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Indigenous ship owners may dump Nigerian flag for flag of convenience

Faced by incessant harassment, extortion and constant detention of their vessels by officials of some government agencies including the Nigeria Customs Service, Nigerian Ports Authority and the Nigerian Maritime Administration and Safety Agency (NIMASA), many Nigerian Ship owners are now considering the option of dumping the Nigerian flag and registering their ships under the flag of convenience in countries that operate open ship registry.

Already, C & I Leasing, one of the leading indigenous ship owners has deregistered all its vessels in Nigeria and registered them under the Liberian flag.

Mr. Femi Otedola, owner of Seaforce Shipping and Zenon Oil while recounting the ill treatment his vessels have been suffering in the hands of government agencies in the country recently told some of his aides that the company would begin to explore the option of deregistering the vessels in Nigeria and reregistering them elsewhere.

Otedola’s position is based on constant arrest and detention of his vessels with the latest being the detention of a 20,700 metric tons tanker vessel “MT Nana” by the Nigerian Maritime Administration and Safety Agency (NIMASA).

Like Otedola, many other indigenous ship owners are frustrated over the fact that NIMASA officials capitalize on the slightest excuse to arrest and detain their vessels whereas many foreign vessels especially those of Greek nationals carry out illegal and unwholesome activities on the nation’s territorial waters.

The detention of MT Nana which cost Seaforce Shipping $25,000 (about N3 million) daily was said to have irked Otedola Vessels owned by Genesis Worldwide Shipping, another leading indigenous operator, also summered similar fate in recent times.

The indigenous operators are also having raw deals in the hands of customs officials who arrest their vessels and extort money from them for purportedly not paying customs duty on such vessels.

The devious customs officers usually lay ambush for the vessels and ensure that they are on a contract voyage before effecting the arrest thus placing the ship owners who will not want to fall short of their contract agreements under severe pressure.

The owners of vessels that fall into the hands of such customs officers usually have to cough out anything between N500,000 and N1.5 million or have their vessels held down endlessly.

A 5,300MT vessel owned by Morlap Shipping, MT Morlap Trader, has been in the hands of customs for about 50 days running.

MT Morlap Trader’s trouble, according to investigation, started in March while it was under a contract with Oando Oil.

The ship had been arrested by customs operatives in Port Harcourt but the refusal of its owners to part with “something” led to its prolonged detention.

The ship currently loses about $10,000 daily.

“It is only in Nigeria that you detain a ship endlessly without minding the consequences”, a maritime analyst, Tunde Ajibogun declared

“If you have problem with a ship, what should be done is that you request for a bank bond from the owners and when they provide the bank bond, you allow the ship to continue trading;” Ajibogun stated.

“It is not done anywhere in the world. It is archaic, barbaric and reckless. It is anti-trade and anti-economy”, he added.

Executive Secretary of the Indigenous Ship owners Association of Nigeria (ISAN) Captain Olaniyi Labinjo also queried the rationale behind detaining vessels endlessly by government officials at a time when government at the centre is embarking on deliberate plans to encourage indigenous participation in shipping

”Sometimes you wonder if those who arrest and detain our vessels are agents of the same government that desires to promote the shipping business among Nigerians.

“Our counterparts in the aviation sector enjoy exemption from payment of duty and I don’t think our case should be different”, Labinjo stated.

At a meeting held last month between members of ISAN and the Customs high command, it was resolved that ISAN should write to the Minister of Finance requesting for exemption from payment of duty on vessels brought in for Cabotage operations. It was also agreed that all vessels under detention for non-payment of import duty will be released pending approval for duty exemption by the President through the Minister of Finance.

About a month after that meeting, however, the vessels are still in detention incurring enormous loss for the owners while field officers of the Nigeria Customs Service continue to harass and exploit other hapless ship owners.

At the moment, almost all the jetties in the country are playing host to one or two detained vessels.

Vessels coming in to berth at the jetties to discharge their cargo have to double bank or sometimes triple bank on detained ships to discharge their cargo. This has led to high cost of operation as the vessels have to acquire very long hoses that can run across two or three ships into the discharge facilities.

Members of the Indigenous Shipowners Association of Nigeria (ISAN) own over 60 ships and provide over 20,000 direct jobs and hundreds of thousands of indirect jobs for ship chandlers, ship agents, suppliers of fresh water, lubrication oil, bunkers and so on.

Nigerian owned vessels also remain the only platform where cadets acquire seagoing experience since the demise of the Nigeria National Shipping Lines (NNSL).

In the face of the country’s dwindling tonnage, the Federal Government recently embarked on deliberate policies to encourage participation in the shipping sector by its nationals.

The constant harassment and exploitation of the shipowners may have adverse effect on government’s desire to promote indigenous participation in ship and lead to a depletion of the existing tonnage.

Banks and other financial institutions who are already indicating interest to finance shipping operations may also develop cold feet.

                                                                                                                                                                                    Updated 19/05/08 10.30am

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