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‘Unfavourable fiscal policies frustrated national shipping line plan’

By Adaku Onyenucheya
21 January 2022   |   4:15 am
The President of the Ship Owners Association of Nigeria (SOAN), Greg Ogbeifun, has revealed that unfavourable trade policies and obsolete tax laws were the major setbacks to the Federal Government's bid to establish a national shipping carrier in partnership with foreign private investors.

Shipping. Source: Google

The President of the Ship Owners Association of Nigeria (SOAN), Greg Ogbeifun, has revealed that unfavourable trade policies and obsolete tax laws were the major setbacks to the Federal Government’s bid to establish a national shipping carrier in partnership with foreign private investors.

Ogbeifun, who stated this in Lagos, said the claims by the Minister of Transportation, Rotimi Amaechi, that the proposed national carrier failed following the failure of Nigerian shipowners to raise the 60 per cent stake allotted to them was false.

The National Fleet Implementation Committee, headed by the immediate past executive secretary of Nigerian Shippers’ Council (NSC), Hassan Bello, had signed a memorandum of understanding (MoU) with Pacific International Lines (PIL), a Singaporean shipping line that Nigerian private sector operators would maintain a 60 per cent equity, while PIL retained 40 per cent.

Ogbeifun, who was a member of the committee, said the committee had not reached the stage where indigenous shipowners were required to raise their equity contribution before PIL pulled out of the venture.

The shipping mogul, who is also the Chairman, Starzs Investments Company Limited, said the seeming lack of commitment and willingness by the Nigerian government to review the country’s tax laws informed PIL’s decision to withdraw from the deal.

“I know that our committee went to Singapore with the Minister of Transportation to sign an MoU with PIL. After signing the MoU, we returned only for PIL to write to the committee that they have looked at the extant laws and that the idea would not be viable unless the country reviews its tax laws in line with what other nations do to enable the establishment of fleet in the country

“Our committee did a global survey of successful countries that have established national fleets – Greece, Angola, even Kuwait all have zero duty, five-year tax holiday and reduced VAT (value-added tax). All these were put in place so that the cash flow will enable payment for the cost of building. But in our country, that is not to be. So PIL looked at it and said that if they are going to go after the same cargo as other global traders and these are the conditions, our charge rate for the cargo affreightment must be higher than anybody else. And they said no, it would be viable and competitive. That was how they backed out,” he said.

According to Ogbeifun there was a need for the government to review the import duty, tonnage tax and VAT laws due to the capital-intensive nature of the shipping trade

“For example, if I were to buy a crude oil tanker of Panama size and I am to spend $100 million or more to buy the tanker. If it is going to be registered in Nigeria, owned by a Nigerian company and crewed by Nigerians, our laws demand that I will pay import duty on that. If I am to draw from the experience of the last ship we built in China, it costs us approximately 14 per cent of the cost of building the ship in terms of import duty and other associated importation cost,” he stated.