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Cabotage waivers clarified

By Dr. Bashir Jamoh
22 December 2021   |   4:07 am
The Nigerian Cabotage law operates a waiver system only on grounds of non-availability. This means that waivers may be granted on all the four pillars of Cabotage where the non-availability criteria are satisfied.

Jamoh

The Nigerian Cabotage law operates a waiver system only on grounds of non-availability. This means that waivers may be granted on all the four pillars of Cabotage where the non-availability criteria are satisfied. The conditions for granting waivers are expressly spelt out to prevent the use of waivers to subvert the noble objectives of the Act. For waivers to be granted and depending on the application:

• The Minister must be satisfied that requirement(s) requested to be waived is/are not locally available.
• The Act also makes it mandatory that where the conditions suitable for the grant of a waiver are established, the Minister must follow the prescribed order i.e. priority to a Joint venture company between Nigerians and non-Nigerians.
• Where the above is not available then 100% foreign owned vessel(s) shall be licensed to supply the service.
• Foreign flagged vessels which are on long-term charter to Nigerians are eligible to engage in Cabotage trade.

For these to be possible within our jurisdiction and to cater for the peculiarity and constant mobility of the vessels involved in the oil sector, the Act allows for temporary registration for such vessels under Section 27. The practical implications of these provisions are that foreign shipping companies are guaranteed at least, in the medium term, continued participation in Cabotage upon the satisfaction of prescribed conditions. Extensive and practical enforcement provisions are provided in order for the Cabotage Act to achieve its laudable objectives. It has provisions to curb, if not completely eliminate, subversive practices by stakeholders. The ownership criteria are indeed very rigorous and any contravention of these provisions is criminalised in the Act. It would therefore be quite difficult to have respectable citizens lend their names as fronts to foreign ship owners.

Another interesting aspect is that the operation of Cabotage will be at little or no cost to the Federal Government as the Act contains provisions for the beneficiaries to contribute to the successful operation of the Cabotage regime. Other equally profitable aspects of Cabotage trade which so far has received little attention are: Fishing industry, Passenger ferry services, Towage, Salvage, Dredging (coastal and inland waterways); Liquid bulk (e.g. chemicals, oil and its derivatives); Dry bulk (e.g. iron ore, coal, grains); General cargo (feeder and inland transport); Container Cabotage trade; Shipbuilding and repairs (shipyards, repair yards, emergency repair facilities at anchorage); Maritime auxiliary services (freight forwarding services, storage and warehousing, maritime agency services, container/depot services); Port services (pilotage, bunkering, garbage and ballast waste disposal, victualing, communications and electrical supplies); Maritime insurance and finance sector (credit facilities for fleet and business expansion); Training schools for the respective skills required in manning and operation of vessels which will compliment Maritime Academy, Oron.

In general, the Cabotage regime will effectively remove the blockade mounted by foreign operators against entry of new indigenous operators. Well implemented, it can promote the development and maintenance of an adequate and competent indigenous merchant marine tonnage and competition among stakeholders all operating on a level-playing field. Apart from the obvious ones listed above, it is hoped that Nigeria’s Cabotage law will stimulate private/public sector investment in the development of maritime infrastructure such as ports, waterways and inter-modal connections, vital links to multi-modal transportation network; reliable and cost effective coastal feeder services. The enormous potential for job creation and the availability of a pool of trained and efficient indigenous seafarers cannot be overlooked. Furthermore, the availability of indigenous fleet and seamen in times of conflict and effective policing of the waterways would contribute greatly to national security.

Revenue generation for government by way of fees from registration, approvals and licenses and fines are some of the other anticipated benefits of Cabotage. Also important is that the Cabotage vessels would boost Nigerian tonnage and Nigeria desperately needs that to have some leverage in international maritime negotiations. Several countries have openly attested to the benefits of Cabotage to their national economy and security. We are familiar with the statistics from the United States on the benefits of Cabotage commonly produced in the media by advocates of Cabotage. President Bush in his 2002 National Maritime Day speech noted that America’s waterborne domestic trade totals N 1 billion tonnes a year and emphasized the importance of Cabotage to the nation’s economic well-being and national defense capabilities.

Cabotage regime in Brazil saw the evolution of Brazilian Cabotage merchant fleet from 500,000grt in 1970 to 3,500,000grt in 2000. The volume of cargo in their Cabotage trade leaped from over 31m tons in 1994 to nearly 67m tons in 2000. Every country, which operates Cabotage regimes, has similar experiences with regard to the positive effects of Cabotage in their maritime industry. However, according to my independent research work conducted for roughly two years, the Nigerian maritime industry, with particular attention to Cabotage, can generate 1.23million self-employment opportunities for young Nigerians with each earning roughly N87,000 per month by today’s market value (2021).

• Dr. Jamoh, Director-General and Chief Executive Officer of the Nigerian Maritime Administration and Safety Agency, writes exclusively for The Guardian.