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Cabotage Law: Which Way Forward

Published

16 years ago

July 26, 2010

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It is lamentable that in the almost seven years of the cabotage law in Nigeria, the nation and indigenous ship owners are still deprived of the needed revenue from haulage of petroleum products which ordinarily should help drive the country’s economy forward.
The cabotage Act was passed into law on April 30, 2003 with the release of guidelines for the implementation of the provisions on June 7, 2004. However, the inability of Federal Government to implement the Act gives foreigners the leeway to invade the country’s waterways to carry out all sorts of illegal shipping activities, which have in turn impoverished Nigerian ship owners.
Vessels owned by indigenous ship operators are considered substandard with poorly trained crew. This provides the ready-made excuse for the oil majors to ignore indigenous operators. In the past when the cargo allocation and reservation principle worked well, a lot of indigenous operators could charter vessels to carry petroleum cargo, but now, most of them simply serve as agents or representatives to foreign shipping companies in Nigeria.
The foreign shipping lines carry petroleum products while the indigenous shippers beg to be given the crumbs. Indigenous operators account for less than 10 percent of the total domestic crude cargo moved through the nation’s coastline of more than 2,000 km, dotted with eight ports.
The discrimination has placed the indigenous shippers at a massive disadvantage to every other flag in the world. Although the indigenous shippers are being over-taken by the better capitalized foreign shipping companies, the contention is that the cabotage laws reserve the haulage of crude oil within the nation’s territorial waterways to indigenous operators.
According to the Act, foreign vessels are not allowed to partake in any domestic coastal trade as obtainable in other developed countries of the world, while it will at the same time, promote the development of indigenous tonnage and establish a Cabotage Vessel Financing Fund (CVFF) and for related matters.
However the Temisan Omatseye led management, which assumed office in July 10,2009, after one year recorded a significant increase of the CVFF from less than seven million dollars in July 2009 to over 55 million dollars in June 2010, representing an increase of 685.7 per cent.
The Nigerian Maritime Administration and Safety Agency (Nimasa) management led by Omatseye as director general and chief executive officer, in one year recorded increase of 685.7 per cent increase in the CVFF.
The law stipulates that Nigerians should carry goods, passengers by vessel, or any other mode of transport, from one place to the other, either directly or via a place outside the country. It further stipulates that only vessels wholly owned, manned, built and registered by Nigerian citizens, shall be engaged in the domestic coastal carriage of cargo and passengers within the coastal territorial inland waters or any point within the waters of the exclusive economic zone of Nigeria; except a foreign vessel is given waiver by the Minister of Transport to carry out such job.
But seven years after the law was enacted, none of the provisions of the Law has been fully implemented by the supervising agency. Rather, waivers have been granted to foreign shipping companies to do jobs which Nigerians could do.
This has resulted in the influx of foreign vessels into the country, which needs to be stopped. In order to stop the influx of foreign vessels into the country, The Indigenous Ship Owners Association of Nigeria (ISAN) embarked on appeals and negotiation.
Since the prospect of achieving result through appeals and negotiations failed, the association resorted to using the power granted it under the Cabotage Laws to fight its cause. Consequently, the association and an indigenous company, Pokat Nigeria, not long ago sued a foreign tanker vessel MT Makhambe, from St Vincent and The Grenades, over illegal coastal trading within the Nigerian territorial waters.
The vessels with International Maritime Organisation (IMO) number 9334612, with 7224 registered gross tonnage was impounded while delivering 10,000 metric tons of petroleum products at Ibafon Jetty 1 in Apapa.
Meanwhile, the case was struck out by the Federal High Court sitting in Lagos in favour of the shipping company.
A lot of maritime experts however insisted that in order to rescue the indigenous shippers, there is the need for the Cabotage Enforcement Unit of Nimasa to wake up to their responsibilities because there is an influx of foreign vessels into the country and this should be stopped.
From available statistics, foreign vessels are scattered everywhere in the country doing illegal businesses because their activities are not effectively monitored and regulated. It is therefore advisable that thorough overhaul of the country’s flag administration should be carried out, and that the Cabotage Act should be revisited and simplified for proper interpretation by the court of law.
The Nimasa management is advised on the need to begin to also take critical look at shipping development to see how they could increase Nigerian fleet because without owning ships, the existence of the organization is meaningless.
Furthermore, the CVFF as provided by the law is the only support from the government that would give intending investors the needed leverage in the sector, otherwise Nigerians would continue to play the second fiddle as far as shipping business is concerned.
As a result of high cost of vessels, some banks find it difficult to sponsor shipping acquisition, a situation which is hampering the development of the expansion of fleets in the country.
According to ship owners, cabotage regime was already failing because interested Nigerians do not have the fund to acquire vessels.
For as long as foreign vessels are doing jobs meant for Nigerians ships, most Nigerians that have ships would certainly no longer be able to maintain them, implying that they would rather have to abandon them so that they would be sold as scraps instead of paying their crew members because they have become redundant, observed a maritime source.
He added that,it is lamentable that the Nigerian National Petroleum Corporation (NNPC) is paying huge amounts as demurrage to the foreign vessels everyday because most of the indigenous ships are not in good shape due to their inability to obtain loan or any support from the financial institutions and maritime regulatory body, regretting that the Very Large Crude Carriers which bring in petroleum products into the country do not allow Nigerian ships to come near their vessels.
The Very Large Crude Carriers according to information available to Nigeria CommunicationsWeek bring the refined products and also use their smaller vessels to distribute the petroleum products to the tanks and to the Nigerian National Petroleum Corporation facilities, which is supposed to be done by indigenous vessels operating under the Cabotage regime.
We regret that because Nigerians do not have good vessels, these foreign ships would stay for two to three months, while Nigeria pays as much as $30,000 to $40,000 daily until they finish discharging their contents.
This would have ended long ago if the Cabotage law was working. Most of the time, the regulatory agencies come up with so many excuses, such as; Nigerian vessels do not have Protection and Indemnity (P&I) insurance, observes another maritime inside source who stressed that it costs about $10 million to get such certificate, which most indigenous shipping companies in Nigeria could not afford.
However, Omatseye, has promised to do everything humanly possible to ensure vessel expansion in the country is given proper attention, by making the process of CVFF simpler to enable indigenous operators secure loans from the apex maritime body as well as increase local participation in coastal shipping.
According to him, the Agency would make Nigeria’s maritime industry the safest and most secure in Africa, further stressing that the management would equally make Cabotage a reality.
Even as operators and stakeholders continue to applaud the words of Omatseye, they however confess to being skeptical whether it will be another sweet talk as usual, like one of those often rehashed comments of newly appointed chief executives and political office holders as is the tradition in the country. They moreover call on the Federal Government to give the present chief executive officer of NIMASA the freedom to implement his good ideas, which should help move the maritime industry to another level.

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General News

Nigeria Not Making Progress in Fiscal Transparency –US

Published

1 hour ago

August 13, 2026

Ebere Melum-Nwogbo

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United States Government has said that Nigeria is not making significant progress in fiscal transparency, referencing gaps in the country’s budget disclosure, expenditure reporting, public procurement transparency and audit processes.

Nigeria Not Making Progress in Fiscal Transparency –US

The assessment is contained in a report by the United States Department of State, which reviewed Nigeria’s fiscal transparency practices in its 2026 fiscal transparency report for countries published on Tuesday.

The report noted that the US government stated that Nigeria made some key fiscal documents available to the public, significant shortcomings remained in the disclosure of budgetary information and the management of public finances.

The report noted that “the government made its enacted budget and end-of-year report widely and easily accessible to the public, including online, but did not publish its executive budget proposal within a reasonable period.”

It also stated that while the Nigerian government had made information concerning the country’s debt obligations publicly available, its budget documents failed to provide a comprehensive picture of government revenues and expenditures.

“The government made information on debt obligations, including major state-owned enterprise debt, publicly available, but budget documents did not provide a substantially complete picture of the government’s revenues and expenditures, or break down expenditures to support executive offices in the budget,” the report stated.

The US government further raised concerns about discrepancies between Nigeria’s approved budget and the actual revenues and expenditures recorded during implementation.

It said, “Actual revenues and expenditures did not reasonably correspond to those in the enacted budget.”

The report also criticised the country’s supreme audit institution, stating that it did not meet international standards of independence and did not publish substantive reports, although it had access to the entire executed budget.

“The supreme audit institution did not meet international standards of independence or publish substantive reports but did have access to the entire executed budget,” it stated.

The assessment, however, acknowledged that Nigeria’s sovereign wealth fund had an adequate legal framework and disclosed information about its funding and the general approach to withdrawals.History

“The sovereign wealth fund had a sound legal framework and disclosed its source of funding and general approach to withdrawals,” the US government said.

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News

NCAA to Introduce RFID Technology to Tackle Missing Luggages

Published

1 hour ago

August 13, 2026

Ebere Melum-Nwogbo

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Nigeria Civil Aviation Authority (NCAA) has announced plans to introduce Radio Frequency Identification (RFID) baggage tracking technology across domestic and international airport terminals to tackle the growing problem of delayed, misrouted and missing luggages

Michael Achimugu, director, Public Affairs and Consumer Protection, NCAA, disclosed this at a stakeholder engagement forum in Lagos.

Achimugu said the RFID-enabled system would replace the traditional barcode-based baggage tracking framework and provide airlines and passengers with real-time visibility of checked luggage from check-in to final collection.

According to him, the technology would improve baggage traceability, reduce mishandling and strengthen accountability across the baggage-handling chain.

Unlike conventional barcode systems, RFID technology allows baggage to be automatically scanned at multiple points without requiring direct line of sight, enabling real-time tracking of luggage throughout its journey.

Achimugu said issues involving short-landed, missing, lost or damaged baggage had remained among the major complaints from air travellers, alongside flight delays.

He said the introduction of RFID technology was therefore aimed at improving baggage-handling standards and restoring passenger confidence in the aviation sector.

The NCAA said the initiative also aligns with IATA Resolution 753, which requires airlines to track baggage at key points during the passenger journey.

The authority expects the technology to provide more accurate information on the location of luggage, facilitate quicker resolution of baggage-related complaints and improve the overall passenger experience.

The NCAA said the initiative would also strengthen accountability among airlines and other stakeholders involved in baggage handling at Nigerian airports.

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E-Financial

SEC Directs Operators to Subscribe to NigSac Alerts, Freeze Terrorists-Linked Funds

Published

1 hour ago

August 13, 2026

Ebere Melum-Nwogbo

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Securities and Exchange Commission (SEC) has issued an urgent directive requiring all capital market-regulated entities (CMREs) to immediately subscribe to Nigeria’s Sanctions (NigSac) Alerts system.

Effective immediately, failure to comply with this, or other AML/CFT regulations, may result in severe fines, suspension of operations, or revocation of registration.

This follows fresh designations by both local and international authorities of individuals and Bureau de Change operators for alleged direct involvement in terrorism financing and material support to the Islamic State West Africa Province (ISWAP).

The directive, according to three circulars issued by the apex capital market regulator, requires a mandatory compliance measure with threats of fines, operational suspension, or outright registration revocation for non-compliance.

The directive, pursuant to the implementation of Financial Action Task Force (FATF) statements on high-risk jurisdictions, signals an escalation in Nigeria’s anti-money laundering and counter-terrorism financing regime.

The SEC’s broader circular implementing FATF high-risk jurisdiction statements reflects Nigeria’s heightened exposure to international scrutiny. SEC, in line with directives from Central Bank of Nigeria (CBN), now requires CMREs to terminate all correspondent banking relationships with listed high-risk jurisdictions, business entities and individuals.

“In line with the provisions of the Terrorism Prevention and Prohibition Act (TPPA), 2022, the Nigeria Sanctions Committee (NSC) has designated six (6) Individuals and three (3) Entities as terrorist financiers and subsequently added them to the Nigeria Sanctions List,” SEC stated in circular to all market operators.

The circular mandated all capital market regulated entities and individuals to do the following:

“Immediately, identify and freeze, without prior notice, all funds, assets, and any other economic resources belonging to the designated persons and entities in their possession and report same to the Secretariat of the Nigeria Sanctions Committee;

“Report to the Secretariat of the Nigeria Sanctions Committee any assets frozen or actions taken in compliance with the designation, including attempted transactions;

“Immediately file a suspicious transactions report to the Nigerian Financial Intelligence Unit (NFIU) for further analysis on the financial activities;

“Report as a suspicious transactions report to the NFIU, all cases of name matching in financial transactions prior to or after receipt of this Sanctions List;

“Subsequently prohibit dealings with the designated persons and entities; and continue to check for transactions relating to the designated persons and entities and report findings to the Nigeria Sanctions Committee through [email protected]”, SEC stated.

“Take Note that at all times, any unusual or suspicious transactions shall be promptly reported to the NFIU,” SEC warned.

According to the capital market apex regulator, the circular takes immediate effect and failure to comply with the directives constitutes a violation of the Investments and Securities Act, 2025, and the SEC AML/CFT Rules and Regulations and such failure would attract appropriate regulatory sanctions, including fines, suspension of operations, or revocation of registration.

The directive implies that capital market operators should immediately audit their AML/CFT technology stacks to ensure NigSac Alerts subscription and automated flagging capability.

CMREs are required to file suspicious transactions reports with the Nigerian Financial Intelligence Unit (NFIU) for any name matching with designated individuals and entities, whether such matches occur pre- or post-transaction.

The obligation extends to reporting all funds frozen and actions taken in compliance with designations to the NSC Secretariat via [email protected].

The designations also create secondary compliance obligations: CMREs must now maintain watchlists that incorporate designations from both the NSC and US Treasury, as regulatory expectations implicitly track international sanctions coordination.

For institutional investors and fund managers, this translates to enhanced due diligence on counterparty relationships, particularly where transactions flow through informal financial infrastructure or jurisdictions flagged under FATF increased monitoring status.

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