Despite the vibrant market for ship repairs by the thousands of vessels engaged in the provision of logistic services in the oil and gas industry, Nigeria has no viable dry dock facility, forcing vessels to patronise the docks in Ghana and Cameroun. All that may change soon as NIMASA is set to float a floating dry dock with private sector partners. But IZUCHUKWU OZOEMENA writes that the pitfalls that forced the collapse of a similar venture by NPA may await the new initiative.
As the Nigerian Maritime Administration and Safety Agency (NIMASA) is set to deliver a floating dock for the benefit of vessel owners who have been dry docking outside Nigeria at huge costs, the sorry state of the Continental Shipyards Ltd (CSL), a facility that has fallen into decay after coming on stream with a lot of fanfare, promise and prospect, quickly comes to mind. But how prepared is the agency to learn lessons and avoid the pitfalls that rendered the CSL a huge waste?
Shortly after taking over the mantle of leadership at the Nigerian Ports Authority (NPA) as managing director, one of her primary tasks was to undertake a tour of port facilities in Lagos, Port Harcourt, Calabar and other areas to familiarize herself with what is on ground before designing strategies to get to work to achieve the specific mandate assigned to her by President Muhammadu Buhari.
President Muhammadu Buhari
Until her decision to embark on the tour, she never knew the extent of rot, waste and mismanagement of resources that waited in the wings for her to see. If some management and staff of the agency had their way, they would have wished she never had a first-hand knowledge of the real situation on ground.
That was the lot of Hadiza Bala Usman, the present managing director of the NPA when she came on-board.
One of the first places she visited in Lagos was the Continental Shipyard Ltd (CSL), a joint venture investment between the NPA and Dockyard Engineering Service Limited of Geneva, Switzerland. The partners pulled together an equity share participation of 60 percent and 40 percent respectively in favour of NPA.
Having been abandoned for over seven years, the shipyard stands, till date, as a giant metaphor for waste and a reminder of the intolerable high level of indiscipline in the management of public organisations. Years before the final abandonment, the shipyard had been rendered idle following mismanagement, willful vandalization of spare parts by those in whose custody the management of the facility was placed.
For the period this negligence and levity lasted, the management was incurring running costs and paying salaries to over 200 staff for doing virtually nothing. It was no wonder that at CSL, Hadiza Bala Usman discovered that equipment worth billions of naira are abandoned. Some, she learnt, had been left to rot since 2006 when the federal government concessioned the sea ports to private terminal operators.
Standing out among the equipments left to rot are NPA’s multi-million dollar floating dock moored in the harbour, the slipway, two pilot cutters and other vital shipping equipments.
At 6,000 tons and a length of 122 metres, the floating dock is ideal for the handling of medium size vessels that dominate coastal trade and the oil and gas logistic industry. Yet, it was left to rot.
In 2010, the floating dock estimated to provide about 2,000 jobs had drifted and beached in the vicinity of the lagoon. Refloating the dock was done in a half-hearted manner and the million-dollar facility was left to rot away in an awkward position.
Vessel Owners Forced To Patronise Docks In Neighbouring Countries
This scenario brings to the fore one of the numerous reasons vessel owners in Nigeria patronize ship yards outside the country for essential dry dock.
Vessels operating in Nigeria would rather dry dock outside the country where proper care of facilities is available. This practice, experts say, has huge implications in terms of foreign exchange costs running into several hundred millions of dollars annually.
A Floating Dockyard
Recently, Finance Minister, Mrs Kemi Adeosun, announced that before long, Nigeria’s economy would rebound from the prolonged recession. As the country struggles to pull her economy out of the current recession, Nigeria’s numerous departments and agencies have been encouraged to embark on ventures that would broaden the country's revenue base.
Hadiza Usman, MD, NPA
In line with the new thinking, the Nigerian Maritime Administration and Safety Agency (NIMASA) recently disclosed it is putting in place to establish a modern floating dock so that vessel owners who had hitherto been going abroad for dry dock would conveniently do same in-country. It is envisaged that Nigeria stands to reap over $160 million spent annually on dry docking and repair of over 500 vessels of various specifications and sizes operating in Nigerian waters currently being done in neighbouring Ghana and Cameroon.
NIMASA’s Floating Dock
As revealed recently, NIMASA has struck an arrangement with the world’s largest ship building firms, Damen Shipyards and its partner, NIRDA, in Amsterdam, the Netherlands to build a modular floating dockyard for the agency. The dockyard which will measure 125 metres by 35 metres with three in-built cranes, transformers and a number of ancillary facilities is expected to be delivered to the country soon.
According to stipulations by the International Maritime Organization (IMO), every vessel undergoes dry-docking once every three years in order to retain their safety classification and insurance cover. It costs between $300,000 and $500,000 to dry-dock a vessel, according prevailing international rates. Information gathered by Business and Maritime West Africa has it that on the average, 5,000 ships, 400 active coastal vessels and several hundred fishing trawlers call at Nigerian ports annually. This factor alone ensures a steady rise in the demand for ship repair and maintenance facilities in Nigeria.
Dr. Dakuku Peterside, NIMASA DG
Before NIMASA ventured into the modular floating dockyard acquisition, Nigeria boasted of only a handful of land-based dockyards, majority of them not functioning optimally. Investigations show that the situation has not changed. As expected, Nigerian ship owners have been full of lamentations that there is no facility that could handle a 30,000 ton oil tanker in the country. Because of that, approximately 500 coastal vessels go to neighbouring Ghana, Duala and Robins Bay for dry-docking yearly. As stated by the director-general of NIMASA, Dr. Dakuku Peterside, the agency’s modular floating dockyard said to be the fifth largest in Africa would enable Nigerian ship owners dry dock in-country, thereby saving over $100 million annually for the national economy. “This will be a direct saving from the dry-docking of vessels operating in Nigeria, which are mostly done outside the country at the moment. It is our desire to partner with the private sector to run the dockyard,” an elated Peterside pointed out. Acknowledging the fact that there is no shipyard in Nigeria that could handle a 30,000-ton oil tanker, Engr. Greg Ogbeifun, the chief executive officer of Starzs Shipyard, Onne, and president, Ship Owners Association of Nigeria (SOAN), noted that inadequate infrastructure such as power, roads and a viable steel production industry are some of the factors inhibiting the development of shipping and the maritime sector in the country. While commenting on the state of ship-building and repair industry in Nigeria at the 2015 Commonwealth Business Forum in Malta, he stated that facilities in Nigeria are inadequate both in number, capacity and capability. This necessitates a robust shipbuilding and repair industry that would make ships and marine platform acquisition, repair and maintenance affordable.
Engr. Greg Ogbeifun
At several other fora, Ogbeifun has always noted that ship repair is an expensive operation globally. Most ship owners prefer taking advantage of proximity to dry dock their vessels within the confines of the routes they operate because that saves them huge costs. “As at today, ship building and repair is relatively non-existent in Nigeria. The building of ships involves enormous amounts of money. Nigeria has only one ship building yard located in Onne, Rivers State, while there are other small yards that build barges and fiberglass small personnel vessels. The big shipyards and dockyards are, in fact, maintenance facilities for dry docking and general ship repairs,” he explained. According to Ogbeifun, the existing facilities are not enough and so clients have been clamouring for investment in that area to meet the teeming needs of ship owners.
It has been said that with a modular dry dock in place, the agency will save the federal government in excess of $100 million annually and about $1 billion in 10 years.
This amount is expected to be generated when vessels operating in Nigeria use the facility for dry dock services. To ensure that the project does not end up as yet another government project bugged down by bureaucracy, NIMASA has indicated the willingness to enter into a working relationship, a partnership of sorts, with interested parties in the private sector who will run it strictly as a profitable business venture. Responding to questions as to whether or not the agency is serious with the project, Peterside was emphatic that it is going to be a reality.
“It is not true that government has scrapped the establishment of the proposed floating dockyard in the Delta area; it is absolutely not correct”, he said. Rather, the plan had been on the cards even before he was appointed to head the agency.
“Recall that before I joined NIMASA team, they had already established a business case for a floating dry dock where owners of ships can service their vessels from time to time,” he disclosed.
The decision to embark on the project was based on the realization that “85 per cent or 90 per cent of those who own vessels dry dock their vessels outside the country. We felt it encourages capital flight and that it doesn’t support the industry.
So, it was at that point that we got into a relationship with a firm in Netherlands to build a floating dry dock in the Netherlands and in Romania. That project is on. When we joined the NIMASA team, we resolved to continue and follow it to its logical completion.”
Peterside believes that the floating dock will be completed before the end of 2017. Once that is achieved, the facility should be able to dry dock more than 90 per cent of all vessels in-country.
With experts from Dockyard Engineering Service Limited of Geneva managing the CSL even with minority shares, the general expectation was that the company was in safe hands and will be professionally run. It had everything going for it - a modern floating dock, a large market of medium size vessels, a well-trained workforce and a reputable foreign technical partners.
So where did all ho wrong for CSL? The Nigerian Association of Master Mariners had warned that the company must be shielded from the civil service procedures in its management. The stance was shared by the Institute of Marine Engineers, Nigeria branch which insistednthat being a commercial venture, political and primordial considerations should not be brought to bear in the scheme of things.
All the admonishing were observed in the breach as CSL was subjected to heavy interference from the NPA and the Ministry of Transport. The procurement of spare part and repair gear were subjected to routine civil service procedures before approvals were secured. Without regard the peculiar dunamics of ship management where every hour lost in dry dock could be very costly, there were interminal delays in job completion. Of course, the vessel owners responded by heading elsewhere.
With no confidence on CSL to deliver on schedule, it was the death knell for the company. Despite the enthusiasm and platitudes of Peterside, there is concern within professional groups that the proposed floating dock may suffer the same fate as its predecessor owned by NPA.
According to a marine engineer who preferred not to be named, the joint venture company may buckle under the pressure of the deep politicisation of business and governance in the country. "What are the safety valves that will guarantee strict respect for timelines and special rules that guide ship repairs? If and when the new floating dock comes on stream, vessel owners will be veey wary and watch to see if it will be run as NPA's dead shipyard. At the slightest sign of political interference, they will head to reliable yards even when it means incurring more costs", the marine engineer said.
The opportunities for the venture are enormous, but so are pitfalls, he said.
Location of the Dry Dock
Already, the location of the shipyard is beginning to generate political interest.
Continental Shipyard Ltd
“When we complete the dry dock, the location will be a business decision and many factors will be considered before we decide where it will be located. Studies are going on right now on where best it will be located”, the NIMASA boss stated.
Already, marine stakeholders are upbeat with the project being spearheaded by NIMASA as this stands to open new windows of opportunity in the maritime industry not only in Nigeria but the entire West Africa. The opportunities will not only be limited to job creation or conservation of foreign exchange, it will also rub off on capacity building and wealth creation in the industry. But NIMASA has one huge challenge: convincing stakeholders and the business community that with time, the dry dock does not turn out to suffer the same fate as NPA's Continental Shipyards Ltd which is presently a metaphor for waste and abandonment.