Market News

•Stakeholders finger regulatory lapses, push for reforms

By Steve Agbota                                

[email protected] 

Nigeria’s ship chandling industry is sinking with local players raising the alarm of being on the throes of extinction.

According to them, regulatory failures stemming from poor legislative framework and corruption have not only paved the way for foreign dominance but weakened their competitive capabilities.

Nigeria loses $20 billion and 2,500 jobs every year.

Industry stakeholders are flagging the worrisome development, urging immediate reforms to revive local businesses and stem the growing economic loss via capital flight.

Digging into the root cause of the problem, stakeholders traced it to perennial negligence of various government agencies saddled with the responsibilities of advancing the chandling sector of the Nigerian economy.

For context, ship chandlers are those who provide supplies and equipment for ships, and fears are rife that local players in that space are currently in the pit of desolation, as they are unable to compete favourably with their foreign counterparts.

Daily Sun learnt that about 85 percent of local ship chandlers are currently out of jobs, as many of them have resorted to clearing and forwarding or other menial jobs as a means of survival.

By this law, any person or group of persons wishing to carry out any trade for the sustenance of seafarers, vessels and other offshore services without a ship chandling license is prohibited.

However, stakeholders lamented that Nigeria is losing over $20 billion per annum to foreigners in ship chandling and other related services in the oil and gas sector alone.

Despite the Local Content Development Act of 2010, which preserves 90 percent of ship chandling services in the oil and gas industry and maritime sectors for indigenous companies, more than 2,500 jobs have been wiped out due to the illegal activities of foreign shipping lines, poor regulations, and other challenges.

Checks by Daily Sun revealed that ship chandlers’ challenges are structural because the various laws enacted to promote the trade are undermined by the various government agencies that are required to advance the profession. The majority of them only pay lip service.

Meanwhile, experts lamented that it is most unfortunate that, with the abundant opportunities in the maritime sector, indigenous ship suppliers get little or no patronage, as foreign ship owners always refuse to give local ship chandlers contracts.

Ironically, the continuous refusal of foreign ship operators to patronize local chandlers contravenes the Local Content Act promulgated by the Federal Government to grow local companies, boost their capacity, and create jobs.

Despite the numerous ocean-going vessels, platforms/rigs, barges, coastal vessels, etc., plying the nation’s territorial waters, culminating in not less than 20,000 maritime operations annually, the involvement of indigenous ship chandlers accounts for less than five percent or 1,000. This is what the stakeholders describe as a rip-off of the nation’s economy.

An expert and former member of the Presidential Taskforce on the Reform of Nigeria Customs Service, Lucky Amiwero, said ship chandlers create jobs by supplying services like food, water, and all the rest.

According to him, the ship chandlers are being controlled by Customs, which regulates them, saying Customs is not the one to tell ship chandlers what to do.

He pointed out that ship chandlers are the people who build their capacity for themselves, not the Customs.

“Nobody builds licensed Customs agents’ capacity. Ship chandlers are just like licensed Customs agents. When you look at the Customs Act, you will find out that the ship chandlers are prescribed there properly.

“But they are the people to build capacity for themselves. The government will not build capacity for you. The licensed Customs agents are the people who are building it up. We have to train them. We have to intervene in most of their issues and all the rest. We don’t sit back and want the government to come and do things for you.”

He urged the indigenous ship chandlers not to sit back in their offices and cry because nobody would fight for them, saying they needed to take their matter to the Minister of Finance and the Presidency to be addressed.

He said if Customs agents had sat back without fighting for their rights, they must have gone into extinction, saying ship chandlers have to present their papers and make their case known to the government.

Speaking on the issue, Felix Adebowale said that Nigerian ship chandlers are given 95 percent authority to render services on ships, but foreigners have taken over the business.

He states that multinationals, when awarding contracts, do so without considering any member of the ship chandling associations of Nigeria.

He alleged that the multinationals engage their vendors without regarding the extant laws of ship chandling services.

“In most cases, the multinationals engage their sister expatriate companies or related operators as vendors to provide all offshore procurements, including offshore catering.

“The law establishing ship chandling service, CEMA, gave it absolute power as the sole supplier of all goods and services on board a ship, and was further empowered by the Nigerian Oil and Gas Industry Content Development Act of 2010. These should have guaranteed the profession its due place in the Nigerian maritime sector and the oil and gas industry, as it has been the standard of practice globally. But here in Nigeria, it lacks classification and categorization,” he said.

He said most countries, like the United Kingdom, United States, Germany, South Africa, etc., have ship chandlers supplying items without being taxed by the port authority, but in Nigeria, terminal operators levy ship chandlers various charges, ranging from the cost of registration with the terminal operators to delivery charges, without rendering any service to ship chandlers, which is against international best practices.

He called on the federal government to address all the challenges associated with the ship chandling business in the nation’s maritime sector, including oil and gas.

An expert and lecturer at the Maritime University, Charles Okerefe, said that the ship chandlers, in the past, used to have associations, just like they have in ANLC and NAGAFF.

“But it appears that association has gone into extinction over the years. So, the question is: Who is there to fight their cause? It’s a major issue. Because I know that even though in cargo clearance, some foreign companies are trying to take over the business, you find out that ANLCA and all the other bodies are fighting there seriously. Okay, so in that aspect, they have a voice. But who is the voice of Nigeria’s ship chandlers? They don’t seem to have a voice.

“So I think they will do well for themselves to come together and resist the encroachment by the foreign operators. That is a major issue. Secondly, who is licensing the foreign operators to operate in Nigeria? Because I know, just as Customs licenses cargo brokers or Customs brokers, who we call clearing agents, it is the same Customs that licenses the ship chandlers.

“So if foreigners are operating in our ports as ship chandlers, who is licensing them? These are the issues that have to be looked into. But first and foremost, I think Nigerian ship chandlers should gather themselves together and come together as a unit to fight the encroachment of the foreign operators. Because in the absence of that, they will take over the industry, and nothing will happen because there is nobody to shout or cry on their behalf,” he said.

He said if Customs is not licensing these foreigners, that means they are operating illegally, and they must be investigated to determine which authority is permitting them to supply vessels if Customs does not give them a license to operate.

“If the law, just like Cabotage, restricts the operation of foreign vessels in our coastal waters, in the same way, it restricts the supply of victuals to vessels by Nigerians. So if Nigerians are not there to take up their proper responsibility, then there is a gap.

“They will have created a gap. And if it is the position that the shipping companies are not giving them supplies, then if they have a body, which is supposed to be the Ship Chandlers Association of Nigeria, that body should be able to cry out to the government to stop the coercion of the foreign operators. That is what I am saying.

“So the law gives Nigerians the power and the prerogative to operate in the supply of vessels calling at our ports. But if they don’t have a body to handle such and speak with one voice, then they have created a gap for the Foreign National Committee. But it is not just enough for the Foreign National Committee. They need to be investigated to see who is giving them a license to come in and operate,” he explained.