Nigerdock: A dream killed in prime

• Deviates From Core Vision
• Vessels Undergo Dry – Docking Overseas
• Loss In Revenue
When the Federal Government conceived the idea of building a shipyard in 1984, the thinking was that by now Nigeria would have joined the league of such ship building nations, as South Korea, Italy, United States and Singapore, among others.

It was the dream of becoming a shipbuilding nation that prompted government to build Nigerdock on Snake Island in 1986. And the shipyard was thriving until 2002, when government decided to privatise the once sprawling entity.

Before it was privatised, the company had graduated from merely repairing ships to actual shipbuilding, especially small craft, boasting a total of 28 vessels it had constructed over the years. By 2001, it had also repaired over 600 vessels of various specifications, with more than 1,500 staff on its payroll, out of which 600 were permanent workers.

Nigerdock turned the tiny Snake Island into a wonderland akin to a foreign country within the country. Visitors to the complex would not believe they were in Nigeria until they were ferried out of the zone.

In 2002, when government announced its intention to privatise the company for which its foreign technical partners, Navimor from Poland, indicated interest as the core investor, Nigerdock held great promise for the country’s industrial growth

As Navimor already had issues with the Federal Government, due to alltged claim of 30 per cent ownership of the firm prior to privatisation, it made no sense to the authorities to hand over the company to it as a core investor. Thus, Global Energy Company consequently won the bid before it handed the shipyard over to the current managers, Jagal Nigeria Limited, which is now focusing more on fabrication of oil and gas equipment, rather than ship repair for which the company was known.

At this stage, the company had a floating dock constructed in Poland with lifting capacity of 3000/1800 tons and was equipped with ultra modern machineries and an off-shore construction areas for the building of structures, oil rigs equipped with 60 tons capacity, mobile cranes and 150 tons crawler crane for handling even the heaviest construction pieces.

From Nigerdock, the premier dockyard in Nigeria, there has been an emergence of other privately owned shipyards in Lagos and Port Harcourt.
Presently, the country has nine shipyards, some of which are fully operational. They are 25,000 tones capacity Nigerdock on Snake Island, Lagos, Starzs Marine and Engineering Ltd. (Starzs Shipyard) in Onne area of Port Harcourt, West Atlantic Shipyard, also in Onne, Naval dockyard in Lagos, which is mainly used to service military vessels and a few commercial ships, non-functional continental shipyards in Lagos, a non-functional Naval Shipyard in Port Harcourt, non-functional Technitrade Shipyard in Warri, West African ventures and Nestoil in Port Harcourt, though still under development.

But these facilities seem not enough to service the over 1,200 vessels operating within Nigerian waters. They are of low capacity and cannot handle large vessels, especially those operating offshore. Besides, many of them lack skilled workers to handle all the required aspects of services by ship owners.

The Nigerdock that was established to undertake all aspects of dry docking has since lost focus, as it now combines vessel repairs with offshore construction, its new major focus. This alone has killed the dream of the founding fathers, especially when it was already building small craft and was positioning for real shipbuilding before it was sold during the regime of former President Olusegun Obasanjo.

However, a source at Nigerdock told The Guardian that the shipyard has not abandoned the core vision of the founding fathers, as ships are still being repaired at the dockyard.

According to the source, the only thing that has changed at the Snake Island yard is the diversification of business. “It is not true that we are not giving attention to ship repairs. We are doing it in addition to other operations in the oil and gas sector. We are oil and gas construction company and we carry out marine services, including offshore, vessel fabrication, shipbuilding and repair among others. We have delivered some of the largest fabrication projects in the oil sector in Nigeria, like the Bonga for Shell and Agbami for Chevron among others. We can take part in other challenging projects, if given the opportunity,” she said, though she remained silent on shipbuilding and ship repairs aspects of the company’s operation.

Shipowners and other stakeholders have decried the trend and are calling on government to act fast so as not to further deplete the country’s foreign exchange, especially now that earnings from crude oil is inadequate for the country’s survival.

The President of Shipowners Association of Nigeria (SOAN) and Managing Director of Starzs Marine and Engineering Ltd (Starzs Shipyard), Mr. Greg Ogbeifun, said although Nigeria currently has about nine shipyards, their capacity is not enough to cope with the volume and type of work available, hence the need for many Nigerian shipowners to patronise foreign shipyards for their dry-docking needs.

“The operational shipyards in the country are mostly always fully booked. That is why there is not enough capacity to meet the demand. Nigeria has over 1,200 vessels operating within its waters. Shipyard facilities in Nigeria are inadequate, both in number, capacity and capability. The available shipyards in the country are constrained by inadequate infrastructure and obsolete facilities. They lack capacity to take bigger vessels and, as such, are limited in the types they can repair,” he said.

According to him, Nigeria is losing an estimated USD500 million annually to foreign shipyards due to vessels constantly leaving the country to look for docking facilities in far away countries such as Ivory Coast, Cameroun, Namibia and even South Africa.

Aside the revenue loss to the country, he explained that Nigerians are being deprived of needed employment, as a typical small sized shipyard has the capacity to employ over 100 skilled and unskilled staff.

“A lot of jobs are lost, when vessels leave the country to look for dry-docking facilities elsewhere. These jobs would have been created in Nigeria, if there were operational ship repair yards in the country. Dry-docking of vessels outside the country hinders the country’s opportunities for skill and technology transfer. The continuation of this practice means that Nigeria will never improve its capacity to repair vessels, which in turn diminishes the possibility of shipbuilding in the country.”

On expectations from the government, Ogbuefun said local shipyard operators are looking for support in areas of basic infrastructure.“The electrical power demand of the industry is huge. Furthermore, the operation of a shipyard is hinged on a viable steel industry, as it depends heavily on imported steel plates, pipes and sections. Currently, the Nigerian steel industry is almost non-functional and the steel companies still in operation are producing far below set capacity. To sustain a robust ship repair industry, a deliberate effort must be geared towards reviving the steel industry,” he said.

Ogbeifun, who is the owner of Onne based ship repair yard, also urged government to develop policies aimed at encouraging the establishment of shipyards in Nigeria, adding that such policies should be fashioned to encourage existing shipyards, as well as strengthening them through giving needed assistance to enable them collaborate with international yards for improved capacity, gain more experience and grow in the process of building or assembling vessels.

“Government can create fiscal incentives in the form of tax breaks such as duty exemptions on imported raw material, equipment and spare parts for use in the ship repair industry,” he said, adding that deliberate efforts should be made to remove all factors militating against the establishment of viable shipyard industry in the country.

According to Ogbeifun, Nigeria has a huge market for ship repairs going by the number of vessel making calls at the country’s ports annually.
“Nigeria cannot become a maritime nation without a vibrant ship repair and shipbuilding sector,” he said. “Indeed, the potential of becoming a maritime nation is there, as statistics have revealed that in the first quarter of 2015, a total of 5,139 ocean going vessels with a total gross tonnage (GT) of 61,990,999 called at Nigerian ports, compared to 57,034,338 GT recorded in 2014. This volume of vessels and the attendant maritime activities surely highlights the huge potential of the shipyard subsector of the maritime industry, if harnessed properly.”

Describing the state of Nigerian ship yards, he said: “Nigerian shipyards are currently incapable of meeting the needs of the industry and without vibrant ship repair/dry dock facilities and personnel, the dream of being a maritime nation cannot be achieved. Starzs Shipyard, which has been in operation since 2000, utilising a 500 tones floating dock and which has carried out more than 700 dry dockings, is the first privately owned indigenous shipyard in the country. With a good reputation based on high level of service delivery, safety and reliability, the yard is working on developmental plan to increase the existing capacity to about 8000tons with multiple berths for ship repairs shipbuilding and shipbreaking.”

Captain Niyi Labinjo, a Master Mariner and president of Nigeria Shipowners Association (NISA), highlighted the implication of dry-docking Nigerian vessels abroad, saying it would encourage capital flight. He urged the government to provide enabling environment for the emergence of high capacity shipyards in view of the huge market for such services within the country.

The implication of dry- docking Nigerian Vessels overseas is clear and great. For a country with over 5,000 vessels visiting annually, we need a very big shipyard. For the kind of maritime market in Nigeria, we need a viable and high capacity shipyard. Look at what is going on at LADOL, the facility has attracted a $300b worth of business. If that facility is not available in Nigeria, that business could have gone to Angola, another African country.”

Continuing, he said ships need regular maintenance and if there is no shipyard to do so, it will lead to capital flight and unemployment.
“The small shipyards available in Nigeria are very busy. All we need is to keep encouraging them by giving them more jobs. The vision behind Nigerdock was novel and it could have taken the country to the Promised Land in terms of ship repair services. Government decided to sell it because it is a bad business entity. All that is needed now is to give all investors a level playing ground,” he said.