Prince Ayorinde Adedoyin is the Managing Director of Peacegate Oil and Gas Limited in this interview he speaks on roles of indigenous ship owners in the implementation of the recently enacted Nigerian Content Law in the oil and gas industry.
What informed the creation of Indigenous Offshore Marine Vessel Owners and Providers Sub_ Committee by Indigenous Ship Owners Association of Nigeria (ISAN)
Sincerely, we cannot fold our hands and watch foreign vessels continue taking businesses away from us after the signing of the Nigerian Content bill into law by President Goodluck Jonathan on April 22, 2010. Our objective is to ensure that the implementation of Nigerian Content Act is adhered, and also to protect and advance the interest of our members, through dialogue, financial support and where necessary government representation.
Why have you not come up with this sub_committee before now?
Over the years, Nigerian Offshore Marine operations have been dominated by foreign vessel owners, this has ensured the continued flight of capital from the country and practically no investment in training of Nigerian seafarers.
At present, Nigeria has little or no experience in Deep Offshore Marine operations, as it relates to seafarers. In 2009, a foreign vessel provider claimed that 60 per cent of its profit was realised within West African waters and in this particular case the alleged profit amounted to 960 million Euro. It also baffles the mind why Nigeria should have problems accessing $50 million for a cabotage fund.
Is this committee planning to stand alone in fighting this menace?
This committee will be an adhoc group within ISAN, it is expected all members will also be members of ISAN. The only difference will be the inclusion of vessel operators to the nomenclature. It is necessary that this group concede the fact, some of the deep offshore marine requirements are beyond what local banks can support at present time. The group will follow all regulations governing ISAN and the Charter by_laws.
What are your plans and goals?
Our activities will not result in fighting anybody but to aid and support Nigerian Content Development and Monitoring Board (NCDMB) and the division in the Nigerian National Petroleum Corporation (NNPC).
They serve a dual propose of regulating bid process and also ensuring local providers are providing the services. Unfortunately, several offshoot agencies are also involved due to overlap in functions i.e. NAPIMS and NIPEX. This Adhoc group must also seek to have representation in the process of bids, to ensure the legal language is fair and the terms of service do not systematically eliminate Nigerians from competing.
For example, most contracts are structured that oil companies can at anytime decide to terminate the contract without recourse to the contractor in Nigeria where our finance terms has proved disastrous to the indigenous service providers. The Federal Government should stop oil firms from cancelling contracts of indigenous firms arbitrarily.
What strategy are you adopting to achieve these plans?
We don’t believe we do it all alone without the support of other stakeholders. In this regard, the group shall also work with Nigeria Maritime Administration and Safety Agency (NIMASA), Nigerian Customs and Nigeria Port Authority (NPA).
A vessel will be nominated to carry out a census on every rig, FPSP, offshore base and yard. The aim is to determine how many vessels actually offer service in country, how many are flagged as a Nigerian vessel and also how many active contracts are in existence. With this information, we can create a database to track cabotage payments, foreign vessels flagged against waiver request and how many local providers have their vessels idle but can provide the service being outsourced to foreign providers.
What is current funding capacity of indigenous ship owners?
At present, 50 per cent of local providers are being owed monies by the multinationals. Those that are not scared to ruffle feathers are in different stages of arbitration, while the other half is facing bankruptcy or foreclosure. While all this happens, the foreign vessels owners are able to arm twist the multinationals to ensure they get whatever they need, and also to keep out Nigerian vessel owners.
Even the verdicts of arbitration are flouted by these oil companies, at the detriment of the local vessel owners. The ultimate outcome of such practices is that Nigerian banks go wary about financing vessel acquisition even when the local provider has a bonafide contract.
What are the challenges?
One of the main requirements of oil companies is the provision of Protection and Indemnity Insurance. The amount varies from $10million to $150 million dependant on the tendencies of the company towards local providers. Nigerian Insurance companies are not able to provide this coverage directly, and where they can, it is prohibitively expensive.
It is also difficult for the Nigerian vessel owner to become a member of a P&I club as they request a minimum number of vessels, or consider the Nigerian risk not worth the endeavour.
The share volume of Nigerian vessel owners will allow us to either form a P&I club, which Africa presently does not have, or negotiate rates as a group that will be less burdensome on individual owners. What I have surmised above are a few of the issues that need to be addressed aggressively, to ensure we can build the type of industry we all wish to see in the near future.
As a country and in particular as a group, if we are not able to collectively support our cause, then we risk not only capital flight, but a complete extinction of the Local Offshore Marine service provider.
What is the hope of local operators?
We have confidence in the administration of President Jonathan to listen and give us the support that will bring an end to domination of foreign vessels. For instance, my three vessels have been idle without jobs even though we pay so much to the various agencies but instead the foreign vessels will come and take our jobs without payment of duty and taxes.
We are hopeful that when we have more Nigerians join our group across all the sector of the economy, a time will come when the mentioning of a foreign vessel will become an abomination to officials of the NNPC. The Federal Government should stop foreign vessels from taking jobs in Nigeria to end capital flight.