Nigeria: Onyung - NNPC Should Reverse Coastal Shipping Contracts Given to Foreigners

26 July 2021

The President of Ship Owners Association of Nigeria (SOAN) and Chairman of Jevkon Oil and Gas, Capricorn Maritime Limited, Dr. Mkgeorge Onyung in this interview with Adedayo Adejobi outlined the main challenges facing Nigeria's Shipping industry, the need for NNPC to reverse coastal shipping contracts given to foreigners and explained the importance of leadership and multi-stakeholder collaboration to innovate feasible solutions that benefit customers, shipping companies. Excerpts

The global maritime industry generates $6 trillion a year, $24 billion a day, $980million an hour and $11million a minute. One would think that it's a business that should salvage Nigeria. What is the current state of the shipping industry and what exactly do you see wrong with Nigeria's maritime industry?

That's a big question. Maybe you should ask the Minister for Transportation that question. But I will limit myself to the Ship Owners Association of Nigeria. The state of shipping as it pertains to ship owners is that we are still in a very rudimentary stage of shipping development. We are also over time trying to battle with maritime infrastructure. The Apapa Port is a clear example of the situation that needs emergency surgery, and the need to think of how to solve the problem. Ships come to berth in ports and it's like a chicken and egg; tongue and teeth situation because without ships there would be no ports.

Without ports, ships will not have a place to discharge their goods. And by extension without seafarers, there would be no ships, because ships will not be able to be maned. So if we are looking at the status of shipping in Nigeria, we must have a situation where we tinker a holistic approach to the solution and not just pinch it on the corner or take a small plaster to cover a gaping wound. It starts with training Seafarers. That way, you can have ships that run efficiently. If you have ships that run efficiently, you must have ports that function efficiently.

If we don't have that, there would be a disconnect. The ocean was created billions of years ago and it has been adjoining our country Nigeria like it borders other countries in the world, and those people are making it. But if you don't wear soccer boots, you cannot play international football. Norway has 45,000 ships, China has 60,000 ships and that's how they are making it. If we must join the ace we must find out how they succeed. And that takes us to laws that are supposed to guide us in conforming. We have conventions and IMO (International Monetary Organisation) regulations. The rules are all laid out and if you don't follow the rules, you are bound to have accidents.

If the purpose is not known, abuse is inevitable. Do you think the regulators' understand the Ocean?

Nice question. When you talk abut regulating the ocean, we are talking about Nigerian Maritime Administration and Safety Agency, (NIMASA) other agencies, which regulate the ocean economy- the Nigerian Content Development Board and Department for Petroleum Resources (DPR). I would assume they understand the ocean because if you get a job, you must know your job and do your job. But, my perspective is that there is 'Sea-blindness'. I have invented the phrase because there is a lack of knowledge of the Ocean. I think that we have to understand the Ocean very well. I'm a physician and I operate in the Maritime sphere. The only way I can operate in this sphere is by having knowledge. Regulators must have in-depth knowledge, not necessarily relying too much on consultants. If you don't know, you must seek help. But the regulators must have the knowledge and I believe they do. If the laws are there and you not regulating based on the law for over 18 years. I would not say it's a lack of knowledge, instead of a deliberate disregard for the laws and principles they should uphold in their regulation of the industry. If you don't regulate properly, there would be chaos in the Ocean.

What prevailing shipping market trends do you think could positively affect Nigeria?

The trend in Nigeria is that we are an import nation. The shipping trend can change if we start exporting, that way it would be two-way traffic. The trend in Nigerian can change from being an import nation if we start thinking export as well. If we want to turn the table around, we must equip ourselves. Trade involves the goods, the ships, and the health of the Ocean. Where Ship Owners are impacted is that the enabling environment to create opportunities for shipping development is still not being tackled with sincerity. As a Ship Owner, there is money to be made. I don't see any business in the world that makes $1bn an hour. Even if we are to tap into that and catch as little as $50m an hour, that is something. Apart from deploying people, we can deploy ships that would make those kinds of monies and turn around the economy. We have the key to unlock the economic prosperity of Nigeria. We can't get to the promised land without addressing the Ocean economy.

The Cabotage Act, which is 18 years, was created to restrict foreign vessel participation in coastal trade, to promote the development of indigenous shipping capacity, and establish the Cabotage finance fund. 18 years after, do you think it has been properly implemented?

I would say no because it has not been implemented at all. For 18 years, I have not seen any implementation whatsoever. The Cabotage is to restrict foreign vessel participation in coastal trade, to promote the development of indigenous shipping capacity, and establish the Cabotage vessel finance fund. All of it has been done, we have not seen any restrictions. There is no strategic implementation of that. If there is no gap to be met, then there is not entrepreneurship, we have o bridge the gap. There is no vacancy. All the contracts are being given to foreigners. There is no room to promote indigenous capacity. And that is what we are demanding. Just implement it.

There is the N72.4 billion Cabotage Vessel Financing Fund (CVFF). Have ship owners accessed those funds?

No, those funds have not been established up to date. The monies are supposed to be applied to develop shipping. Has it been done, No? For 18 years, they are still tinkering around it, and this absolutely no excuse because the law is clear as to what needs to be done if there was any problem. It is not going to be another Petroleum Industry Bill (PIB). implementing the Cabotage law has to be done and done quickly.

The Nigerian Maritime Administration and Safety Agency, (NIMASA) is moving its operations to Victoria Island. Do you think they would be able to monitor the ocean with Helicopters? And how effective do you think their operations would be in after its relocation?

We read it just like everybody on the pages of the newspaper.N3.4bn story building with some car parks. The only advantage of the building is that it is very high and has a helipad. Other than that, it is not on a waterfront. On whether it would be of benefit to NIMASA, the Director-General of NIMASA can answer the question. They have bought a few helicopters and air crafts to monitor what is happening in the ocean, but the building at a waterfront would have given NIMASA a better opportunity to take off from there and be able to monitor the ocean. Now, NIMASA rents vessels to do the monitoring. I think they need to work very hard in that area. How can you restrict foreign ships if you don't put your boots in the water? Asides from the fact that the building is beautiful, I don't think it is of an advantage to the agency.

At this point, we need to take more proactive action in terms of developing the maritime sphere. Ship Owners want to see action in the waters. We commend the Federal Government for the deep blue project, but we feel the strategy to be able to take full control of the security means you need to have armed Navy personnel on the water and proper security boats patrolling so that all the network of communication and intelligence will be put to use.

Piracy is no longer fashionable. We are owners and we take Seafarers as members of our family. Any time any of them is lost, kidnapped, or hijacked, we don't sleep until we find them. We talk the heat and write big tick transactions, weather the storms and surfer the waves and pay ransoms so that we can bring back the Seafarers because without them there is no trade. Whether it is a Nigerian or foreign ship, the strategy must be a holistic approach towards solving this problem. We Shipowners are already securing the oilfields.

IOC's charter navy approved ballistic security boats to patrol the oil fields. That method is straightforward and there are no risks to the oil fields. If that approach is deployed to the territorial waters as well, it would help. But those vessels have to be manned, repaired, fuelled, and people on board the ships have to be fed. It is a strategy that has to be Government and private sector collaboration to ensure that we secure our ocean. We also need widespread collaborations with stakeholders and users of the ocean.

What domestic political or legislative developments that you think may have an impact on Nigeria's shipping market?

We have enough legislation. There is the African Continental Free Trade Agreement (AfCFTA), the best thing that can happen to Africa. By Sea, Africa is linked by 34 countries, and as such Nigeria stands in a good position now, to be able to export our goods to reach Ivory Coast or Angola before anything comes from China. That is our advantage because we're not going to fly them in airplanes, or by road. We have to send ships there. So there are opportunities for vessels, ferries, Ro-ro vessels, fishing boats, cargo vessels, and container ships. These will bring African prosperity.

What do you see as the biggest challenge in terms of Safety and Environmental protection? How will this affect the industry and how should we prepare to face this?

When you talk about safety, we are still going back to the same issues of piracy and maritime crime. The POMO Act, which has been enacted to try pirates and ocean criminals is a welcome approach. These people operate daily, so if you catch them once in 90 days, it means you have to step up. We need to have a proper strategy to ensure ocean security. The same thing goes for the environment, as the same patrol monitoring pirates will monitor spills, environmental dumpings, illegal and uncontrolled fishing because at night people come to take our fish and we are scared to death. I used to be a fisherman with 7 fishing trawlers and I fished within Nigerian, Gabon, and Cotonou territorial waters for 11 years years and exported shrimps to Europe and America. I sold my fish here is Ijora. But that industry has gone down, because asides from the price of fuel that is so high, the security of the ocean calls for concern. Because of exploration, technology can be deployed transparently to monitor pollution.

The global maritime industry is transitioning toward cleaner operations, thus decarbonization has become so important. Do you see the center innovating feasible solutions that benefit customers, shipping companies, the environment, and the Nigerian shipping industry's move toward decarbonization?

There's a big talk about decarbonisation and two conferences have already been held this quarter of the year. I see that Nigeria is gearing up, even though they are not going to throw away the reserves that we have for gas that would take us another 150 years, and oil which will last us another 50 years. Many places still don't have electricity whilst many places cook with firewood, so there's a lot of gaps to close and the centre is doing something about it. There is the opportunity for us to have ships that transport the gas and LPG tankers and cleaner fuels. There are autonomous ships, Unmanned ships are coming into the sphere. It is already here. That is why the knowledge of the ocean and decarbonisation, must be taken seriously. It is ridiculous to know that part of the raw materials used in creating the solar system is sand, which we have in abundance. The time is now to get to the drawing board and get ourselves ready.

One year into your leadership as President, Ship Owners Association of Nigeria (SOAN), what would you say have been the high points of your tenure?

I don't know what the high points are, but I have a duty as President, Ship Owners Association of Nigeria (SOAN), to ensure that we promote Ship Ownership and have genuine Ship Owners and not people who call themselves stakeholders and are just in the maritime sphere. In order for Ship Owners to thrive in Nigeria, the Cabotage law must be maintained. So what we have done is to cry out to the National Assembly and various tiers of government that these laws are not being implemented. We have been able to stimulate a public hearing on foreign ship ownership dominating our waters. Although the Group Managing Director Nigerian National Petroleum Corporation (NNPC), Minister for Transportation, Director-General Nigerian Maritime Administration and Safety Agency, (NIMASA) were at the hearing, we have still not seen the traction yet.

The problem is that we are still waiting on NNPC, even though they came out to openly accept that for 40 years Nigeria has not done anything about moving Nigeria's crude by Nigerians and Nigerian Ships and that this administration would change the narrative. We are still to see the impetus up till this moment, rather we have been disappointed by a contract that has been recently awarded for coastal shipping- the crux of Cabotage, was with impunity granted to a foreign company, Unibros Shipping Corporation, to bring 14 Ships to work in our waters when we have the capacity in Nigeria. We are talking to NNPC to reverse those contracts and use Nigerians because there is no other way you can thrive without obeying the laws of Nigeria. Also when people talk about capacity, there is nobody that was born with capacity. The hardest thing anyone did in our lives before the age of one, was to get up and work and no one was able to get up and work without being held up in the hand by a brother, sister, mother, nanny or relative t be able to take that step.

Therefore, that is why the Nigerian Content law has been promulgated. In a situation where there is inadequate capacity, whoever is awarding the contract, must ensure that they have a strategy approved by the Nigeria Content Development board to create those jobs for Nigerians within one or two years. And the awardee of the contract must also have that strategy for Nigerian content implementation.

There is absolutely no excuse for anybody to give the excuse of capacity. Whoever is in the position of Authority is saddled with the job of developing the capacity and he needs help. The Cabotage Vessel Fund is there to give is the help. Even the 25% income of NIMASA is supposed to applied for that help, and NIMASA is getting huge amounts monthly and just sitting on the money. We have to continue to engage the regulators and government agencies. The building of Nigeria's capacity is paramount on our agenda. That is why we organised the maiden Lagos International Shipping Expo in November 2019, with participants from different countries like Thailand, China, Norway, Italy, Ghana, Ivory Coast, Cameroon.

Over nine countries were represented with major players in the industry. In this light, we are putting out the voice that Shipowners are here to build this economy because it is 95 percent of global trade and no industry is bigger than the Shipping industry in Nigeria. In my tenure, I have insisted that we should take out duties for ships. Airplanes, private jets, and agricultural equipment's come in without duty. Recently, all medical officers were on the front line so they took out all duties on medical equipment. but the ships that bring in the supplies and the Seafarers who are supposed to be on the frontline, are charged duty.

We must recognise the hen that lays the golden egg. Nigerian Ships pay full import duties, whereas the foreign ships trade on temporary import permits which is little or nothing- yet they take undue advantage of us. In the areas of security, we are collaborating to ensure that the regulators make sure that piracy is s thing of the past. Meanwhile, the ship owners have lent their vessels for training in collaboration with Man Oron to train them. There are so many things to do in my second term and I believe we would be able to get more work done.

What's your advice to the government?

We must speak truth to power and let them understand that they are a government of the people, for the people, and by the people. We want them to understand that shipping, is going to help Nigeria. The government needs to also understand that the law needs to be followed. There is no agency above the law.

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