How NIMASA paid N13.5bn on idle N50bn floating dock in 3yrs

The Nigerian Maritime Administration and Safety Agency (NIMASA) has paid the sum of N13.5billion as wharfage charges for a floating dock, which it acquired three years ago, investigation by Daily Trust on Sunday has revealed

Wharfage is the fee charged to cover the cost of using a wharf. It includes the cost of nocking unto the dock electricity and maintenance service since a ship cannot be locked up and abandoned like a car.

A senior management source at the agency told our correspondent that they paid around $30,000 daily as wharfage charges and other expenses.

The source said the agency might have paid $32.9million in three years.

The claim is consistent with the disclosure of a former executive director, operations of the NIMASA, Rotimi Fashakin, who explained that insecurity in the Niger Delta region made it difficult for the agency to berth the dock at Okerenkoko as originally conceptualised.

He said, “Indeed, the floating dock was supposed to go to Okerenkoko in Delta State, but with the conditions that exist now, it is almost impossible. A dock is supposed to serve the shipping community as a commercial facility, but which company or vessel would be bold enough to travel to Delta State?”

The NIMASA is a regulator and not an operator, so giving the dock to an operator also needs to go through the bureaucracy of government.

 “The other thing was getting a place to berth it. If you know the complexity of a floating dock, the draft you need to keep and operate it is 12 meters. The contractor was spending over $30,000 keeping the dock afloat for many months, and we had to pay many months demurrage on that. Eventually, we reached a situation where we had an agreement with Naval Holdings Limited, a sub-sect of the Nigerian Navy, to keep the dock,” he added.

Daily Trust on Sunday reports that the floating dock, which was acquired at N50bn, has remained idle since it arrived in the country on June 11, 2018 at the Nigerian Navy Dockyard, Lagos. 

Justifying the purchase of a floating dry dock

In a bid to put an end to the huge cost of dry-docking outside the country, the NIMASA acquired the modular floating dockyard to save the federal government over $100m annually and about $1bn in 10 years. 

The plan to embark on the project predates the current director-general of the NIMASA, Dr Bashir Jamoh, and in fact, Dr Dakuku Peterside. Before their appointment, their predecessor had already established a business case for a floating dry dock, where owners of ships can dry-dock their vessels from time to time. 

However, since its arrival in Nigeria, the modular floating dockyard has been enmeshed in controversy.

With an average of 5,000 ships calling at the Nigerian ports annually, 400 active coastal vessels and several fishing trawllers, the demand for ship repair and maintenance facilities can only be on the rise.

Before now, the dry-docking of vessels operating in Nigeria was done outside the country, with huge implications in terms of foreign exchange costs running into several millions of dollars yearly.

Analysts say Nigeria was losing about N16.5bn annually to neighbouring countries through the movement of its vessels dry-docking to meet the International Maritime Organisations’s (IMO) requirement.

Findings by Daily Trust on Sunday revealed that it cost between N45m and N75m to dry-dock a vessel, and that approximately, 200 to 300 vessels go to Ghana, Duala and Robins Bay for dry-docking annually.

A maritime expert, Lucky Amiwero, was quoted as saying, “Each dry dock costs the ship owner between $300 and half a million dollars each trip. If you can dry- dock a vessel at $300,000 for 25 days and if you have two docks a mont,h that is $600,000 every month.

“You can imagine having over 3,000 vessels (in Nigeria); they have to go for dry- docking. It is a requirement by the IMO standard that a vessel goes for dry-docking once every three years, and if you dock 200 to 300 vessels once every year at $300,000 per dock, you can then imagine how much it will come to, ”

 ICRC issues enable a ‘PPP’ operation of the dockyard

The Infrastructure Concession Regulatory Commission (ICRC) has issued a certificate of compliance for an outline business case to enable the operation of the modular floating dockyard acquired by the NIMASA.

With the certificate, the modular floating dockyard will be operated, maintained and transferred under a public-private partnership (PPP) arrangement, in compliance with the ICRC act, 2005 and the National Policy on PPP.

Jamoh, who received the certificate of compliance, said, “We have confirmed that the dockyard cannot berth at an area earlier proposed for it. We got approval from our supervising ministry to deploy the asset on a PPP basis, and we are working in conjunction with the Nigerian Ports Authority (NPA). Our arrangement to use facilities at the continental shipyard in Apapa is still on course.” 

Jamoh also said if put into use, the dockyard is expected to generate N1bn monthly into federal government’s purse.

He said the floating dock, which remains a viable project, would also generate lots of jobs and revenue for the country.

Expert wants management prosecuted

The chairman, Board of Trustees (BoT), Nigerian Ship Owners Association (NISA), Chief Isaac Jolapamo, called for the immediate prosecution of those behind the purchase of the modular floating dock.

Jolapamo explained that in the first place, the NIMASA has no business owning and operating a shipyard.

He said the money used for the purchase was meant to be given to ship owners for the yearly maintenance of their vessels, which must be paid back for it to be recycled among owners.

“If the NIMASA had procured the floating dock the way it was scheduled from the beginning, there won’t be this confusion. This is the outright misappropriation of public funds. You cannot develop the shipping sector on a political platform. There is no wisdom in the decision to own a dock. The government is losing money. And in a sane country, those behind it would have been in jail by now,” he said.

Chief Greg Ogbeifun, a former president of the NISA, however, advised the NIMASA to focus on how to put the dock into use so that it would create employment for the unemployed and generate revenue for the government.

“The good thing is that there is a move between the NPA and the NIMASA to site the dock in one of NPA’s facilities in Lagos. The arrangement should be concluded.

“But worrisome to me is the fact that there was no adequate arrangement for a place to site the dock before it was purchased.

“Neither the NIMASA nor the NPA is structured to run a shipyard; however, my advice to them is that they should partner with an international organisation that is into the shipyard to manage and run it,” he said.

Similarly, Mrs Margret Orakwusi, the founder and Chief Executive Officer of Morbod Group, as well as the first female president of the Nigerian Trawler Owners Association (NITOA) and chairman, Ship Owners Forum, in a phone interview, said shipbuilding and maintenance facilities were very expensive to acquire and manage. She noted that a lot of logistics requirements go into the shipping business.

According to her, it is capital-intensive and needs a lot of planning before any acquisition is made. She urged stakeholders to be patient with the NIMASA, noting that from the look of things, so many considerations are being made.

“I think they actually put the cart before the horse. One of the things they are battling with is where to keep the dock. They are working on a public-private partnership to make it work. All these things take time,” she said. 

 NIMASA denies payment of $30,000 as wharfage

Reacting to the allegation of the payment of $30,000 wharfage, the Assistant Director, Public Relations of the agency, Edward Osagie, said it was a untrue.

Osagie said the agency had security men, seamen and engineers on board the modular floating dock on a 24-hour basis.

He added that the agreement between the NIMASA and the NPA on moving the dock to the continental shipyard, Apapa was still on course.

 “We have men on board 24 hours, so the issue about the payment of $30,000 wharfage is a lie. The agency has also gotten an outline building case compliance certificate from the ICRC. The agency is also working with the timeline given to it by the ICRC to identify and engage satisfactory managing partners for the dock,” he added.