National fleet: Singaporean liner cancels deal over duty, tax laws

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Plans by the Federal Government to facilitate a national fleet for Nigerian ship owners has suffered a setback as Pacific International Lines (PIL), a Singaporean liner, pulled out of the trade agreement it signed with the Federal Government because of duty and tonnage laws.

This is coming barely two years after the Federal Government signed a Memorandum of Understanding (MoU) with the Singaporean shipping line in order to establish a private sector-driven national carrier with stake holding of 60 to 40 per cent between PIL and Nigerian ship owners respectively.

The company complained that Nigerian fiscal policies, tax laws, tonnage tax laws and other laws that affect international shipping in the country would hinder it to compete with other global liners operating in Nigeria.

It was learnt while most countries declared zero duty on imported ships, an average import duty charged in Nigeria is 14 per cent of the value of vessel.

The President of Shipowners Association of Nigeria (SOAN) Engr. Greg Ogbeifun, who was not happy with cancellation of the deal, said in Lagos that PIL had previously came to Nigeria to express willingness to have a Joint Venture (JV) partnership with the country to re-establish a national fleet flying the Nigerian flag.

However, Ogbeifun said that the shipping line pulled out of the deal because of the unfavourable fiscal policies of the Federal Government and the cut-throat duty payments collected by Nigeria Customs Service (NCS), Nigerian Ports Authority (NPA) and other agencies.

He faulted claims by the Minister of Transportation, Rotimi Amaechi, that the deal failed because Nigerian shipowners were unable to provide 60 per cent equity required for the national carrier.

The minister had earlier said that the inability of the players to come together frustrated the PIL deal.

Ogbeifun, who was a member of the ministerial committee set up for the establishment of national fleet, however, explained that Nigeria did not get to the point of equity because PIL pulled out of the whole arrangement after the committee came back from Singapore.

He said: “I am a member of the ministerial committee, I can tell you that PIL pulled out of the deal because the Nigerian fiscal policies do not make establishment of a fleet of that nature possible where they would be involved competition in global trade. Our fiscal policies, tax laws, tonnage tax laws and other laws affect international shipping.

“If you take a Panamax crude tanker of $40million, you would have to pay another 14 per cent duty in order to import the vessel into the country despite flying Nigerian flag.”

Ogbeifun said that Nigerian ship owners were at disadvantage because of the shipping laws in Nigeria, which had made competition become difficult with foreign shipping lines that didn’t pay duty to acquire vessels in their countries.

This, he explained, made the cost of carrying cargo by foreign liners cheaper than shipping companies in Nigeria.

He noted that this was the reason why Nigerian shipping firms could not compete internationally.

Ogbeifun added that PIL pulled out of Nigerian deal when the Federal Government failed to review the fiscal policies that hinder competitive shipping in the country.