CVFF disbursement: Shipowners reject loan as lending institutions peg interest rate at 8.5%
…Reps stop disbursement of $700m CVFF fund to Nigerian shipowners
By Seun Ibiyemi
The disbursement of Cabotage Vessel Finance Fund (CVFF) is currently being stalled by the proposed interest rate of 8.5 per cent by commercial banks, a requirement which has been rejected by indigenous Nigerian ship-owners.
Designated Primary Lending Institutions (PLIs) which are to provide 35 per cent of the equity pegged the interest at 8.5 per cent while ship-owners are demanding a much lower rate as the Nigerian Maritime Administration and Safety Agency (NIMASA) explores alternatives to attain lower interest rates.
The Director General of NIMASA, Dr. Bashir Jamoh OFR, revealed this while speaking with journalists today at the agency’s headquarters after receiving a delegation from Ghana Maritime Authority (GMA) on a study tour of Nigeria’s Cabotage regime.
In his words,“I’m not in a position to say whether the disbursement of CVFF will take place under this regime or not, because we are still discussing with the PLIs. It is only when we are sure that we are getting the best deal to help the stakeholders that we would accept the terms for disbursement. We wouldn’t succumb to a situation where the PLIs will be imposing unnecessary guidelines or interest rates. The interest rate for CVFF disbursement is the core issue we are looking at presently.”
“15 per cent of the fund is coming from stakeholders, 50 per cent is from the government and the PLIs are providing only 35 per cent. So, the PLIs shouldn’t be imposing high interest rates when they are only bringing 35 per cent. We are also engaging other development banks to see how low their interest rates will be so that we can compare with other banks. Our guidelines specified commercial banks and not development banks, but we are consulting to enable us do peer review of the interests.”
He disclosed that the last offer the approved banks was an interest rate of 8.5 per cent but stakeholders insist that the interest rate isn’t acceptable as they still want it to be much lower.
“Initially, we wanted single digit and we got single digit with 8.5 per cent but we are asking them to go down in view of stakeholders position,” he explained.
Jamoh, however, expressed optimism that the amended version of the Cabotage Act will be passed before the end of the President Muhammadu Buhari administration.
“We have been implementing the Cabotage Act for about 20 years and the amendment should reflect a lot of changes and developments in the industry. We have encountered a lot of bottlenecks in the implementation of the Cabotage Act which have led to the amendment.”
Speaking on the Ghanaian attempt to implement its Cabotage law, Jamoh recalled that the former Director-General of the Ghana Maritime Authority, Kwame Owusu, conceived the idea while at NIMASA for a strategic meeting years ago.
Jamoh opined that the opportunity to collaborate and partner with GMA would lead to growth and development in the maritime sector for Nigeria and Ghana, even as it strengthens partnership within the Gulf of Guinea coast.
On her part, the Director, Legal/ Board Secretary of Ghana Maritime Authority (GMA), Mrs. Patience Diaba, expressed delight at the opportunity to learn from the Nigerian experience in the implementation of the Cabotage law.
Diaba stated that Ghana is privileged to have an opportunity to learn from the experience of Nigeria’w Cabotage experience, stressing that the valuable insights would ensure Ghana avoids the pitfalls and challenges that plagued Nigeria.
“We appreciate the time and efforts of the NIMASA team who will be sharing their insights and expertise with us over the next few days. We look forward to a fruitful discussion and site visits, especially the visit to Port Harcourt and other activities that have been planned for us.
“We are confident that our time will be rewarding and we will return to Ghana better informed and equipped to implement the Cabotage regime in our nation. We are excited to begin this 10-days study tour,” she posited.
Speaking earlier, the Executive Director, Maritime Labour and Cabotage Services, NIMASA, Engr. Victor Ochei observed that Nigeria’s Cabotage achievements did not come without pitfalls and struggles that were surmounted through consistency.
“Our achievements, processes, knowledge acquired and experience are what will be sharing with you within this short period of time. Luckily, you will be gaining these set of skills without the inclusion of the pitfalls we had to learn from to attain our current level.”
“In the course of this under-study, we chronologically intend to take you on a historical sojourn and enlighten you on our famous ‘4 Pillars of Cabotage. We shall put you through the enabling legislations and instruments that empowers us to operate as well as our enforcement procedures amongst others,” Ochei said.
Meanwhile, the House of Representatives has ordered the immediate suspension of the planned disbursement of $700 million to Nigerians and companies by the Nigerian Maritime Administration and Safety Agency (NIMASA).
Recall that President Muhammadu Buhari had in December 2022 approved the much expected fund to Nigerian shipowners with immediate effect.
However, the House of Representatives has directed NIMASA to present an audited statement of account showing all monies that have accrued to the Cabotage Vessel Finance Fund within seven days.
Adopting a motion of urgent public importance brought before the House by Henry Nwawuba, the lawmakers also directed its Committee on Local Content to engage an external auditor to audit all contracts entered into in the cabotage regime and report same to the House within seven days.
The committee is also to commence immediate investigations into the Cabotage Vessel Finance Fund to determine all monies that have accrued to the Fund since its establishment in 2003 and report to the House within 14 days.
Adopting a motion of urgent public importance brought before the House by Henry Nwawuba, the lawmakers also directed its Committee on Local Content to engage an external auditor to audit all contracts entered into in the cabotage regime and report same to the House within seven days.
The committee is also to commence immediate investigations into the Cabotage Vessel Finance Fund to determine all monies that have accrued to the Fund since its establishment in 2003 and report to the House within 14 days.
