Ogbeifun gives insights how FG can create enabling environment to support indigenous participation in shipping trade



Chairman/CEO Starzs Group, Engr. Greg Ogbeifun
Although Nigeria has been exporting crude oil in the last 50 years and presently marking export of about two million barrels of crude daily, no Nigerian shipowner has ever been involved in the lifting of the product, a venture that would have otherwise earned the nation huge revenue in foreign exchange.
Concerned about the situation, Nigerian Shipowner and Chairman/Chief Executive of Starzs Group, Engr. Greg Ogbeifun, believes that immediate action to address the problem should be the concern of the Federal Government much as it is a problem to private business owners in the maritime sub-sector.

Ogbeifun was giving insights to the issue raised on Tuesday at the fourth Lagos International Shipping Week.

He said: “Nigeria has been exporting crude oil in over 50 years. Today we are exporting about 2 million barrels of crude daily. So, if you imagine the number of ships coming into our waters daily to take out the product for export. In over these 50 years, not one barrel of the crude oil has been carried by a Nigerian shipowner.

“That calls for urgent action by both government and the private sector, because the benefits we are losing by not getting involved in our crude oil shipping and the amount of freight charges running into billions of dollars that this country is losing, we need to begin to wonder what we should do about it.”

Ogbeifun told the gathering that as a member of a ministerial committee tasked to work out how Nigeria could develop a national fleet, the committee found out, from its survey, that countries floated global trading ships by first creating an environment that supported the plan.

“Countries that were able to float global trading ships started by creating an enabling environment for their nationals; public or private or public private partnerships to be able to establish global fleets. One of the incentives for example is on the issue of their tax laws. If you are Greek, America or A British and you buy a ship to trade globally and you want to flag or register that ship in their flag, the importation for that ship is zero-duty. That is fundamental.

“Because shipping is capital intensive business, you need a long amortisation period to be able to pay back whatever financing you are getting. So, some of these countries even go further to introduce tax holidays. Maybe for the first five years of your operation you are not required to pay any of those things that put pressure on your cash flow. So, it becomes easy for you to be able to trade, pay your debt and operate your fleet. But what do we have here?”

Sharing a personal experience, the shipowner said he had to pay 14 per cent of the cost of his ship as import duty, bringing the ship from China where it was built, to Nigeria.

That import duty paid was because the ship was flagged Nigerian, whereas, foreigners brought in same category of ship for the purpose of bidding for same job, but required to only post a one per cent Customs Bond.

Of course, the foreign shipowner would have a cost advantage, bearing in mind also that he would have accessed financing at single-digit rate when a Nigerian would get such financing for building ships at double-digit rate.

Ogbeifun, therefore, called on the government to urgently address the problems as it has the powers to do so, in order to encourage indigenous shipowners, and in turn increase revenue from such operators.