As NIMASA Moves to End Cabotage Waivers

Eromosele Abiodun posits that the move by the management of the Nigerian Maritime Administration and Safety Agency to end cabotage waivers is a welcome development

On May 9, 2003, former president Olusegun Obasanjo signed the cabotage bill into law. To stakeholders in the maritime industry, that was one of the best decisions taken by the Obasanjo government. In their view, the development opened a window of limitless opportunities for not only those in the shipping business, but the entire nation and the economy as a whole.

Cabotage came into being in Nigeria with the enactment of the Coastal and Inland Shipping Act 2003. The provisions of the Act made it clear that only indigenous ship owners have the mandate to carry out coastal trade and inland shipping.

The Act set out the limitations on foreign operations of cabotage shipping and the tight conditions under which exceptions can be allowed. These provisions are set out in sections 3 to 6 of the Act, which prohibit coastal carriage of cargoes and passengers, except by wholly Nigerian-owned, manned, built, and registered vessels.

It also restricts towage by tugs or vessels to those wholly owned by Nigerian citizens, just as it limits carriage of petroleum products and related oil and gas shipping services to vessels of Nigerian ownership. Furthermore, the Act prohibits domestic trading in the inland waters of Nigeria, except by vessels wholly owned by Nigerians.

However, the purpose for which the act was enacted may have been defeated as most indigenous players in the industry are still been crowded out by foreigners. According to numbers released by the Nigerian National Petroleum Corporation (NNPC) Nigerian owned vessels accounts for only 12 per cent of annual oil trade market. The major point of the matter is that rather than allow the letters and spirit of the cabotage act to work, a particular clause in the act flawed everything.

This is the waiver clause. This clause has over the years been exploited by multinational companies with the excuse that Nigerian players do not have the facility, capacity and competency to play in critical areas.

NIMASA to Outlaw Waivers
However, this is about to change as the management of the Nigerian Maritime Administration and Safety Agency (NIMASA) is putting plans in place to end cabotage waivers.
Last week, the Director-General of NIMASA, Dr. Dakuku Peterside announced that the agency would no longer encourage the application of any form of waivers under the Cabotage Act, particularly from multinational oil companies (IOCs) such as Total, Exxon Mobil, Shell amongst others.

Speaking during a meeting with the Oil Producers Trade Sector (OPTS) in Lagos, Dakuku said NIMASA was on the verge of ending the policy, adding that it does not help the growth of the Nigerian maritime sector and economy at large.
He urged industry players to draw up a five-year strategic plan for the cessation of application for Cabotage waiver and also pursue the utilisation of Nigerian-owned vessels for marine contracts.

Specifically, he said, “Our laws forbid foreign vessels operating in our territorial waters save for compliance with the Cabotage Act. We also want to increase the number of Nigerians who participate in the marine aspect of your business and we are working closely with the Nigerian Content Development and Monitoring Board (NCDMB) to have a joint categorisation of vessels operating under the Cabotage Act in order to ensure the full implementation of the Act.”

Dakuku urged the IOCs to support NIMASA’s bid to ensure full implementation of the Act, adding that it would equally be of more benefit to the investors in the sector as it will be cost effective for them to engage Nigerians.

Commenting on the previous resolutions with the OPTS, Dakuku stated that there was need for the trade section of the oil producers to fulfil their own part of the agreement.
He said NIMASA will not compromise the growth of the maritime sector, especially when it comes to the issue of enforcing statutory regulations enshrined in the Agency’s empowering instruments.

Dakuku further stated that in NIMASA’s bid to grow the industry, it would not hesitate to wield its powers where necessary, adding that the agency’s mandate is strictly regulatory. But he also noted that NIMASA preferred the method of engaging key players in the industry for symbiotic benefits.

He added, “We don’t want to change our rules of engagement to a confrontational one because the mandate we have is that of the Nigerian people, to grow shipping for our economic benefits. In this wise, we urge you to cooperate and collaborate with us where necessary so that we can have an all-inclusive maritime sector.”

Dakuku said the agency was taking necessary steps to ensure that there were no gaps in the sector, especially as it concerns needed human capacity. He said the Nigerian Seafarers Development Programme (NSDP), which is an interventionist programme of the Agency, was making serious headway in creating sea time for the over 2,000 graduates of the programme.

In his remarks, the Executive Director of OPTS, which comprises major oil companies, Bunmi Toyobo, said the trade section was ready to comply with all directives of NIMASA. He said the information required by the Agency to build and harmonise its data for better regulation of the sector will be provided by OPTS.
The meeting, which was well attended by OPTS, had managing directors and representatives of major oil firms, including Total, Exxon Mobil, Shell, and Agip amongst others.

Clamp Down on Vessels
The bid to put an end to non-compliant to the Cabotage Act did not start just last week. A few years ago, Nigerian Maritime Administration and Safety Agency had announced that it has started seizing vessels for violating provisions of the Cabotage Law which states that Nigerians should be employed onboard vessels.
Director of Maritime Labour and Cabotage Services at NIMASA, Ibrahim Jubril, who disclosed this at the time, said the agency has also acquired fast intervention vessels for the purpose intercepting erring vessels.
Jubril, also said that in order to have an accurate data of available maritime labour in the sector, NIMASA has recently come up with an electronic register of all maritime labour in order to ensure jobs are provided for them in line with the Cabotage law.

According to him, “On the part of NIMASA as a regulator, we have put in measures to ensure full implementation of the Cabotage Act in Nigeria, particularly on the fourth pillar which has to do with building of ships, carriage of cargoes and the manning aspect of it.
“We have come up with an electronic register of all maritime labour that would enable us plan better for the industry, such that whenever there are identified jobs for seafarers, it would be carried out by Nigerians and Nigerians would be placed on the job.
“In line with the Presidential executive order, we have come out in full force, in terms of our enforcement, to ensure that only Nigerians are engaged onboard. Before the release of the Presidential order, NIMASA came up with a marine notice which stated that we would have zero tolerance for any waiver at all.”

Operational Guidelines
The Nigerian Maritime Administration and Safety Agency had at the time issued new set of operational guidelines to International Oil Companies (IOCs) as it concerns engagement of seafarers and dockworkers as provided for in the Cabotage Act. The guidelines which were disclosed to the IOCs and other stakeholders at a sensitisation seminar on the implementation of the agency’s statutory mandate on offshore operations in respect of maritime labour and cabotage, the then Director, Maritime Labour Service of NIMASA, Juliana Gunwa, noted that same are to be fully complied with.

Gunwa gave the guidelines which would attract penalties for defaulters as follows: All IOCs/ facility operators are to engage only maritime labour employers registered with NIMASA as agencies for outsourcing of seafarers/dockworkers. All IOCs/facility operators are to engage only maritime labour that is registered with NIMASA as seafarers/dockworkers; All IOCs/ facility operators are to ensure that only maritime labour employer that have conditions of service validated by NIMASA are engaged on their facilities.

Others are that all IOCs/facility operators are to ensure that employers of maritime labour implement the agreed conditions of services for the maritime labour industry; “All IOCs/facility operators are to engage the cabotage services department of NIMASA for advice and periodic assessment on status of compliance with the Cabotage Act 2003 and manning of cabotage vessels. All IOCs/facility operators are to ensure that only registered operators of ports, terminals, jetties, offshore platforms and vessels are qualified for service contracts on/in connection with their offshore facilities. “This will be implemented as a “fatal flaw” during the tendering process.

“Facility owner will be held liable for contracting with unregistered operators of ports, terminals, jetties, offshore platforms and vessels.” She told the stakeholders that the agency will soon commence enforcement of the provisions of the Cabotage Act as it concerns engagement of seafarers and dockworkers in the oil and gas sector.”
Instructively, an official of the agency had at the time admitted that NIMASA have some challenges in the enforcement of the Cabotage Act because they do not have a database on numbers of vessels providing marine services to offshore operations of the IOCs.

The official also blamed the IOCs for not co-operating and not being open in the declaration of number of offshore marine vessels in their employment, as well as need to seek NIMASA‘s approval in all pre-tender for offshore and related contracting processes.