Maritime stakeholders have called for robust national policies and increased private sector investment to address the critical challenges of financing capital-intensive vessel construction and acquisition.
This call was made in Lagos, yesterday, at the 2024 Maritime Finance Conference, organised by the Association of Maritime Journalists of Nigeria (AMJON) in collaboration with NLNG Shipping and Marine Services Limited (NSML).
Speaking on the theme, ‘Vessel Acquisition/Construction: Nigerian Banks, Insurance Firms, Government and the Blue Economy’, the Managing Director/Chief Executive Officer of NLNG Shipping and Marine Services Limited (NSML), Abdulkadir Ahmed, emphasised that access to finance is crucial for the acquisition and construction of ships, which are key to advancing the country’s maritime sector.
Providing insights into the costs and financial aspects of vessel construction, Ahmed noted that the cost of constructing a foreign-built vessel has significantly increased over time, rising from $190 million to between $270 million and $275 million.
Ahmed highlighted that financing the construction of these complex and advanced vessels involves a mix of financial players, including both local and Korean banks, especially for vessels built in Korea.
He stressed that vessel building and acquisition is fundamentally a finance-driven business, noting that while having substantial capital is advantageous, successful ventures should attract external financing due to their profitability and potential returns, which make them viable investments.
The Executive Secretary of the Nigerian Shippers’ Council, Pius Akutah, called for a deliberate national policy aimed at creating a conducive business environment with incentive measures to attract private sector investments that would drive vessel acquisition and construction.
Akutah, represented by the Principal Officer of Regulatory Services, Cadson Temitope, emphasised that exploring financing options for vessel acquisition is essential to fully harness the potential of Nigeria’s blue economy.
He also advocated for the expansion and implementation of existing financial support mechanisms, such as the Shipping Sector Support Fund, the Cabotage Vessel Financing Fund (CVFF) and the Nigerian Content Development and Monitoring Board (NCDMB) Maritime Fund.
Akutah pointed out the importance of commercial banks in financing vessel acquisition and chartering, as well as the role of insurance companies in providing necessary coverage.
He noted that the council is committed to advising the Federal Government on crucial maritime issues, including freight rate structures, shipping space availability, quality of vessels and port charges.
Akutah expressed optimism that the conference would address critical issues and explore the feasibility of establishing a national carrier to ensure Nigerian-flagged vessels play a significant role in global maritime trade.
