The Nation’s maritime industry started a new phase of history in 2003 when the National Cabotage regime commenced quietly.
Although, the regime kicked off without the usual funfair that usually mark the beginning of such programme in Nigeria, it commenced in accordance with the provisions of the Coastal and Inland Shipping Act (2003), which says the enforcement must start a year after it is signed by the president.
Formal President Olusegun Obasanjo signed the Cabotage Bill as passed by the then National Assembly in April 2003, believing that after few years, it would have assisted in the building of the necessary capacity needed to advance the nations shipping industry.
The Act, in all its ramifications, was fashioned after the United States Jones Act and other related status, which requires that vessels to transport cargo and passengers between the U.S ports be owned by U.S citizens, built in the U.S shipyards and manned by U.S citizen crews.
The status know in the U.S a cabotage laws, is the foundation of the country’s domestic maritime industry, the largest and most vital section of the U.S merchant marine and key link in the nation’s intermodal transportation
Like the Jones Act, the argument in favour of Nigerian Cabotage Acts were compelling – job creation, safety of shipping, environmental protection, efficiency and national security, all of which have been provided hitherto in the U.S Jones Act at no expense to the tax payers and without a dine of subsidy from the central government.
Truly, the Jones Act as at 2003 had provided direct employment for over 124,000 Americans, including 80,000 vessel crew members. There were more than 44,000 vessels as at then in the Jones Act Fleet.
The vessels ranged from containership to coastal tankers, dredgers, great lakes self-unloaders and passengers ferries
to promote national security and healthy growth of the country’s commerce as they move more than one billion tons of cargoes and over 80 million passengers yearly according to commercial statistics from the country’s maritime
administration in 2006. Chief Olusegun Obasanjo, the former Nigerian President, who signed the cabotage law in 2003 must have been convinced that the regime, if well implemented, could build necessary capacity needed for national tonnage that could be relevant at the time of emergency, as it did in the U.S and other countries where the scheme is in place.
He probably would have been impressed upon that Nigeria could derive the same benefit, especially when the government was no longer ready to commit public fund into the procurement of vessels for national
Those who fought for the promulgation of the law, including the former Director General of the defunct National Maritime Authority (NMA) now Nation Maritime Administration and Safety Agency, Ferdinand Agu and Chairman of the then House of Representative Committee on Marine Transport, Dr. Okey Ude did so because of their belief that indigenous shipping operators could gradually develop capacity, within the new regime, that would enable them dominate coastal and inland shipping activities in no distant time.
They were of the opinion that with regular patronage from users of shipping services, they would be able to take up the challenge by acquiring vessels that would be needed for national fleets building to take over local shipping activities from foreign nationals.
But 14 years into the law implementation, achieving the main objective of the regime itself remains a mirage. There
has been no sign that the nation is drifting towards the actualisation of the dreams of the founding fathers as private shipping operators for whom the law was meant to protect continue to grumble that they were better off under the old regime.
Successive minister of transport have been utilising the power conferred on them under the law to allow foreign participation of foreigners in the lucrative local shipping business. It has become unbaiting pot of soup for them as they hitherto made no attempt to actualise the deal of the cabotage Act.
Instead, the transport ministers and NIMASA tuned it to revenue generating venture, collecting huge sum into government coffers yearly, only for the money to disappear later.
For instance, during the first year of implementation, the revenue generated from the registration of cabotage vessels and fees changed on waiver granted foreign vessels amounted to N1.3trillion.
NIMASA alone collected over N100billion into cabotage vessels financing fund from the 1 per cent of contract sum executed by vessels and shipping companies as at 2016 and 30 per cent of its annual revenue.
The fun is supposed to be used, under the cabotage law, to assist indigenous shipping operators to acquire new building to make up the new national fleet since the demise of the Nigerian National Shipping Line and National Unity lines, at low interest rate.
As we speak, there is no known indigenous shipping firm that has benefited from the fund despite the initial shortlistof eight of them out of several of them who applied for loan planned to be disbursed by already appointed primary lenders which were banks into which the fund was lodged.
Investigations revealed that nothing is left with the primary lender as the last administration allegedly diverted the fund for other purpose.
In 2006, NMA, now NIMASA initiated interagency cooperation, aimed at effective implementation of the cabotage
Act, with Petroleum Product Marketing Company (PPMC), a subsidiary of NNPC.
The aim then was to ensure the patronage of Nigerian ship owners in the affreightment of petroleum products within National coastal area. This was after the stalemate in the push for the involvement of Nigerian ship owners in local and lucrative shipping business. While the PPMC insisted on its involvement in waiver granting process at the ministry of transport, NMA then wished to be part of product lifting contract to shipping companies operating
within Nigerian waters to ensure compliance with the cabotage law.
The dialogue was yielding fruitful dividend until the change of leadership at NIMASA that year. The NNPC had spelt out conditions under which to allow vessels belonging to indigenous shipping firms to participate in the afrieghtment of petroleum products within the inland and coastal waters under cabotage regime.
It said the vessels for oil marketing along the specified area under cabotage must be registered with P & I Club for
protection and indemnity before approaching it for contract.
It said it was not ready to compromise standard of shipping because of the involvement of Nigerians in the business. So the status quo remained until date, with the sudden change of baton at NIMASA in 2006. The foreign shipping companies have been enjoying a field day as they hitherto dominate Nigerian shipping activities.
In 2009, specifically August, the Nigerian ship owners tried to take their destiny into their own hand when, through their umbrella body; Indigenous Ship owners Association of Nigeria approached the Federal High Court to seek redress against foreigners encroachment into the business that was legitimately reserved for them.
The litigation was the peak of the years of “frustration as many of them had been reduced to the level of prostitute” as they were often found hanging around the waterside or offices where oil lifting contracts were awarded, in search for patronage that would enable them remain in business.
Their hope were dashed as the foreign ships owners have perfected ways of circumventing the law under which they
were dragged to court. The outcome of the court case also justified the need to review the law of coastal and inland shipping (cabotage), which reserved the business of lifting or carriage of goods and passengers from one country to Nigeria built, flagged, owners and carried vessels.
Indigenous ship owners and Pokat Nigeria Limited had jointly accused a foreign shipping company, MBX of St Vincent and Grenades at a Lagos Federal High Court for using its vessel; MT Markham to transport petroleum products within the country, contrary to the provisions of the 2003 Nigerian inland and coastal shipping (cabotage) Act.
The trial judge, Justice Okechukwu Okeke dismissed the case because of the overwhelming evidence that the vessel
loaded at Cotonou, Republic of Benin and only transported it through Nigerian waters into Nigerian ports, undermining the fact that there is no refinery in Cotonou to warrant the loading of petroleum products from that
Since crude oil is not known to be refined in Cotonou, it is obvious that a mother vessel must have anchored very close to the Nigerian waters to feed smaller vessels that will now lift the products into their final destination in Nigeria. They can easily do this because of the porous nature of Nigerian waters as the Nigerian Navy that should have arrested the illegal activities is believed to have failed in its responsibility.
Its officials can only be found on land doing some illegal business leaving the nation at the risk of possible external aggression and attack.
But one good aspect of the judgment was the exposure of the cabotage Act weakness as Justice Okeke urged shipping
operators in the country to ensure its amendment to enable the judiciary to resolve future cases bothering on the interpretation of the law relating to the Act.
Although, the ship owners promised to file an appeal against the owner court judgment in the case between the
ship owners and MT Markhambe, the case had since provided a new dimension in the attempt to sabotage the implementation of the 2003 Act. In the past, these vessels and their owners used to hide under the waiver provision in the Act.
The waiver clause was considered necessary by the authors of the Act in view of the fact that Nigerian ship owners still lack capacity in some areas of shipping. So the clause was to serve as a stop-gap aimed at not creating a vacuum until indigenous ship owners become matured enough to carry out all aspect of shipping operations.