Eromosele Abiodun writes that the move by Nigerian Maritime Administration and Safety Agency to put globally acceptable ship registry in place will redefine the shipping industry in Nigeria
Nigeria once had a thriving ship registry and vessels proudly carried the Nigerian flag. Like most things in Nigeria, that has since become history as the country’s flag administration no longer exist.
Ship registration has been done since business on the seas has been important. Originally meant to control ships carrying cargo in European seaborne countries, it was used to make sure ships were being built in the local country, with crews predominantly of the local country.
Since then, ship registration has been used to document ships for ownership. Documentation provides definite evidence of nationality for international purposes and provides financing opportunities with the availability of preferred mortgages on documented vessels.
All vessels, according to the rules of the International Maritime Organisation (IMO) are expected to register under a country of their choice, the maritime administration, which in turn permits such ship to fly their flag.
Ship registration is the process by which a ship is documented and given the nationality of the country to which the ship has been documented. The nationality allows a ship to travel internationally as it is proof of ownership of the vessel.
International laws, experts said, require that every merchant ship be registered in a country, called its flag state.
“A ship is subject to the law of its flag state. It is usual to say that the ship sails under the flag of the country of registration. A ship’s flag state exercises regulatory control over the vessel and is required to inspect it regularly, certify the ship’s equipment and crew, and issue safety and pollution prevention documents. The organisation which actually registers the ship is known as its registry.
“Registries may be governmental or private agencies. In some cases, such as the United States’ Alternative Compliance Program, the registry can assign a third party to administer inspections. A register that is open only to ships of its own nation is known as a traditional or national register. Registers that are open to foreign-owned ships are known as open registries and are sometimes called flags of convenience, said Managing Director and Chief Executive Officer of Starzs Investment Limited, Mr Greg Ogbeifun.
A few years ago, the Nigeria Liquefied Natural Gas (NLNG) Limited made effort to revive the Nigerian ship registry. NLNG had engaged a consultant on ways of improving the nation’s registry. The NLNG actually approached Nigeria’s flag administration to express their desire and preference to register all her ships in Nigeria if the flags administration can be enhanced and reorganised to meet international standard.
They went further and paid for a consultant to carry out a study of our flag administration and made recommendations to achieve this objective. The report and recommendations have been awaiting implementation by the maritime administration since then, over three years ago.
On assumption of office as minister, the Minister of Transportation, Rotimi Amaechi, had constituted a committee to look at possible ways to make the nation’s flag administration attractive for international patronage.
NIMASA takes action
A team of professionals worked assiduously to produce a comprehensive report and recommendations to achieve the objective, on submission of their findings, the Nigerian Maritime Administration and Safety Agency (NIMASA), set up a seven-man committee, which transversed several notable maritime countries to seek assistance.
The committee recently submitted their report to the Director General of NIMASA, Dr. Dakuku Peterside.
The terms of reference of the nine-man committee, which was set up in February 2018, included to examine the status of the ship registry in line with international best practices and advise and recommend requisite improvements of necessity in the registry.
Peterside had on February 27, 2018 inaugurated the committee to establish a strategy to revamp the Nigerian ship registration process in order to raise the profile of the Nigerian flag in the global maritime space.
Speaking to THISDAY after the presentation ceremony, Peterside said Nigeria would have a vibrant, effective and efficient Nigeria Ship Registry (NSR) in a few months stressing that the achievement will transform the nation’s shipping industry and transform the Nigerian economy.
He said: “A ship registration is a custodian of the licensing of every vessel that is flagged Nigeria. It is more than a licensing agency. It is a regulation of the technical acceptability of the country in the global maritime space.
“If we have a ship from a flag of convenience or what they call open registry and I have another ship that is carrying the British red and white ensign, the UK flag, automatically, that vessel carrying the UK flag is respected. It is believed it meets every global standard by the right people and it would not be involved with illegal activity because there are minimal standards accepted by the UK ship registry.
“This cannot be said for flag of convenience. Most crime in international high sea are committed by vessels with flag of convenience, they become vessels of interest if you juxtapose this with the meaning, the symbol of the Nigerian flag and the Nigerian Shipping Registry(NSR), currently, there are not too many ocean vessel carrying the Nigerian flag.
“Even vessels owned by the LNLG are not flying the Nigerian flag. So, when you talk about what the flag can do for the Nigerian economy, it would bring respect and reputation for Nigerian shipping. So, if the NSR is solid, reputable, business ready, of course, it would command global respect. It would attract vessels to the NSR and a Nigerian flag ship leaving Nigeria to another country would earn her place and be respected.”
The NSR, he added, would mean technical competence, more dispositions by the international community.
“So, the first thing it does is the NSR will be having people with technical competence. The second thing is that it will give ship owners access to funding in the international financing space so they can play big. If your vessel is registered with the NSR and the NSR commands respect, then the financial institution can transact with you.
“They know about the integrity of the Nigerian flag. You can access capital at a competitive and relatively cheap rate. There are funding out there. If your vessel is not with a flag that commands respect, people will deal with you with caution and circumspection.
“The third thing it does is that it attracts the best hands to work for you. It enhances the status of the Nigerian seafarer. If a ship is flagged, for example, United Kingdom, it means that all the seafarers there would be deemed to be competent. Once you leave there, you can work anywhere. People would employ you because you have the British flag. If the Nigerian ship earns this reputation, we would not be fighting everywhere looking for sea time bets for our cadets. Our cadets can practice on vessels flagged Nigeria and become employable anywhere in the world,” the NIMASA boss added.
Impact on cost of insurance
He explained that the cost of insurance would drastically reduce, stressing that the insurance premium payable by Nigerian flagged vessels would reduce.
“If your vessel today is registered under the Nigerian flag, the insurance companies P&I (Protection and Indemnity) Clubs in London can deal with you knowing that you are technically solid, your safety records are good, and then of course you are bringing some value. The insurance premium will come down.
“Another thing the NSR will do will be acceptability in other countries. Now, you know that when you go to other countries, their port state control officers would delay you. Now, if they are sure of the quality of your flag, they know that you meet all the technical standards set by the IMO or the regional MoU. But if your flag is substandard, you become target for port state inspection. Your vessels are delayed and sometimes detained. So, in every dimension of quality, the Nigerian flag determines the capacity of Nigerian flag ships to transact business in the international spaces and those who will engage them,” he said.
Peterside, stated that there are many companies out there that will not engage a ship flagged Nigeria, “but again, if our flag is raised solid and commands technical respectability, then many people will trade with vessels. It means more trade, more business opportunities. It means strength for our businesses and so in every dimension, the quality of the flag determines your place in the market. The flag shapes profitability in the marketplace.”
He said Nigeria lost its respect in the past because it neglected the quality of training of its surveyors.
“I think that it is something that happened gradually overtime. We neglected the quality of training of our surveyors. We didn’t run with technology. We also neglected the enforcement aspect. One thing is that negligence itself breeds more negligence. If you could do something and get away with it with nobody ensuring compliance, of course, it means that you can do the other things. From the point of administration, there has been negligence on our part and so this would eventually get to the Nigerian flag.
“Now, shipping is a global business in nature. If your vessel cannot trade in some regions of the world, of what use is it? Very few vessels will trade outside the Nigerian coasts all their lives. Vessels are expected to trade in different jurisdictions. So we got it wrong in the deployment of personnel and technical response capacity and the time involved,” he added.
On what to expect from the new NSR, he said: “We expect to see three things. One, a NSR that is respected across the globe and that is attractive to ship owners. Secondly, we expect to see a NSR that is effective, efficient and responsive to change. Thirdly, we expect to see a NSR that is automated, that meets international standard certification and in the next few hours and days the implementation of the monitoring committee that will follow through to see that every single recommendation is followed through to the latter will be named. We have the will and courage to implement this report.
Health of maritime administration
Speaking just before submitting the report, the committee chairman, Emmanuel Ilori, stated that ship registration and the effectiveness of the established processes in a country’s maritime sector operations were critical in determining the health of a national maritime administration.
“All the committee’s efforts were geared towards making the Nigerian flag globally acceptable. The committee carried out an extensive review of the Nigerian Ship Registry, took cognizance of stakeholders’ opinions and expectations, and carried out comparative analysis of the ship registration processes of some Global Registries in arriving at the report. NIMASA management should consider and implement submissions contained in the report because we need to see the Nigeria that is moving in the positive direction going forward.
“Thank you for your efforts and time to change the negative perceptions of the Nigerian maritime industry. The reform that we are recommending, we believe, is in the right direction, will attract investment, grow the confidence of the financial community in the Nigerian flag, and make sure that we achieve the necessary global acceptability because the exposure at the moment has to be reversed,” Ilori said.