FINANCE & ECONOMICS
Nigerians to Benefit from $5bn Spending on Maritime Activities in Oil and Gas Industry.
Dr. Dakuku Peterside is the Director General/CEO of the Nigerian Maritime Administration and Safety Agency (NIMASA), the apex regulatory agency for the maritime industry in Nigeria. In this interview with NestOil News, he explains what the agency is doing to ensure that more Nigerians begin to benefit from the multibillion dollar opportunities in Nigeria’s oil and gas as well as Maritime sectors. He also shared his thoughts on other regulatory issues in the nation’s maritime sphere and what the agency is doing to ensure safe and secure shipping on Nigerian waters. Excerpts:
Recently, the International Maritime Organ-isation (IMO) announced plans to cut down sulphur emissions from ships coming into ports of member states by 50% by 2050. What is NIMASA doing to key into this plan?
First, the marine environment is shared among a lot of industries. The oil and gas industry operate within the marine environ-ment, seaborne transportation operates within the marine environment, fisheries also do their business within the marine environ-ment, but the responsibility of protecting the marine environment is for all of us.
When we talk about protecting the environ-ment, the regulatory aspect is a core responsi-bility of NIMASA. Part of that responsibility, is derived from international rules and regula-tions in which Nigeria signed into. One of such rules or organisation is the IMO. The IMO has set the year 2020 as the year that it will reduce to a maximum of 0.5% sulphur content in fuel used by vessels that trade on all oceans and international sea route.
“We are partially automated, but the bigger picture for us is that by the end of this year, all our processes will be fully automated.”
Nigeria is a party to that agreement. On the long-run, the IMO plans that by the year 2050, it would reduce by half the current level which is a maximum of 3.5 percent sulphur content in the fuel that we use to power vessels that trade on the oceans and seas.
Because Nigeria is a party to that agreement, we have put a strategic plan in place to achieve compliance by the year 2020 and it will be in fve phases. First, is to raise awareness among ship owners that there is this limit of maximum of 0.5 percent sulphur content in the fuel use for vessels. Secondly is to also raise awareness among those who produce fuel or bunker to begin to produce fuel or bunker with the maximum of 0.5 percent sulphur content by the year 2020. Thirdly is to notify everybody of enforcement to the regime in order to ensure that we measure the quality of fuel that we use and the sulphur content and ensure compliance. Fourth is a regime of punishment and deterrent for those who do not comply. Finally is to embark on aggressive education, enforcement to ensure compli-ance.
So, that is the plan but in the interim, we have taken quite a number of steps among which is running a trial test on a number of vessels. We have installed instruments in vessels that can measure the type of fuel and quality of sulphur content and emission on them.
In addition, we have created awareness about sulphur cap limit by the year 2020.
We are rolling out a national campaign to ensure that all our people comply and compli-ance will be in two phases starting from international vessels to local or cabotage vessels.
We have also started engagement with the Department of Petroleum Resources (DPR) and those who refine bunker or fuel to ensure that they set out to produce fuel that comply with the international regulation. On the whole, we are set for the compliance limit by 2020 and we are working towards full compliance by Nigerians as the leading maritime administra-tion, and because we know the impact on the environment and the negative consequences on the environment, we are working tirelessly in that direction.
NIMASA has a target to meet 100% compli-ance level to the provisions of the Interna-tional Ship and Port Facility Security (ISPS) code. How far has the agency gone with this plan?
The ISPS code is an international regime meaning that it is an instrument created by the IMO following the 9/11 attack that took place in the United States. It was realised that as the aviation industry was used to carry out terrorism or illegal act that could impact on humans, ports and vessels can also be used. Nigeria designated NIMASA to enforce compli-ance with the provisions of the code to ensure that our ports are safe and secured, and that vessels trading within our Exclusive Economic Zones (EEZ) and coastal waters are safe.
As at the time NIMASA was made the designat-ed authority, the level of compliance by port facilities, terminals and vessels was a maximum of 12%. In the past 5 years, we have raised the level of compliance to 70%. Howev-er, there are a few facilities that are still not compliant but they are not major ports. We are working very hard with those who operate the terminals with our partners like the US Coast Guard, Department of Transport UK and with the support of the IMO to ensure total compli-ance.
It is usually not very easy to achieve total compliance because it is a human system. Hence, it requires a number of processes and systems to be put in place. It requires continu-ous monitoring and evaluation on a consistent and sustainable basis. However, what is important is that operators of terminals and port facilities understand the need to comply with the provisions of the ISPS code.
NIMASA as a designated authority is stepping up our game and we will not only satisfy at the interim but would also continuously come around to monitor every facility to ensure that at every point in time, they are in compliant with the provisions and requirements of the ISPS code. Now, we are getting the needed support from the Nigerian Port Authority (NPA) and the Nigerian National Petroleum Corporation (NNPC). One thing that has happened is that there has been a dramatic improvement in compliance with the ISPS code in the last two years. Though, we are not satisfied with where we are, but we are working very hard to achieve full compliance.
In terms of the Executive Order on the Ease of Doing Business, how far has the agency gone with the automation of its processes towards enabling shipping companies have seamless transaction in line with the Order?
We have made a lot of progress not just about the executive directive. Before the Presidential Order 1 and 2, NIMASA had identified digital transformation as one of the pillars of reforms that we are championing in the agency. Pursuant to the digital transformation programme, we set out to automate all our business processes.
The objective is in three folds: One is to reduce corruption by reducing human contacts. The second is to enhance efficiency as everybody does not need to come down to NIMASA headquarters to queue and do business. People can carry out their transactions online. That way, you get results within shortest possible period. The other one is the economic benefits that come with automation, for us, processes is faster, more efficient, and reduces time to conduct business.
We are partially automated, but the bigger picture for us is that by the end of this year, all our processes will be fully automated. So, if you want to do registration of vessels, you can go online. If there are further documents needed, you will submit it and get your full registration. If you want to pay your cabotage surcharges, you go online, pay and generate electronic receipt. If you want to pay for your 3% freight or whatever transaction you want to do with NIMASA, you can do so online.
In addition, the issuance of Sailing Clearance, which shows that your ships are fit and comply with our safety rules, and that you have paid your statutory charges, can now be done without delay. Before now, Sailing Clearance takes a minimum of seven days to issue but now, it can be issued under 24 hours. That is of course, keying into the Ease of Doing Business initiative of the current administra-tion. Apart from the Sailing Clearance, what hitherto used to be a challenge is the issue of payment of government statutory charges. We have instituted what is called the Final Bill Regime. If you are calling at Nigerian Ports, we can process your manifest and agree on what are your responsible charges and you can conclude that transaction within a short period. This is something that used to take longer period but now it takes a maximum of 7 days.
One other thing that we have done is to promote openness and transparency as our charges are now posited online, hence, nobody can fall victim of fraudsters. We have increased channel of communication and feedback to enable our stakeholders make complaints and get a response within 24 hours. What we have done is to create a lot of feedback mechanism, so that if you are not treated appropriately, you can report to the agency.
We are collaborating with the NPA and the Nigerian Shippers Council and of course being supervised by the Federal Ministry of Transportation. In terms of Ease of Doing Business, NIMASA has contributed its own fair share to enhance the ease. That explains why Nigeria’s rating is improving within the global business community.
What is NIMASA doing to improve the standard and quality of Nigerian Ship Registry?
Years ago, Nigerian Ship Registry was not the most attractive registry even for Nigerians to register their vessels. There were a series of complaints about it in terms of the quality of the registry and the respect it commands internationally. So, if you fly Nigerian flag, there are some ports that may not allow you access while some ports may treat you shabbi-ly. Of course, the responsiveness of the flag to challenges and the integrity of the flag as well as the certificate the ship carries, earns it respect globally.
We got a bit concerned such that the Honor-able Minister of Transport Rt. Hon. Chibuike Rotimi Amaechi initiated a process that led to a multi-stakeholder review of Nigerian Ship Registry. After the review, we commissioned a number of studies about ship registries and we received a report from consultants.
We set a committee led by Engr Emmanuel Ilori to fashion out a roadmap on how we can make Nigerian Ship Registry business friend-ly; enhance its competitiveness and integrity among others.
They studied ports, visited stakeholders and known institutions that deal and rate registries around the world including the ABS of United States and UK Ship Registry. After then, they submitted a report to the manage-ment of NIMASA. We have since reviewed the reports and approved the critical elements on that report. We have empowered a stakeholder committee to work with us and ensure the detailed implementation of the recommenda-tions of that committee.
The bigger picture for us is to have a ship registry that is internationally respected, business friendly, has integrity, noted for excellence and is responsive to the yearnings of stakeholders, who sign on to our registry. In the immediate, we hope that by next year, we will attract a lot of vessels and that we would improve our tonnage and be noted as one registry that is very competitive.
Secondly, we want to have a registry that has both national and international registers at the same time. We do not want an open registry because they do not command a lot of respect because anything goes in open register. Then, we are not going to be a nation-al register alone, which entitles only Nigerians to register their vessels. We want to attract vessels all around the world to register with Nigeria. I think that our ship registry is going to be one of our flagship assets as a maritime administrator.
NIMASA recently came up with a 5-year waiver cessation plan on cabotage imple-mentation. What is the thrust and signifi-cance of the plan to shipping development in Nigeria?
You recall that the Coastal and Inland Shipping (Cabotage) Act was passed in 2003. The objective was to restrict foreign vessels from trading on our coastal waters so that we can grow the capacity of Nigeria, and Nigerians will benefit in the area of ship building, ship ownership, ship registration, manning and all the spiral benefits that come with shipping activities in our waters. We have reviewed the cabotage regime and we say that Nigerians have optimised the benefits. One of the things we have identified as a challenge is the abuse of the waiver clause in the Cabotage Law.
To address that, we have initiated a 5-year cessation plan for granting of waivers. Meaning that over a period of 5 years, we will no longer grant waivers for categories of waivers being built outside and brought into our coastal waters to trade. We will not consid-er waivers for flagging of vessels and manning. To get to that point, we need to address the identified gaps in ship building like issues around steel, aluminum, building skills, financing of ship building and lack of repair industry.
In terms of ship ownership, why is it that Nigerians are not owning vessels? Is it just financing issues or lack of managerial skills?So, what we have done is to notify people in advance that we are going to cease the granting of waivers. So, if you want to make an invest-ment in training of personnel, ship building and ship repair, go ahead and make plans because 5 years from now, we are not going to do that. For us, we expect to create more jobs, create ship building activities and create activities around ship repair sub-sector as well as ownership. We expect the general gamut of, for Nigeria playing a leading role and creating wealth for our people. That is where we are going to.
In terms of Local Content, what percentage of this does Nigerian oil and gas operators enjoy in Nigerian Maritime industry?
We have not done detailed calculation of the percentage of Nigerians actively involved in this sector but the critical statistics for us is that about 70% of vessels trading in Nigeria today are owned and flagged Nigeria. Between 60 to 70% of seafarers working onboard cabotage vessels in Nigeria today are Nigeri-ans. If you compare that to where were coming from in 2004 when it was barely 30%, you can see that we have made a lot of progress but are we satisfied? The answer is no because for us, we want to get to a point when we will achieve between 95 to 100%.
The sector still has a lot of foreigners but we are yet to know the percentage of Nigerians in the entire industry. What we know is that a lot of the vessels are owned, manned by Nigerians and registered in Nigeria. One area of gap that needs to be addressed is ship building activities because we are not doing well in that area.
We have a preliminary study that shows that in the next 5 years, oil and gas industry will be spending about $5 billion d in maritime asset and maritime related activities. We want Nigerians to benefit from the $5 billion that would be spent in the next 5 years. The oil and gas industry and maritime industry are interrelated. Most oil exploration activities are done from offshore wells and as we move more and more offshore, there would be more maritime activities even when we drill the crude.
You know crude from the studies to explora-tion to shipment and commissioning of the facilities are maritime activities. So, from end to end, we expect Nigerians to play active roles and benefit from the wealth generated in that sub sector.
In the area of search and rescue operations, what is NIMASA’s response time to distress call?
NIMASA has the responsibility for search and rescue for accidents that occur within the nation’s marine environment. Our responsi-bility is more of coordination than owning all the assets. What we do is to identify who owns what asset and has what personnel. So, we create a community whenever there is a distress call requiring intervention in the area of search and rescue and we call up our partners and assets that are available. Today, we cannot estimate the response time but we are working towards a 5-minute response time for any incident anywhere within our Exclusive Economic Zone (EEZ).
We are working towards having a database of air assets, maritime asset, land assets and all sorts of response assets. So, if anything occurs in the Eastern zone including Port Harcourt, Rivers or Akwa Ibom areas, we can call up our partners there to respond immediately on our behalf and we do on-the-scene coordination whether it happened in central zone that is the Warri area or the Western Zone throughout the length and breadth of our coastal waters, we want to respond under 5 minutes and help those in distress.