- Saving Cost Through Modular Dry Dock
Before now, the dry docking of vessels operating in Nigeria was done outside the country with huge implications in terms of foreign exchange costs running into several millions of dollars yearly. This wastage is about to end with the acquisition by Nigerian Maritime Administration and Safety Agency (NIMASA), of a modular floating dockyard. With this facility in place, the agency will save the federal government in excess of $100 million annually and about $1 billion in 10 years.
This princely sum will be a direct saving from the dry docking of vessels operating in Nigeria. Dry Dock is a waterless area for ship repairs, an enclosed dock from which water can be removed so that construction or repairs can be carried out below the water line of a boat or ship.
The agency and, in particular, its Director General, Dr Dakuku Peterside, has been celebrating and rightly too. To ensure that it did not end up as yet another government facility bugged down by bureaucracy, he has expressed the willingness of NIMASA to enter into a working relationship, a partnership of sorts, with interested parties in the private sector who will run it strictly as a business venture and profitably. Already, work on the dry-dock project is in progress and is likely to be completed before the end of this year.
This assertion by the Peterside himself debunks speculations that the plan for such a facility had been scrapped. He made it clear that, “It is not true that government has scraped the establishment of the proposed floating shipyard or dock yard in the Delta area; it is absolutely not correct.
According to him, the plan was on before his appointment. “Recall that before I joined NIMASA team, they had already established a business case for a floating dry-dock where owners of ship can dry-dock their vessels from time to time,” the D-G said
The decision to embark on this project, he further explained was based on the realisation at that time that “85 per cent or 90 per cent of those who own vessels dry-dock their vessels outside the country and we felt it encourages capital flight and that it doesn’t support the industry. So, it was at that point that we got into a relationship with a firm in Netherland to build a floating dry dock in the Netherland and in Romania. That project is on; when we joined the NIMASA team, we resolved to continue and follow it to its logical completion.”
Peterside, an accomplished technocrat was of the firm belief that the project would be completed this year and once that was achieved, it will be brought into the country and with it the agency should be able to dry dock most if not 100 per cent at least 90 per cent of all vessels in-country.
The Director-General said that another issue around the floating dry dock was location, adding that the agency had resolved to make the decision on location business related.
As expected, the location of the facility is beginning to generate political interest. But Peterside stressed that, “When we complete the dry dock, the location will be a business decision and many factors will be considered before we decide where it will be located. Studies are going on right now on where best it will be located”. This was just as he emphasised that, “it is absolutely not true that we have cancelled that project; that project is on. It is progressing at a satisfactory pace and we believe that it will be completed this year.”
Stakeholders in the Marine Transport sector are optimistic that the floating dockyard being built by the Nigeria Maritime Administration and safety Agency (NIMASA) would open new windows of opportunity in the maritime industry in West Africa.
After evaluating the extent of work on the floating Dockyard being built in Galati, Romania, the Senate observed that the opportunities would not only be limited to job creation or conservation of foreign exchange but would also include capacity building and wealth creation in the industry. With an average of 5,000 ships calling at the Nigerian ports annually, 400 active coastal vessels and several fishing trawlers, the demand for ship repair and maintenance facilities can only be on the rise.
However, it is lamentable that up and until now, no such indigenous facility was available in the maritime industry. The absence of modern functional floating dry docking facilities in the country which has forced ships and vessels to go overseas to undertake mandatory routine dry docking is not acceptable “the few land based dockyards in Nigeria are not even functioning optimally. Sometimes Nigerian ship owners have to go to neighbouring Cameroon to dry dock vessels paying in scarce foreign exchange”.
In addition to the Dry Dock project, Peterside is introducing other innovative policies that are intended to enhance the viability of the agency he heads. One of these is the Cost Insurance and Freight (CIF) to enable Nigerians lift the country’s crude oil
According to him, “One major factor that edges Nigerians out in the ‘affreightment’ of Nigerian cargo, especially crude oil lifting, is the prevalent Free On Board (FOB) trade term especially in a situation where Nigeria as a nation and Nigerian businessmen have very minimal control in the distribution of its crude oil with respect to carriage, insurance and other ancillary services.
Under a CIF arrangement, NIMASA on Peterside’s watch is planning to effect a far-reaching change in favour of indigenous operators. To this extent, therefore, NIMASA is joining forces with well-meaning Nigerians to move for the change of trade term from FOB to CIF to reasonably involve our indigenous operators in Nigerian cargo affreightment.
The advantages of this policy when implemented is that it will not only give distribution control of the country’s hydrocarbon resources to Nigerians, but also enable the agency to empower Nigerians through cargo lifting and meaningful participation in the entire value chain of export goods. CIF as a policy thrust will enable Nigerians participate in cargo lifting, cargo insurance, create job for our teeming cadets and other ancillary economic and security derivatives.
Peterside added, “The plans are on top gear to reach out to relevant agencies of government and very soon, we shall do an executive memorandum to the Federal Executive Council (FEC) for consideration and approval.”
Another policy the management of NIMASA is putting in place and which lead to a process of giving indigenous ship owners greater participation in the industry. Already the agency has designed and embarked on a programme that will empower indigenous ship owners
Elaborating on this policy, Peterside said, “Conscious of our mandate-to promote the development of indigenous commercial shipping in international and coastal shipping trade, we are poised, more than ever, to achieving this obligation. We understand it requires a great deal of capacity building, especially human, infrastructural and tonnage capacities of our indigenous shipping operators.
“We have reviewed the participation of Nigerians in the industry and are not satisfied with the outcome. The summary of our findings reveals a very low indigenous participation in international commercial shipping trade in Nigeria. As far-fetched as it sounds, there are no Nigerian Flagged Ocean-going vessels known to us.
“In the course of our review also, we observed the salience of cargo availability to the commercial fortunes of a ship owner/operator and to our national tonnage growth. We noted also that commercial shipping will less likely develop without conscious, proactive, well -structured and monitored government intervention as is done in other sectors,” he stated.
The NIMASA chief executive added that one area of such intervention is cargo availability.
Developed maritime nations, he said, have at one time or the other consciously supported, and are still supporting their indigenous operators in building their commercial shipping capacities.
“Recently, a bipartisan bill was brought before the United States Congress aimed at strengthening indigenous participation in shipping. The bill seeks to allow US flagged vessels carry up to 30 per cent of the U.S LNG as a matter of both economic importance and security concerns.
“On our part, plans are in top gear to use our existing enabling laws to make public cargo available for indigenous shipping operators in order to improve their commercial fortunes and competitive advantage over their well-capitalised and established foreign counterparts. We are out to enforce Sections 36 and 37 of the NIMASA Act 2007 towards building indigenous capacities in shipping.
“This is already at executive management level and we are determined to take it to the highest level of bureaucratic, legislative and executive engagements necessary. We shall also involve our esteemed stakeholders at the right time because we understand they have roles to play in the entire process,” Peterside said.
––Eshiogu wrote in from Abuja