$200 million Cabotage Fund to be Disbursed toward the Acquisition of Vessels

BKLC Maritime Watch: $200 million Cabotage Fund to be Disbursed toward the Acquisition of Vessels

$200 million Cabotage Fund to be Disbursed toward the Acquisition of Vessels

The Minister of Transportation, Rotimi Amaechi, recently announced that the Cabotage Vessel Financing Fund (the Fund) will now be applied toward the acquisition of vessels. The Fund was established pursuant to section 42 of the Coastal and Inland Shipping (Cabotage) Act, of 2003, to be funded primarily from the 2% surcharge on contract sums performed by vessels engaged
in coastal trade and other monies generated under the Act including tariffs, fines and fees for licenses and waivers.[1] The Fund was to be collected by the Nigerian Maritime Administration and Safety Agency (NIMASA), deposited in Nigerian banks and administered under guidelines approved by the National Assembly to Nigerian citizens and shipping companies wholly owned by Nigerians.[2]

For the 17 years of its existence, the Fund has not been used for the purpose for which it was created – “to promote the development of indigenous ship acquisition capacity by providing financial assistance to Nigerian operators in the domestic coastal shipping.”[3] The Fund had however previously been used to develop universities and faculties for maritime studies in Nigeria. The Guidelines for the Fund’s disbursement are yet to be set and a commencement date for the disbursement is still unclear. In 2019, shipowners engaged the public and the regulators concerning the audit, transparency and disbursement of the Fund.

The Minister has however confirmed the President’s approval for the disbursement of the Funds and stated that a Committee was to be set up to prepare the Guidelines, headed by the Director General of NIMASA and 4 other industry stakeholders. Mr. Amaechi also noted that the banks will be responsible to hold shipowners accountable for any credit facilities extended under the Fund. The NIMASA DG, Dakuku Peterside noted that the timeline for disbursement would be dependent on the approval of the Guidelines by the National Assembly and the financial institutions to be involved in disbursement.

For further information on how the Cabotage Vessel Financing Fund affects your business, contact Brooks and Knights Legal Consultants.

Are you a shipowner or a stakeholder in the Nigerian maritime industry, Brooks and Knights Legal Consultants provides bespoke legal advisory and policy advocacy services relevant to your business. Contact Us.

[1] Section 43(a) of the Cabotage Act, 2003.
[2] Section 44 of the Cabotage Act, 2003.
[3] Section 42(2) of the Cabotage Act, 2003.

Find Newsletter below:

BKLC Maritime Watch v.1