Thursday, January 3, 2008



Recent news report (Vanguard of 6/18/03, by Emma Ujah) about the sale of Mv Abuja the only ship owned and operated by Nigeria Unity Line (NUL) for a paltry sum of $3million dealt another disastrous blow on the much touted anti-corruption stand of the Obasanjo regime. The report among other things stated that the said vessel was bought in 1995 at the princely sum of $16.5 million at a time another ship built by the same company, was bought by Glob Pacific Inc. of Bremen, Germany at $9.5 million.

As usual with every one of such allegation that has ever happened in the Nigeria political circles, the government did nothing. In fact 3 weeks after the sale, no one is asking any question, no enquiries done, no fact-finding panel. And this is a government bragging about his anti-corruption stand!

Now, before we examined the propriety or otherwise of the purchase and subsequent sale of the vessel, we need to understand some perspectives on the peculiar circumstances we have with Nigeria maritime industry as well as take a look at the history of Nigeria government involvement in shipping and maritime business. The Nigeria shipping industry has come of age. Historically, it dates back to the period of the so-called discovery and exploration of Africa by the colonial masters in which some of their journeys were made by sea from Europe and Americas.
The evolution of merchant shipping in Nigeria could be properly traced to early this century with the activities of three British companies namely Elder Dempster Agencies, United Africa Company (UAC) and John Holt Company Liverpool Ltd. All of these companies are still in existence in Nigeria till date. Though these companies were mainly trading concerns, carrying their own merchandise from Europe with their own ships rather than being shipping companies rendering freight services. Commercial freight services was however attributed to the UAC when in the early fifties it set up Palm Line ltd to provide shipping services to the public for a fee. The monopoly enjoyed by the white colonialist in the shipping business at that time allowed the foreign shipping merchants to charge very exorbitant freight rates both on imports and exports. This had disastrous effects on the economy of Nigeria at that time. According to Haroun Adamu, in his book “Maritime Handbook” published in 1995, these foreign shipping companies also kept their doors shut on the nationals of the developing countries who were desirous of taking part in the trade. At that time, companies from the developing countries were not admitted into conference lines, which consist of the following lucrative routes:
v UKWAL-United Kingdom West African Line Conference
v COWAC –Continent West African Route (with lines to France Germany and Sweden from Nigeria
v MEWAC –Middle East West African Conference line
v AMWAC –American West African Conference Line
v FEWAC – Far East West African Conference lines among others.

This situations led to protest in the British colonies which forced the colonial British government to set up the Royal Commission of shipping freight which sat between 1906 and 1909, making far reaching recommendation which was never implemented.
This was what prevails before the advent of the Nigerian National Shipping Line (NNSL), which was formed in 1959 signaling the birth of indigenous shipping line in Nigeria. Credit however ought to have been given to Messrs Patrick Osolea and Sons who in 1957 made bold effort to enter the shipping trade but this effort died almost immediately due to stifling environment by the colonialist.

At independence in 1960, Nigeria inherited a Maritime Trade System, which was almost totally controlled by foreign ship owners. There is no record to show that any Nigerian individual (other than NNSL) acquired any ocean going vessel until about 1972 when the Nigeria Far East Company owned by Late Henry Fajemirokun blazed the trail. This was later followed by Chief Wahab Folawiyo Nigeria Green Lines, Alhaji Mahmud Waziri’s African Ocean Line and the partnership of Late MKO Abiola and Shehu Yaradua on Brawal Lines and Bulkship Nigeria Limited.

Generally, shipping plays a very important role in the development of most nations. Maritime transport generally has been regarded as the vector of all production. It accounts for about 80 % of world trade. The acquisition of ships is very complex and highly capital intensive. It takes a lot of time and money to build and acquire vessels and their costs vary usually depending on the physical condition of the ship, the type of cargo its is designed to lift, rate of interest, the ship owners expectation of future market development and quality of cargo it normally lifts.

You will expect all these factors would be considered at the time of the purchase of Mv Abuja, given the bad experience Nigeria government went through with NNSL vessels. Nope! For those who don’t know, at the peak of its existence, the NNSL, boasted about 27 ocean going vessels, but by 1995, all of the vessels had either been sold as scraps or downright shipwrecked without any hope of redemption.

In 1987, Nigeria promulgated the Nigeria National Shipping Policy popularly known as Decree 10 of 1987. Section 13 (2) of the Decree, which is on ship acquisition and ship building states that the National Maritime Authority shall establish a fund “which shall assist Nigerians in the development and expansion of the National fleet”. There is nothing in that law that either advocates ownership or management of vessels by government. The truth is government has no business in shipping other than to set rules and ensure compliance. The issue of ownership and management of vessel is always a disastrous investment for governments in developing countries.

It was therefore an embarrassment and a willful violation of the law when the Abacha government through the then Minister of Transport Late Maj. General Gumel forced the NMA to invest $9 million in the acquisition of a dry cargo vessel. No feasibility studies were ever conducted to examine the pros and cons of such acquisition, and no attempt was made to invite bids before the purchase. As usual with anything purchased in that era, directives were given from Abuja to proceed to Gdansk, Poland for the purchase of the vessel and the entourage returned with a vessel. On that entourage, there were no representative from Nigeria shipping industry, no consultation whatsoever with technocrats familiar with the peculiar maritime details required for such purchase. All that happened on the trip is to point out the most colorful ship and then fly back to Nigeria after collecting the estacode. The Nigerian government delegation consisted of mainly government technocrats while the main key players in the Nigerian shipping industry were minimally represented. Only in Nigeria will you have bureaucratic take such decisions without regard to professional personnel we have in abundance in Nigeria.

Permit me to digress a little here, the structure of the shipping industry worldwide can be grouped into 4 broad categories, with each sector having it’s own clear characteristics and style. The four sectors are:
Bulk Shipping
Cargo Liners
Passengers Liners
Offshore operations

Bulk shipping is concerned with the carriage of the world’s bulk and primary commodities. The ship involved in bulk shipping are the workhorses of the ocean and of international trade and they can be further classified into: Wet and Dry Bulk. The wet bulk is concerned with the carriage of wet cargoes, oil, chemical etc or anything. On the other hand, Dry bulk shipping is concerned with the carriage by full shipload of the world’s primary commodities like grains, fertilizers, sugar, cement etc

Bulk shipping is practiced in Nigeria but not very common. There are lots of tankers lifting Nigeria crude while those for bulk dry cargo are few. At the time of purchase of Mv Abuja our export of non-oil commodities was non-existent. The world cocoa trade was at it’s lowest, groundnut pyramid had ceased to be of any feature in the north. Foreign shipping/trading company mentioned earlier in this piece tightly controls our shipping import: The question is what prompted the purchase of a dry bulk cargo for NUL at that time in 1995? The answer to that question we may never know. What we know however is that, in 1995, wet bulk carriers was the largest shipping activities in Nigeria. Even if we decided against wet bulk due to the financial outlay, we could as well invest our money in offshore operations. In Nigeria today, this factor is a common sight in the Niger Delta area up to Qua Iboe (Eket) where off shore drilling of Nigeria crude is much prominent. The basis of this sector is the rig from which mining or drilling operations are conducted. If Mobil, Shell or any other multinationals decided today to boycott Nigeria all they will do is to fold their hangers and stand and Nigeria live wire-oil- will be in trouble. The joint partnership we had with the oil company allows us to invest in equipment and training but our delegation never remembered that when they went to purchase Mv Abuja.

To cover up the fraud perpetrated on Nigeria, the authorities came back to announce to us all, that the vessel will be the main asset base for the privatization of NUL. An event widely touted but which never materialized. First they appointed a certain Rear Admiral Samuel Bitrus Atukum (rtd) as the managing director. In Nigeria it is as if working with Nigeria Army signal corps automatically qualifies you to work as a traffic police officer! The said managing director had no pedigree in the shipping industry, he had never worked for in the private sector, the closest experience he had to maritime industry is working as a naval officer. All that qualified him for the post is his place of birth and ties to the military. Of course in Nigeria that is all that you need to get a top job! In his over 9 years at the helm, he never carried out the much touted privatization of the organization, rather he periodically addressed the press on the lofty height he is taking NUL. It was in one of those press conferences (reported in Vanguard News papers of February 27, 2003) that he informed the whole world that he had concluded plans to start lifting Nigeria’s crude oil. At that time, the only vessel owned by NUL, which is a dry bulk carrier, was been detained in Sri Lanka, the vessel was arrested by her crew who attempted to sell her over trade dispute. Let me quote the news report:
“Arrangement between the Nigerian National Petroleum Corporation and the Nigeria Unity Line (NUL) to lift and transport the Nations crude and refined petroleum products have been concluded, the managing director of NUL Rear Admiral Sam Atukum has said. When this deal is fully in place NUL would be the only local shipping firm involved in lifting of crude oil and petroleum products”

Did I hear you say if wishes were horses? Well if there is any factual evidence of a purported lifting of crude oil by NUL, it existed in the Admiral’s fertile imagination.
Among the many mismanagement the vessels and its crew suffered under Atukum’s inept management style was a debt of $826, 7772.82, which included staff salary arrears, repair charges and other forms of bills. We also now know thanks to Guardian newspapers of February 18, 2003 that there is also the debt owed to Lloyds classification which totals $52, 000 for the cover due and inspection charges debt owed by NUL.

The secrecy associated with the purchase of NUL can be compared with the transparent bid and open bidding scheme adopted by El Rufai led National Council on Privatization (NCP) where over 40 firms bid for the sale as reported by Guardian Newspapers of 3/26/03 But then the NCP, circumvented the lofty goals it sets for itself by its refusal to permit inspection of the vessels by all the 40 firms that bided for the vessel. As a result “out of the 40 associated firms” only nine of them secured permission to inspect the ship, and only the nine sent in bid ranging from $500, 000, to $3.4 million. Why in the world should NCP restricted inspection of the ship to these nine firms after it had spent thousands of dollars to advertise the bids in “Trade Winds” and “Lloyd’s list” remains a mystery. Again only in Nigeria will that happened! Why advertise for bids when you know the sale will be narrowly tailored for a privilege nine!

Well, the sale is now a forgone conclusion, but we need to take stock and find to some nagging questions such: Should Nigeria government invest in Shipping activities? Did the purchasers of Mv Abuja violated Decree 10 of 1987 which expressly restricted government involvement in shipping to only activities that “assist Nigerians in the development and expansion of the National fleet”? What should be the proper role of NMA in the development of Nigeria maritime industry? What pushed the purchasers of Mv Abuja to procure a dry bulk cargo, against all commercial and economic indices? Why is it that after over 42 years of oil mining in Nigeria Delta, no Nigerian owned vessels lift our crude oil?

The 6th Edition of Transport Statistics in Nigeria published by Federal Ministry of Transport indicated that Nigerians owned about 511 of the 3023 vessels that called in Nigeria in 1995. This could be misleading as the definition of a vessel was not given. Available statistics at the Government Register of Ships office did not indicate that Nigerians owned up to that. It is most possible that fishing trawlers were included as vessels.

We know of a fact that ship owners in about 35 developed countries of the world accounted for over 94 % of the World Merchant fleet used in Maritime transport in 1990. This means that Nigeria including all the developing countries account for the remaining 6% of the world merchant fleet. As at 1991, a 250, 000 deadweight taker (DWT) costs about $85 million while a 3, 000 teu container costs about $5million. There is no doubt that Nigeria indigenous investor needs assistance in getting access to funds, but it should not be free fund for privileged few who are close to the government in power as it is being presently run. We need to invest in a National Maritime Bank, with government creating enabling environment for the shipping industry to thrive. We had had enough of failed schemes perpetrated in the name of national fleet. The truth is if Nigeria were to start a war with Cameroun today and France, with its power EU’s support Cameroun, we would be completely blockaded without any access to maritime shipping but for those struggling privately owned and poorly funded indigenous shipping company, we would be in “hot soup” within hours, not with our penchant for and over reliance on imported goods.

One can only hope that some of the issues raised in this piece will be addressed by a Nigerian government, that is willing and ready to look at its past in order to prepare adequately for its future.

This article was first published online June 26, 2003, sadly the issue of corruption discussed therein is as much alive today as it was then.

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