Failure to implement the coastal and inland shipping act (Cabotage) passed into law seven years ago is beginning to generate controversy between the Nigerian National Petroleum Corporation (NNPC) and indigenous ship owners association. The controversy is heating up as the corporation is yet to include the indigenous ship operators in lifting of crude oil to Warri Refinery, which is part of the guideline lines stipulated by the Cabotage Law and the Local Content Policy of Nigeria.
The Cabotage Law states that only vessels wholly owned and manned by Nigerian citizens, built and registered in Nigeria shall engage in the domestic coastal carriage of cargo and passengers within the coastal territorial inland waters, or any point within the waters of the exclusive economic zone of Nigeria. Similarly, the Local Content Policy short term directive of October 13, 2006 states that henceforth, all projects and operations in the oil and gas industry must demonstrate strict compliance with provisions of the Cabotage Act.
Moreover, the targets set by the Nigerian government for local content is to achieve 40 percent by 2007 and 70 percent by 2010. But with unfolding events at the NNPC, it seems that such government directives no longer hold as long as people in-charge have nothing much to benefit from such local businesses. Now, observers are worried that the same cabal who made the four refineries in the country dysfunctional are still there to ensure that indigenous ship operators are not allocated cargo. They are wondering why government have paid deaf ear to the cries of indigenous operators. On what criteria are they basing their qualification for cargo allocation? How will local operators qualify for the crude lifting unless they are given opportunity? What technical competence are they looking for which Nigerians do not have?
Expressing dissatisfaction over their alienation, the chairman, Indigenous Ship owners Association of Nigeria (ISAN), Isaac Jolapamo, said the operators reached a gentleman agreement to lift the 460,000bpd allocated to the NNPC by the Federal Government to Warri Refining Petrochemical Company (WRPC). But unfolding events have shown that the corporation had concluded arrangements via a selection process for the operation without involving them in the movement of the crude. He explained that coastal transportation of crude oil falls under the Cabotage Act as well as the Nigerian Local Content which the NNPC ought to protect, advising that the NNPC should look inwards and involve indigenous ship owners who have the capability considering their more than three decades of operation in the terrain.
Jolapamo said this time, the indigenous ship owners would not settle for anything less stressing that they have the capability considering their experience over the years in the job. Better still, he said, the NNPC may wish to engage the mega shipping company owned by the entire Indigenous Ship owners Association of Nigeria members to provide these shipping services. He lamented that shipping services for both leg (crude and refined) have hitherto been left in the hands of foreign operators, stressing that the local companies under the Indigenous Ship owners Association, have formed a mega shipping company capable of handling the shipping side of this project to avoid capital flight as the transportation cost would begin to reside in Nigeria. He believes that a local shipping company owned by majority of the operators would not only do the country proud, but would create more job opportunities for our teaming youth.
For Dada Labinjo, the general secretary of the Indigenous Ship owners Association of Nigeria, the NNPC and foreign vessels do not want us to come around on the grounds that the local operators are running old vessels. He wondered how they could acquire new vessels without getting contracts. According to him, even if the indigenous do not have the capacity, they could collaborate with the foreign shipping lines to get the job done, but the most important thing is to ensure that the job is being done by Nigerians. He pointed out that old vessels are not judged by their age, but how the operator is able to maintain them. In Greece and many other European countries, ships of about 50 years old are still trading, insisting that age has nothing to do with vessels as being speculated in some quarters, Labinjo stated.
The secretary general of the Indigenous Ship owners Association said the chairman of ISAN borrowed the sum of $10 million from banks to buy a ship two years ago, but up till now, the vessels has not done any job because they could not get contracts from the NNPC. Yet he is expected to pay the sum of N10 million every month to the bank.