Temile Development Company Limited; an indigenous shipping company operating in the Nigerian oil and gas industry, Industry experts also say this development has paved way for the foreign ship owners to take over the business opportunities created specifically for local ship owners under the Cabotage Act which made it mandatory for all cargoes within the coastal waters to be conveyed by local ship owners.
Vanguard Maritime Report gathered that between the Ministry and the Customs, about N3 million is being collected from foreigners as TIP on all vessels brought into the country and an additional unofficial fee of $30,000 for any foreign-flagged vessel laden with petroleum products. With the enactment of the Cabotage Act, it is illegal for any foreign owned ship to trade within the nation’s coastal waters unless they are granted waiver by the Ministry of Transportation. But with the TIP, the law is being breached.
Vanguard Maritime Report also learnt that the foreign ship owners successfully lobby officials of transportation ministry to further breach the Cabotage Act with ministry issued receipt for waiver application which such vessels owners then use as waivers to trade along the nation’s coastal waters.
Speaking with Vanguard Maritime Report on the issue, Secretary General of the Memorandum of Understanding (MoU) on Port State Control (PSC) for West and Central African Region, Mrs. Mfon Ekong Usoro, said that the issuance of TIP to foreign ship owners is not in the interest of Nigerian ship owners.
Usoro explained that there is need to take a second look at the policy as it is depriving Nigerians of business in the Cabotage area as well as giving the foreign ship owners undue advantage as they are charged less for bringing their vessels into Nigerian waters.
Reflecting on a similar challenge facing local ship owners operating in the downstream oil and gas sector, Director-General of Nigerian Chamber of Shipping, NCS, Mrs Ify Anazonwu-Akerele, said foreign operators were better favoured by the prevailing import duties on vessels. Anazonwu-Akerele said foreign operators are allowed under the import laws to bring vessels in on a Temporary Import Permit (TIP) at a negligible sum annually, when compared with the volume of business they engaged in. According to her, “an indigenous operator brings in his vessels and pays importation duty of up to 13 per cent, thereby increasing the costs for the indigenous operators and places him at a competitive disadvantage with the foreign operator.” “On the other hand, foreign operators pay only five per cent as import duties”, she noted.
Anazonwu-Akerele explained that for the foreign operator, the vessel could be re-exported after two years as required by the guidelines and re-imported three months after, with no import duty paid. She suggested that Value Added Tax (VAT) should be zero-rated on the vessels, adding that this would drop the import cost incurred by the indigenous operators to seven per cent from 13 per cent, currently applicable. This will bridge the gap between indigenous companies and the foreign companies who used the TIP, she added.
Anazonwu-Akerele also said the rate of company income tax and the various taxes which indigenous ship owners paid were very high. “It is there therefore no wonder that the foreign operators can afford to underbid the Nigerian companies in any commercial bid as they carry overall a lower cost structure in loans and import duties”, the NCS boss said. She also said that shipping was a long-term business and so longer-term contract should be awarded by the NAPIMS, NNPC and the International Oil Companies (IOC).
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