has it been disbursed to? What infrastructure have government put in place to support indigenous businessmen in this industry? How do you expect a Nigerian businessman who is sourcing for fund at 25 per cent interest rate per annum to compete with his counterpart in the Western world who is raising funds at below 3 per cent per annum? How do you expect a Nigerian business with a high import duty on ship acquisition to compete with his counterpart in the Western world who is given tax rebate for capital acquisition? How do you compare the ease of doing business in Nigeria and what obtains in any of these countries where these vessels are coming from? So, before you say Nigerians are incapable, I think it is only fair to consider these hindrances. The fact that even the multi-nationals with the advantage of cheap fund and oversea parent management and technical support find it hard to survive here (and are gradually relocating to places like Ghana) speaks volume of the harsh reality of doing business in Nigeria. The fact that we are able to run thriving businesses in this hostile environment is a testament to the dexterity of the average Nigerian businessman. It shows that if the environment is made a little bit more conducive, if we are not expending money buying our own security, generating our own power, training and retraining our own labour force, if all these resources are put into capital investments, Nigerians can hold their own against any other country in other parts of the world. Like I said earlier, some of our brightest minds are in this government and they are more than capable of charting a viable way forward if they sincerely wish to so do. If the right questions are asked, if there is sincerity of purpose to execute on these answers, an explosion of prosperity will happen to manifest the potentials that make the world see us as giants.

Can you let us into the brand-new vessels you recently added to your fleet?

The explosive fleet expansion you see this year is really the manifestation of many years of careful planning. I just talked about laying foundation and building systems, getting here has seen several preparatory moves over the years. The journey started in 2016 when I decided to equip myself better for the challenges I knew will come with building a world-class company. This decision took me to Harvard Business School for the Owner President Management course (my recommendation for all businesses on an inflexion curve) - a grueling innovative management boot camp spanning over three years. The lessons learnt have helped reshape and reinforce our strategy while at the same time adding bite to our system and processes. All of these, together with organisational re-alignment and manpower fortification laid the foundation for the referenced fleet expansion. I was adamant since 2017 that we will not add a single vessel to the fleet until I was convinced the organisational structure to drive and sustain the service delivery standards we are known for are in place. We launched Project 8 mid last year to acquire six state-of-the-art, purpose-built security vessels and two Platform Supply vessels before the end of 2019. Today, we have practically achieved this objective as four of these vessels including the two PSVs are already in service and the last security vessel to be delivered soon. Our acquisition of two PSVs this year is a landmark in our corporate journey to dominance as it marked our upward migration from the security vessel niche, which we have significantly dominated till date. One of the recently acquired PSVs -TMC EVOLUTION - of course has become the crown jewel of our fleet. It is a beauty to behold. This brand new world renowned 1000m sq diesel-electric MMC 87 CD Design was acquired in March, 2019. She is one of the biggest PSVs in the world and as modern as they come. No sooner had she arrived Nigeria than she was snapped up by one of our major clients. As we speak, the vessel is rendering world-class services to ExxonMobil. In addition to that, we have taken delivery of five brand new customised Flex-Fighters built by Penguin Shipyards Singapore with the last one billed for delivery a couple of weeks away. Tamrose has always put much rigour in their build design and monitoring that every single vessel is actually customized to meet our customers' expectations. Because we are a customer-centric company, if you look at our mission statement, you notice that it is actually an embodiment of our operational strategy. We're a company that exists because of our customers. So, we do everything we do from that flow point. What will our customer want us to do? How would our customer have wanted this done? That is where we operate. That's why we always buy brand-new vessels, to give us the flexibility of reflecting our customers' needs in the final product and service we deliver to them.

In what ways are you contributing to manpower development in Nigeria?

Manpower is a critical factor in every industry, more so in the maritime industry. I can tell you that Nigeria has a manpower crisis that either the government is not aware of or have not completely understood the gravity of its multiplier effect. I don't think they understand that if not addressed, this crisis has the ability to undermine every single policy enunciated in this country and reverse the modest gains we have recorded in recent times. In the maritime sector, there are two distinct groups of manpower. The offshore manpower which are the manpower resident on the marine assets that go offshore and the on-shore support system to keep the guys offshore serviced and comfortable. Both of these categories of manpower in Nigeria are in crisis. For this reason, you have a lot of capital flight going out through foreign crewing, vessel management all due to skilled manpower shortage. It is inconceivable for someone to buy an asset for over $20 million and you expect him to gamble with the fate of that asset. In an environment where the number of competent seafarers to operate these assets is grossly limited or near to lacking in-country, entrepreneurs are left with no choice than to employ foreign crew. Not only with a resultant capital flight but also the perpetual under-development of the Nigerian manpower pool. That's on the crew side alone. On the management side, the story is practically the same. Only recently was a maritime university commissioned in Nigeria. The impact of this university will take a long time to manifest. How do we administer existing maritime organizations in the interim? One of the problems that have dogged the Nigerian maritime industry is lack of skilled manpower at the managerial level, which has led to the proliferation of foreign vessel management companies operating in Nigeria. What we have done on our own, mindful of the fact that government cannot do it all alone, is to find ways to contribute meaningfully to the solution. We and other industry stakeholders must contribute to manpower development. On the offshore personnel (the crew), we are currently running a Cadetship Scheme in which we take OND graduates from the Maritime Academy of Nigeria, bring them into our fold and give them the mandatory sea-time training that will qualify them either to go back and pursue their HND or seek to obtain their STCW and become able seamen. Whichever option they chose at the end of their 12-month period with us, we will support them either to acquire their COC or to further their education to HND level. We are also currently running the officer training scheme where HND graduates from the Maritime Academy are also given the opportunity for sea-time on Tamrose vessels. We pay them stipends during this period and upon graduation, after the sea-time, we enroll them in classes and exams for their certificates of competence (CoCs) at our own cost. Upon successful completion of these exams and certification, they join our employ; we deduct the cost of training them over a period of time. To encourage people to continuously improve themselves and remain loyal to the Tamrose brand, we give them an incentive of completely writing off the cost of training if they stay with us over a period of time although this takes time to yield fruit. We have about 15 people in this scheme at the moment and we intend to do a minimum of 20 every year going forward. We believe that if we alone are able to bring in this number of trained people into the industry, it's only a question of time before the manpower level in the industry will start coming up. We're very confident that other companies will ether see what we're doing and emulate us, or are already doing similar things. At the end of the day, not just the maritime industry but the entire country will benefit from these and similar schemes. On the shore side, we are currently focused on training our own personnel for now. We're not only training them in-house and exposing them to new and better ways of doing things, we're going as far as sending them abroad to see what international best practices look like. Last year, one of our port captains spent about three weeks in India. We're committed to doing that on a yearly basis. Every year, at least one of our shore-based staff goes on an international course so that we can keep her promise to render world-class service using indigenous talents.

Has the government supported you in any form?

None! But we're not complaining. We see this as our modest effort at giving back. The Maritime Academy, Oron, through the Shipowners Association of Nigeria (SOAN) recently offered to give us some stipends to have some of their cadets on our vessels. But on our own, we decided to take on these cadets for free as a further contribution to the manpower development drive in the industry.

As a company, what major challenges have you been grappling with since takeoff?

Challenge is another name for doing business in Nigeria. Nigeria is synonymous with challenges. The ability to run a successful business in Nigeria, I don't know how to describe it. If you look around, you see how many businesses that have failed. This will give you an idea of our challenges. Unfortunately, how I see it is, in Nigeria the system seems designed and conspire to make you fail. The odds are stacked so highly against you that success seems like a miracle. Where do we start from in terms of challenges? Is it the unnecessary bureaucracy? Is it the absence of supporting infrastructure? Simply put, the challenges are overwhelming! Most countries of the world look at how to help entrepreneurs create wealth. It's only by so doing that employment can be guaranteed, poverty can be reduced and government taxes can actually increase. What Nigeria does is instead of creating an environment that will create more businesses to broaden the tax base; the focus is on over-taxing existing business often times to extinction. Any time they feel there's need to raise more money, they look for one more levy or tax to impose on those same companies that are doing business within the Nigerian space without thinking of broadening the number of companies that they can collect tax from. So, what you see is that businesses are stifled in Nigeria. The challenges range from multiple taxation, endless levies, etc. A situation where NIMASA, which is supposed to be a regulatory agency entrusted with the safety of our maritime space is seen as a revenue generating body is already a problem. Why do we need to renew licenses annually; licenses that are not renewed based on certification or visits? So, we are not saying re-certify these asset; we want to ensure they are in good condition. Instead, we are paying pay these various and numerous annual rentals like shipping company license, DPR permit etc. that do not add value to anyone so that some lazy folks can feed fat at the expense of businesses. If I am registered as a shipping company, why do I need to renew my shipping license every year? Why does my DPR license expire? Why do I pay N250, 000 every year to be on special category? Why do I pay cabotage waiver yearly? If I buy a vessel that is foreign-built and I pay cabotage waiver upon purchase, why do I need to pay it again next year? How will businesses grow? What drives our policy decisions? Is it to help businesses grow or to milk businesses dry? Are private businesses primarily seen as source of income for government or engines of wealth and employment creation? These are some of the questions that government needs to start finding sincere answers to. This is the bedrock of the challenges of doing business in Nigeria. As the Bible says, only the living can praise the Lord; only viable businesses can pay tax and support various government initiatives!

As a pioneer member of SOAN, do you ever see the CVFF fund getting disbursed any day, going by the controversy surrounding it?

The pioneer president of SOAN, Engr Greg Ogbeifun and some other notable industry stakeholders have been in the forefront of the campaign for the disbursement of this fund. The baton has now been passed to the present leadership under the stewardship of Dr. MkGeorge Onyung. First, we have registered our voices but my question is, have we gotten the desired result? The answer is no! Do we stand a chance of getting the desired result from what I see today? The answer is again a resounding no!

What must the new leadership do to achieve the disbursement in the shortest time possible?

The current leadership of SOAN is privileged to have a foundation to stand on. I am also happy that there's an imminent workshop-taking place in November. I see that as an opportunity for the association to once again look government straight in the eyes and speak truth to power. The CVFF fund belongs to ship owners. It is not government money! NIMASA has proven over time to be incapable of handling this fund either due to incompetence, lack of sincerity of purpose or a combination of both, among others. But the truth remains: there is no member of SOAN as constituted today that has received a kobo from the fund despite the fact that 2 per cent of our revenue is taken away at source and put into the till. To get the desired result, maybe we need to change the direction of our advocacy. My suggestion is simple; SOAN as a voice should advocate the appointment of a reputable company outside NIMASA to manage the CVFF. They will work out the modalities but I am very convinced that so long as this fund remains with NIMASA, the CVFF disbursement will remain a mirage.

NIMASA recently announced a timeline for cessation of cabotage waivers; do you see indigenous players prepared to take over?

This is another laudable policy with good intentions but perhaps not so rigorous thoughts on implementation as is the case with many policies of this nature. Cabotage stands on four footings - Build, Ownership, Flag and Crewing. Which of these are they talking about? If you say you want to cease cabotage waiver five years from now as a policy statement, all well and good. But the question is, is there deliberate planning to ensure actualization? If you say five years from now, no foreign-owned vessel is going to be allowed to do coastal trade in Nigeria, have you dimensioned the number of vessels that are currently doing coastal trade in Nigeria? What proportion do foreigners own so that you know the gap you need to fill? Business like nature abhors a vacuum, it must go on! You will not say no foreign vessel should come into Nigeria when there are not enough indigenous vessels to fill the gap. I work for the IOCs. IOCs have drilling rigs and if there are not enough indigenous PSVs to support these rigs, will you tell them they shouldn't bring foreign vessels to support the rigs? Don't forget that Nigerian government owns between 55 to 60 per cent of most of these IOCs. Are you going to tell government to lose revenue because they want to implement cabotage? If you have dimensioned the space that needed to be filled five years from now for this policy statement to become effective, what framework have you put in place to drive actualization? Vessels are not like loaves of bread you can buy across the counter. If you are saying every PSV, construction vessels, floatels e.t.c in Nigeria five years from now is going to be owned by Nigerians, those vessels ought to be either being built already or plans to build them are currently ongoing. Most of these vessels take two to three years to complete. You're making policy decisions and putting a timeline without thinking of the infrastructures that will make them happen. What do you think is going to happen five years from now? Nothing will change.

What do you think government must do to revive the marine industry?

Like I said before, some of our most brilliant minds are in this administration. You find them everywhere from NNPC at the group level to NAPIMS, NCDMB (By the way, permit me to say a word about NCDMB - this is a model board matching words with action and strategic planning. Receiving only 1 per cent of our revenue, they have disbursed millions of dollars to indigenous companies as intervention funds and other guises often at single digits interest rate with ample repayment time - NIMASA may want to borrow a leaf from them as regards the CVFF in the interim) and other agencies and parastatals. The first step is for government to adopt a paradigm shift from milking businesses to growing them. This is the only way to guarantee successes for this industry and by extension the government itself. Most of the suggestions already discussed in the course of this interview like disbursement of the CVFF, industry specific-intervention fund appropriately priced and tenured, asset acquisition incentives, manpower development among others if implemented with resolute political will and sincerity of purpose will see the marine sector roar back to life and the full benefits of the blue economy will be felt nationwide.

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