The Nigerian Cabotage policy encourages indigenous shipping and proper implementation of the cabotage policy in Nigeria would be able to provide more jobs, cause a growth in skill acquisition; increase in revenue generation and eventually development of the shipping capacity of the country.
INTRODUCTION
The name Cabotage draws its origin from the French word “Caboter” meaning to sail coastwise or “by the capes”, which signifies coastal shipping.[1] In Nigeria, the existing law on Cabotage is embodied in the Coastal and Inland Shipping (Cabotage) Act 2003. It came into force in April 2004 and aims to restrict commercial transportation within Nigerian coastal and inland waters to vessels flying the Nigerian flag, owned and crewed by Nigerian citizens, and built-in Nigeria (Cabotage Act, 2003).
The Nigerian Cabotage Law is crucial not only due to the topographical nature of the country which is depicted by coastal and inland waterways, but also due to the fact that Nigeria is heavily dependent on import, and the market reservation provisions of the Cabotage law would help to stimulate growth in coastal shipping business opportunity. This is achievable, especially through the oil & gas sector which involves the supply of offshore vessels of different operational and market role descriptions, and ultimately the supply of all manner of shipping services between all Nigerian coastwise and offshore locations for Nigerian operators only.[2]
This disquisition shall proffer an overview of the Nigerian Cabotage Act 2003, by highlighting its key provisions such as registration and its types, Waiver, License, and Exemptions. It will also identify the major challenges affecting the implementation of Cabotage law in Nigeria and recommendations.
AN APPRAISAL OF THE NIGERIAN CABOTAGE ACT 2003
The Nigerian Cabotage policy encourages indigenous shipping; this is evidenced by the Part II of the Cabotage Act stipulating the restriction of foreign vessels in domestic coastal trade. The restriction was mainly to increase indigenous participation in commercial shipping in Nigeria. This was necessary because of intense competition from foreign shipping firms that were heavily capitalized and experienced. Thus, the Cabotage law was introduced to ensure the protection of poorly funded new indigenous companies so that these new local operators are not forced out of the market, thereby enhancing the domination of foreign shipping companies.[3] However, critics of the Cabotage Act have stated that the Act merely encourages development but does not initiate development.[4]
Specifically, Section 3 of the Cabotage Act stipulates exclusions of vessels which cannot participate in the domestic carriage of cargo and passengers and they include vessels not wholly owned and manned, built, and registered in Nigeria. The implication of this provision gives Nigerians the sole right of engaging in the country’s coastal trade and inland waterway transport ensuring that domestic shipping is fully indigenous.[5] The protection of national and economic interests, national security and agitations of the citizens are other contributory factors that led to the introduction of the cabotage policy.[6]
Proper implementation of the cabotage policy in Nigeria would be able to provide more jobs, cause a growth in skill acquisition; increase in revenue generation, and eventually development of the shipping capacity of the country which is vital to its future. Despite the cabotage guidelines specifying the procedure for implementing the Act, implementation has been a challenge and currently, the implementation process has received a lot of criticism from the public and stakeholders.
Furthermore, the current outlook of the Nigerian indigenous shipping seems discouraging, the objectives for which the cabotage law was enacted are far from actualization. The challenges for effective implementation of the Act are quite enormous as these challenges manifest in various forms, for instance, the absence of a national fleet or carriers which can be used to provide necessary training and give sea time experience for cadets, officers and engineers might be a clog to the actualization of the manning objective of the Act.
Another problem that has led to the ineffectiveness of the Cabotage Act is the availability of cabotage vessels in comparison to the amount of tonnage; there are not enough cabotage vessels to carry the available tonnage. Insufficient funds for acquiring new ships and other marine types of equipment are reasons for this shortage. The problems are multifaceted and are attributed to some of the provisions of the Act.
REGISTRATION OF VESSELS/SHIPS
All vessels intended for use in Cabotage Trade are required to be registered by the Registrar of Ships in the Special Register for Vessels and Ship Owning Companies engaged in cabotage (Cabotage Register) at the Nigerian Maritime Authority (NMA),[7] as well as obtain all other applicable licences and permits from other relevant government agencies, such as the National Inland Waterways Authority (NIWA).
The following types of vessels are identified under the Act and the guidelines as cabotage vessels:
Any other craft or vessel for carriage on, through or underwater of persons, property or any substance whatsoever.[8]
Types of Registration:
The guidelines issued by the Minister of Transport provide for five categories of registration.[9] These are:
1. Registration of Wholly Owned Nigerian Vessels: To qualify for registration in this category, the vessel’s 64 shares must be wholly and beneficially owned by Nigerian citizens or by a company registered in Nigeria with 100 per cent of share capital wholly and beneficially owned by Nigerian citizens. All the shares in the vessel or in the company that owns the vessel must be held free from any trust or obligation in favour of any person who is not a citizen of Nigeria.
2. Registration of Joint-Venture Owned Vessels: As the name implies, this category applies to the registration of vessels owned under a Joint-Venture arrangement between Nigerian citizens and non-Nigerians. It is required that the equity shareholding of the Nigerian partner(s) in the vessel and/or the shipping company must be at least 60% held free from any trust or obligation in favour of non-Nigerians.
3. Registration of Bareboat Chartered Vessels: To qualify for registration in this category, the bareboat chartered vessel is required to be under the full control and management of Nigerian citizens or a Company with 100% of its share capital wholly and beneficially owned by Nigerian citizens, free from any trust or obligation in favour of non-Nigerians.
4. Registration of Foreign-Owned Vessels: To be eligible for registration in the Cabotage Register, foreign-owned vessels are required to obtain a waiver and a licence for participation in coastal trade (cabotage) from the Minister of Transport.
5. Temporary Registration of Cabotage Vessels: The Cabotage Act in Section 27 provides that foreign-owned vessels presently engaged in cabotage trade, may be granted a temporary registration in the Cabotage Register for the duration of the contract for which the vessels are employed. However, as stipulated in the guidelines, where the period left to run on the contract exceeds one year from 1 May, 2004, the foreign vessel will only be granted temporary registration for one year and not for the duration of the contract for which the vessel is employed.
Thereafter, the vessel is required to obtain a licence from the Minister of Transport and obtain registration as a foreign-owned vessel. This appears to be inconsistent with the Act which provides that temporary registration will be granted for the duration of the contract.
Requirements for Registration
The registration requirements for all the five categories are similar except that in the case of a Bareboat Chartered Vessel, a copy of the Bareboat Charter Agreement is required and in the case of a foreign-owned vessel, a licence from the Federal Ministry of Transport is required prior to registration. The duly completed application form is required to be submitted to the Registrar of Ships with the applicant’s corporate documents and the statutory certificates for the vessel as specified in the guidelines. However, vessels registered in the Nigerian Registry at the date of enforcement of the Act (i.e. 1 May, 2004), that are above 15 years old, shall continue to be eligible for participation in cabotage for a period of 5 years after the enforcement date, subject to the vessel possessing a Certificate of Registry and a Certificate of Seaworthiness from a recognized classification authority.
Duration of Registration
The guidelines stipulate that the Cabotage Ship Registration Certificate for categories 1-4 shall be valid for a period of 5 years, subject to annual endorsement by the Registrar of Ships. The documents required to be provided for the annual endorsement of the certificate by the Registrar of Ships are:
WAIVER, LICENCE AND EXEMPTIONS
The Cabotage Act[10] permits the Minister of Transport to grant waivers for matters on the prohibited list. Foreign-owned vessels are required to obtain a licence from the Minister of Transport in order to qualify for registration in the Cabotage Register. In certain prescribed circumstances, vessels both foreign and Nigerian may be granted a waiver by the Minister of Transport in respect of the prohibitions contained in the Cabotage Act.
The Minister of Transport is empowered to grant the following waivers:
The Cabotage Act establishes a priority system for the grant of waivers as follows: