Shipowners seek forensic audit of CVFF
Unless entrenched and legacy structural constraints are addressed, the $700 million Cabotage Vessel Financing Fund (CVFF) may follow the path of similar previous interventions, burdening beneficiaries with new liabilities while adding no value to the sector.

The prospect of revving the capacity of local shipping lines is also being marred by the takeover of major local contracts (primarily NNPC Limited and Dangote Petroleum Refineries) by foreign firms.

The fund, which has already been applied for by 60 companies, may not move the needle given the sector’s illiquidity.

To have any impact, some experts have warned, underlying infrastructural hurdles would need to be cleared. Otherwise, the fund would only increase the liabilities of the borrowers, reduce their credit assessment and leave behind generational indebtedness by the beneficiaries, who are meant to pay back their debt.

Shipowners and maritime lawyers have warned that disbursing the fund to operators who are struggling to meet high operating costs would not make any significant impact on their capacity but would increase their debts.

A maritime lawyer and shipowner, Captain Dada Labinjo, told The Guardian that current disbursement plans risk plunging indigenous shipowners into generational debts, except for the structural problems stifling the country’s shipping industry.

Labinjo described the CVFF as an ill-conceived intervention that fails to consider the realities of the Nigerian maritime sector.

Labinjo analysed the financial pressure faced by shipowners, saying that while shipowners secure the $25 million to purchase a vessel, they are left with expenses such as crew salaries (N4 million monthly for 10 crew members on a small vessel).

“For charter, a vessel has a maximum of N5 million per trip, with up to three charters monthly, generating about N12 million.

“The vessel also spends on food supplies for the crew, which is between N1 million and N1.5 million monthly, while for bunker fuel, it is approximately N4 million to N5 million monthly, regardless of activity.

“The vessel also undergoes maintenance and servicing, which costs around N5 million monthly. Fresh water supply, which is a necessity, costs N400 million per tonne with a small vessel requiring 20 tonnes,” he explained.

For berthing fees, Labinjo explained that at the Naval Dockyard, berthing costs about N187,000 daily, amounting to about N5.6 million for a month of inactivity.

Even if a vessel secures work after a period of idleness, the debt accumulated during downtime often takes at least a year to clear, he noted.

“Now, imagine if your ship has no job for three months or six months — which happens. That is why you have ships parked at Marina, Kirikiri and Port Harcourt with no jobs,” he stated.

The maritime lawyer further criticised the Federal Government’s policy of issuing waivers that allow foreign vessels to dominate cabotage trade, denying Nigerian operators access to domestic cargoes, which the CVFF was originally intended to help them capture.

The inability of shipowners to access funds continues to add to the controversy and bureaucratic complexity, heightening uncertainty about the actual accruals and interest generated in both the CVFF account and the Treasury Single Account (TSA).

Even officials at the NIMASA, the Federal Ministry of Transportation and the Federal Ministry of Marine and Blue Economy have given conflicting figures.

Initially, the fund was quoted at $195 million. In 2019 and 2020, the then Director General of NIMASA, Dakuku Peterside, claimed it had reached $200 million. His successor, Dr Bashir Jamoh, in 2023, said $350 million was available as the dollar component, alongside a N16 billion naira component.

A former Minister of State for Transportation, Gbemisola Saraki, also confirmed the $350 million figure but acknowledged the uncertainty surrounding the actual balance.

However, in May 2023, the House of Representatives disclosed that the CVFF account with the Central Bank of Nigeria (CBN) held $360 million.

Contrary to the figure, some shipowners argued that the total contributions would exceed $2 billion.

Most recently, the current NIMASA Director General, Dr Dayo Mobereola, said the fund now stands at $700 million.

Meanwhile, a document obtained from NIMASA by Borderless Ltd/Gte through a Freedom of Information (FOI) request, detailing transactions from January 2007 to October 2022, reveals that N20,613,344,488.8 was transferred from local banks to the TSA, while N16,953,322,635.17 was paid directly into the TSA, bringing total naira collections to N37,566,667,123.97.

For the dollar collections, $257,228,760.32 was paid directly to the CBN/Access Bank and $12,147,632.66 held by the Office of the Auditor-General for the Federation, totaling $269,376,392.98.

The FOI requests by the Nigerian content advocacy group also uncovered alarming mismanagement of accrued interest, which the group’s founder, Tunde Kasamotu, said raises serious questions about financial accountability and stewardship.

Regarding interest accrued, only figures from the dollar accounts were disclosed. The default Afribank generated $1,516,928.14; Platinum/Keystone Bank accrued $40,326.46; Access Bank earned $11,594.32, while Guaranty Trust Bank (GTB) held $43,333.81.

Kasamotu urged the Federal Government to commission a forensic audit of the account before disbursement.

Kasamotu also warned against political interference in the disbursement process, stating that NIMASA’s guidelines explicitly require applicants to be financial contributors to the fund and to present credible feasibility studies.