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Buhari directs disbursement of Cabotage fund to ship owners

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A container-laden vessel

President Mohammadu Buhari has ordered the disbursement of the Cabotage Vessel Financing Fund (CVFF) to operators after about 18 years of contribution.

The President had earlier approved the disbursement in 2019, but the process has dragged for about two years.

The president, in his recent approval, directed the Nigerian Maritime Administration and Safety Agency, (NIMASA) to ensure that the fund is disbursed to qualified indigenous maritime operators.

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The presidency on its Twitter handle said: “President @MBuhari has approved the disbursement by @nimasaofficial of the Cabotage Vessel Financing Fund (CVFF) to qualified indigenous maritime operators in line with the Treasury Single Account (TSA) policy and the CVFF Guidelines 2006.

“The Cabotage Vessel Financing Fund (CUFF) is money set up by the provisions of section 42(1)-(2) of Cabotage Act 2003 to promote the development of indigenous ship acquisition capacity by providing financial assistance to Nigerian operators in domestic coastal shipping,”

Earlier in 2019, the minister of Transportation, Rotimi Amaechi, had said that Buhari had approved the disbursement of the long-awaited Cabbotage Vessel Financing Fund (CVFF). The fund was estimated at $200 million as of then.

The President said the process of the disbursement would begin immediately. Since then, indigenous ship owners have been longing to benefit from the fund.

The accumulated fund represents a two per cent contribution by indigenous shipowners on every contract done in the maritime sector.

NIMASA has called for an Expression of Interest (EoI) from banks to act as primary lending institutions (PLI) for the disbursement.

According to the publication by the agency entitled ‘Implementation and Disbursement of the Cabotage Vessel Financing Fund (CVFF): Expression of Interest as Primary Lending Institution,’ which was signed by the Executive Director, Finance and Administration of NIMASA, Chudi Offodile, the fund would promote the development of indigenous ship acquisition.

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He said the request for the primary lending institution (PLIs) is in line with the Federal Ministry of Transportation guidelines for the implementation of the Cabotage Vessel Financing Fund (CVFF) 2006, which specified the minimum requirement for the participation of banks as PLIs.

He listed the requirements to include that the PLI must have an existing relationship with NIMASA, shareholders fund over N25 billion and proof of substantial financial support in terms of credits extended to indigenous maritime operators.

NIMASA stated that the PLI would be responsible for liaising with NIMASA in determining the risk acceptance criteria for the utilisation of the Cabotage Vessel Financing Fund or issuing of guarantees.

“PLI will participate in financing and management of specific projects where necessary to further secure repayment of the loan or obligation; be actively involved in on-lending monitoring and entire loan management and any other financial advisory or ancillary services as the Fund may determine,” he stated.

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