Nigerians hope for national shipping line dashed as Singaporean partner withdraws
By There are indications that Nigeria’s ambitious stride to establish a national shipping line to fly its flag in the near future, has hit the rocks as Pacific International Line (PIL), a Singaporean consortium that signed memorandum of understanding (MoU) with the Federal Government to float the shipping line, recently, withdrew its intention to be partner in the business.
In 2016, the Federal Government signed a Joint Venture (JV) partnership with PIL, on shareholding of 60:40 for the establishment of national shipping line. The 60 percent equity share was to be held by a group of indigenous shipping firms that are yet to be selected, while the remaining 40 percent shares go to the foreign firm.
Two years after the MoU was signed, Nigeria has failed to bring the establishment of the much talked about national shipping line to a reasonable stage, apparently due to the failure of government to select a consortium of local shipping firm that are qualified to be part of the new shipping line.
BusinessDay understands that since the demise of the foremost Nigerian National Shipping Line (NNSL) in the 90s, Nigeria has not owned any ocean-going vessel flying her flag in foreign nations and also benefiting from the nation’s lucrative shipping business.
Therefore, it is expected that the floating of the shipping line would help Nigeria domesticate over N2 trillion annual losses to capital flight, following the domination of Nigeria’s shipping business by foreign shipping companies.
Reacting to this, Hassan Bello, executive secretary of the Nigerian Shippers’ Council (NSC), said recently that the plan to establish the national shipping line is still on and the government has many options to achieve that, which PIL of Singapore is one.
Bello, who is the chairman of the committee on Establishment of National Shipping Line, said that though establishing a national fleet is not cheap, but the initiative was being vigorously pursued.
“We are moving forward. The committee is working day and night to ensure we have a national fleet. We have to involve banks, insurance companies and the flag administration. We have to look at the policies and laws to be changed such as changing our crude oil trade policy from free on board (FOB) to Cost, Insurance and Freight (CIF) and many others things including issues around ship building and ship repair yards,” he said.
On why PIL left the MoU, Greg Ogbeifun, president, Ship Owners Association of Nigeria (SOAN), also complained that the current Nigeria’s fiscal policy which stipulates that ship owners bringing ships must pay a duty charge of 14 percent out of the total cost of the vessel to the Nigeria Customs Service (NCS), was a major reason, the foreigner partner withdrew.
Ogbeifun confirmed that the PIL pulled out because the Nigerian Fiscal Policy on importation of vessel does not make establishment of shipping fleet competitive in global trade.
He listed other unfavourable fiscal policies to include tax laws, tonnage tax laws, and other laws that affect international shipping, but said that a recent study conducted by local shipping firms, shows that unlike Nigeria, most countries first declare zero duty on importation of vessel to encourage shipping business.
“The duty payable on an average if you are bringing in a vessel is about 14 percent of the value of that vessel. So, if you bring in a vessel of $80 million, a crude oil tanker, you will be expected to pay $80 million and then in Nigeria’s port, you have to pay 14 percent of that value to enable you to import it,” he explained.
He noted that PIL said in their writing that Nigeria must review the fiscal policy if they must continue in the partnership because the commercial terms for carrying cargo will be cheaper for a country with zero duty compare with Nigeria with 14 percent duty.
AMAKA ANAGOR-EWUZIE
The post Nigerians hope for national shipping line dashed as Singaporean partner withdraws appeared first on BusinessDay : News you can trust.