‘NSML is working to bring revolution to shipping industry’ says Okesanjo
Managing Director, NLNG Ship Management Limited (NSML), Temilola Fatai Okesanjo is a passionate Nigerian who believes in the development of human capital and value creation, in this interview with SULAIMON SALAU, he highlights the strategies of NSML, a subsidiary of Nigeria LNG to bring to bear a desired revolution in the shipping industry.
Sir, may we know how many ships you have in your fleet at the moment and how your vessels are doing in the global market?
Nigeria LNG as a company chatters ships. What this implies is that it goes to ship owners to procure shipping capacity on a long time basis for the purpose of lifting its cargoes, which was contracted for delivery basis. What NLNG has also done was own a shipping company known as Bonny Gas Transport and it also manages the company. In actually fact, that was my first job after I was promoted as a General Manager. I re-integrated everything and you now have a division known as shipping division. I was managing BGT and the various developmental activities, which eventually culminated into the setting up of NLNG Ship Management Limited (NSML).
We started NSM as a mining company and we started to gradually move the activities in the shipping divisions to NSML, because the vision was to have all the companies that are able to provide all the shipping activities, and support the growth of BGT and NLNG. As we progressed in that, the ships of BGT became fully managed by NSM. BGT today has 13 NLNG carriers.
It started with four old vessels, another two old vessels were brought in when we were about to start the project procedure from Duke Energy in America (that was the MV Abuja and the MV Edos). These were the six old ships which we started the project with under the auspices of BGT. Those ships were chattered to NLNG and as we went to train three, three more ships were acquired. The first six ships were to service the productions coming from train one and two. As we went to train three, we built three new ships. But, all of them were known as steam ships.
As we went further in trains four and five, we required eight ships to carry the productions from trains four and five because they were bigger trains. At that time, a decision was taken to capture half of that shipping requirement from Bonny Gas Transport and half from a third party shipping company. This was how Bergeson was able to supply four brand new ships, which are also steam carriers to NLNG, and making a total of 13 ships. These were the ships that were chattered from BGT. Four additional ones were chattered from Bergeson for trains four and five and when we went into trains six, we got additional ships four from Bergeson and two from NYK. So there were three major companies chattering ships for NLNG.
There was one addition one chattered from Shell Bermuda Oversees Limited. This was old and we had to return it to Shell Bermuda Oversees Limited, therefore it would have been 24, but because we now have bigger ships, we decided to stay at 23. In the smaller fleets we were having 24 ships. We latter decided to replace the six old BGT ships, which we started with train six with, those ships were 125,000 capacity and we replaced them with 178,000 capacities.
Today, NLNG as a company is chattering 23 carriers, comprising six brand new ground floor diesel electric ships which is the latest. One of the things we also did was that the constructions of these ships were hitherto done for us by foreigners, but we now developed our people and their capacity. I’m happy to announce to you that these ships were constructed and completed by Nigeria Sight Engineers, which also shows that we have not only grown our capacity to man ships, but to manage and supervise the construction of ships as Nigerians.
Can you give us a sharp insight into the need for building of the six new vessels?
These six vessels have served their purpose. The money that was realised in chattering these ships was been used to run the NLNG before the project started. Issues went into the project and they grew forward to a very old age of 35 year, which is unusual. But they were still evergreen and because we now have emission rules, you now have certain compliance in terms of age. We had to retire those ships we had two alternatives. First, go out and chatter from the third party or make BGT to get these new ships.
We did what was known as economic replacement and assessment. We did the analysis and the management found out that it is more profitable for the company to undertake this investment for the purpose of keeping to our values. Before now, whenever BGT wanted to borrow money to buy ships, it will rely on the collateral of NLNG and some other parties. But BGT on its own and based on other assets, was able to collateralise a loan of over $1.5 billion to purchase these six ships. They have the latest designs and with the state-of-the-art technology. Four built in Samsung heavy industry and others by Hyundai.
As the helmsman of NLNG Ship Management Limited, what are your future strategies for growth?
The good thing about NSML is the fact that it has become a very important pillar not only in Nigeria NLNG, but in the Nigeria’s shipping industry today it is the only outfit that manages ships in the country such as NLNG cargoes. It is also the only outfit that manages a marine terminal. It is the one managing the activities of NLNG and we do it 100 per cent. Our vision is that NSML will become a vision of positive revolution for the shipping industry. We foresee a future whereby NSML will positively influence the growth of shipping such that Nigerian shipping companies are not only able to compete and stand on their own, and will be able to bring value and revenue to this country.
What is the current status of NLNG’s Maritime Centre for Excellence?
When you talk about Maritime Centre for Excellence (MCOE), NSML is the one managing what I refer to as the first and only maritime research centre in Nigeria today. MCOE is a product of many positive outcomes of the six new ships. What I did not mention here is that the Nigerian industry’s beneficial activities such as the BGT project. For the first time, paints were developed from the country by two indigenous companies and shipped to South Korea for the purpose of constructing these new vessels. Electric cables were developed, produced in the country, and shipped to South Korea for the purpose of using them in these six new vessels. Other things such as furniture were developed by Nigeria companies. We also trained 600 Nigerians in the act of welding, construction and many of them participated in the construction of these ships.
One of the outcomes of the Nigeria content is the supply of simulators, which are electronic equipment and facilitators that can be used for navigation and cargo which we also got supplied worth over $4 million to $5 million and the training of our people with these simulators. MCOE came into been for the purpose of research and development using cutting-edge technology. Like I said, MCOE was able to simulate and support the design and construction of ships. They will be able to simulate port development and channel, if you want to construct anything within Nigerian ports, they have all the facilities it takes to build ships. If you want to build ships they can design for you.
Even the Vessel Tracking Monitoring (VTM) system, they have all the facilities, we have a VTI base in Bonny. We do not only have the simulators, but we have trained people on the use of those facilities. We can support Nigerian Ports Authority (NPA) and many of the outfits in the country, including Nigeria Maritime Administration and Safety Agency (NIMASA). One of the things we are also thinking about is how we can come to the aid of the shipping industry in bringing about the complete development of cadets which NIMASA have trained in order to ensure that these guys were not just made to be roaming about, but provide opportunity for them to follow up on their career and pick up whatever they have envisaged in their minds. I look at MCOE as the engine of revolution and NSML will be the outfit upon which MCOE will create this revolution in the country. That is the vision I intend to follow.
Security on Nigeria waterways has been a make setback for the maritime industry.
How would you describe the implications of these on Nigeria shipping business and how much do you spend protecting your vessels on yearly basis?
The question you have asked bothers on two aspects. The first has to do with security of ships on Nigeria waterways or Gulf of Guinean and the other has to do with national security. I will not speak on national security because I don’t have what it takes. It is a very serious issue, what I can tell you is that to the best of my knowledge for 10 years, the Gulf of Guinean has been declared by the International Maritime Organisation (IMO) as high risk area. What this means is that ship entering into that water will have to take additional security measures to protect the ships and the people serving onboard. One of those things you will be exposed to is additional insurance. You will also pay some bonus to crew in order for them to agree to come to that area.
You can imagine what that will have been for the ships coming Nigeria, particularly for NLNG which transits that water daily in order to come into Bonny terminal to lift its cargo and the same for the companies under us. The second problem is what if with all these measures that you have to get to a situation where the risk has increased within the context of daring pirates and we have seen many ships been hijacked and what we really need today is the use of what is known as security vessels which has become very prominent in Nigeria.
When NLNG started there was nothing like security vessels. But today, our vessels cannot go out without the support of security vessels. What it then means is that the cost of shipping activities in the country will have to increase because somebody has to bear this additional cost. We can now take and check the samples, then satisfy ourselves in what it takes to hire a security vessel ranging from the size of that vessel and how many we have to hire in order to successfully transmit Bonny channel into the sea without any incident. The same for many other companies who are transiting in high risk in order to evacuate their products, in terms of counter marine activities.
NLNG has been trading from Cost Insurance and Freight (CIF) basis. Nigerian crude is currently being lifted based on Free On Board (FOB) basis. Using NLNG as a model, what model is more suitable for Nigeria?
There must be a vision, based on that vision you develop strategies for pursuing the objectives of that vision. The vision of the founding fathers of NLNG was that we will control and take value for the entire chain. We will liquefy gas and we will produce LNG, we will sell using our ships, so in everything we will make good value. You can also take value by owning the means of delivery. When you look at NLNG, one of their duties is that they chatter ships. So when they chatter the ships, they are still in control of the value chain, because they chatter those chips on a long term basis. So they will take value from delivery using ships that you have chattered. Therefore they control the freights, not only do they chatter ships, they setup a shipping company. They train their people to manage it. Again, they are taking value from owning as different from the value of freighting using chatter ships. They are providing jobs, which is another value. This was why I said in my own time that vision will not only be sustained, but be nurtured.
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