Nigerian shipping companies are facing hard times as over 40 per cent of vessels owned by private individuals are no longer lifting petroleum products since the beginning of the year due to economic downturn.
Investigation by New Telegraph revealed that some of the vessels have lost their contracts with International Oil Companies (IOCs) due to high cost of shipping. The development has resulted to some ship owners not being able to pay their seafarers since the beginning of the year.
According to the President of Ship Owners Association of Nigeria (SOAN), Engr. Greg Ogbeifun, the situation has affected the fortune of all ship owners, leading to huge job losses. He explained that some international oil firms had reduced the number of vessels being used in the upstream sector, while some of them have lost their contracts due to high cost of doing business.
Ogbeifun, who is also the Chairman of Starzs Investments Company Limited, noted: “I can confidently say that not less than 40 per cent of our members are out of jobs and affected by the distress.“ The IOCs have substantially reduced the rate at which they charter vessels to between 20 and 25 per cent.
“Prices of goods and services have gone up, the operating cost for ship owners have gone up too. It is quite a challenge working under this inclement situation.” Investigation also revealed that investments valued at over N200 billion were being threatened by the cost of operations at the nation’s seaport terminals.
It was learnt that cost of operations had risen by 328 per cent at the Lagos container terminals alone due to inflation and depreciation of the naira. Echoing him, the President of Nigerian Ship Owners Association (NISA), Capt. Dada Niyi Labinjo, said that all ship owners under his association were seriously affected by the recession.
According to him, since the beginning of the year, importation of oil and gas has been reduced. Labinjo said that some of the shipping companies were unable to pay workers’ salaries. He explained that the coastal trade (Cabotage) exclusively reserved for local shipping companies had been taken over by foreigners. “Everybody is jobless. All our workers are jobless. Personally, I have not paid my staff salaries since the beginning of the year due to lack of cargo to lift. I owe all of them.”
The foreign shipping companies have snatched the contracts we are supposed to be doing because they have an upper hand. “Cabotage is a nursery which government should nurture to grow. But they have allowed foreigners to take over the trade. We expect government to protect the indigenous ship owners.”
“This is the time government should not give waivers to foreign vessels; except for the specialised vessels. There is no need to give waivers to tanker and offshore vessels because they are not specialised vessels,” the NISA president told New Telegraph.
Spokesman for Seaport Terminal Operators of Nigeria (STOAN), Mr. Bolaji Akinola, also lamented the state of the industry. He said: “This is the reality on ground. Our earnings as terminal operators have been eroded by over 300 per cent.
Our salaries and overhead costs between 2006 and now have gone up by over 1,000 per cent.” On the way forward, the SOAN president said that government was aware of what to do, having realised that the country was operating a mono-economy.
He suggested that government should prioritise the shipment of agricultural commodities and solid mineral resources. Ogbeifun noted that the country needed ships to ferry agricultural produce to other countries, adding that government should look into other means of boosting the economy rather than depending solely on oil.
Also, a Professor of Maritime Administration at the Certified Institute of Shipping of Nigeria (CISN), Alex Okwuashi, suggested that government should intervene, saying that some of the ships owned by Nigerians were too old to lift cargoes. According to him, only few local shipping companies can afford to raise between $60 million and $150 million to procure between 15,000 metric tons dead weight and 125,000 metric tons dead weight vessels.
Okwuashi said: “This is a major challenge; the fund is not there for private individuals or indigenous shipping companies.” “How many local companies can afford this? There should be an intervention funds for the sector.”
He added that the role of government was to midwife the formation of shipping consortia for different shipping markets based on interest and areas of competency of the shipping companies. He added that counterpart funding as a model of equity participation could be adopted. He said: “There are opportunities for Nigeria to join the profile of countries exporting solid minerals, fish and other marine products.”
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Source: Finance Watch
