Nigerian Import Duties on Ships Discriminate Against Indigenous Ship Operators

The discriminatory nature of Nigeria's import duty levied on imported vessels, which favours foreign ship owners over their Nigerian counterparts, has been underlined in Lagos at a joint meeting by the Nigerian Chamber of Shipping (NCS), the Nigerian Content Development Monitoring Board (NCDMB) and indigenous ship owners.

While indigenous operators pay up to 13 percent importation duty on their vessels, their foreign counterparts are allowed under the import laws to bring vessels in on a Temporary Import Permit (TIP), paying only five per cent.

For indigenous operators, who have been groaning under the non conducive shipping environment especially in the Nigerian coastal trade, paying 13 percent for import duty increases their cost, thereby placing them at a competitive financial disadvantage compared with foreign operators.

It was also noted that the rate of company income tax and the various taxes which indigenous ship owners paid were very high, which is being attributed to why foreign operators can afford to underbid the Nigerian companies in any commercial bid as they carry overall, a lower cost structure in loans and import duties.

Highlighting the challenges facing operators in the downstream oil and gas sector at the meeting, director-general of NCS, Mrs Ify Anazonwu-Akerele, expressed worry that the prevailing import duties on vessels better favours foreign operators.

She said the foreign operators pay at a negligible sum annually when compared with the volume of business they engaged in.

She explained that foreign operators could re-export the vessel after two years as required by the guidelines and re-imported three months after with no import duties paid.

In her suggestion, Anazonwu-Akerele said Value Added Tax (VAT) should be zero-rated on the vessels, which she said, would reduce the import cost incurred by the indigenous operators to seven per cent from the 13 per cent currently applicable.

According to her, this will bridge the gap between indigenous companies and their foreign counterparts who used the temporary import permit.

She also urged NAPIMS, NNPC and the International Oil Companies (IOC) to award longer-term contract as shipping is long-term business.

She condemned early contract termination clause, saying that termination of a long -term contract by the IOC without reason negated the longer tenor contract of five years.

She also suggested the establishment of a standardised system of progressive compliance with the cabotage requirements.

For Executive Secretary, NCDMB, Engineer Emeka Nwakpa, Nigerians should be participating strongly in the maritime industry, pointing out that it was imperative for ship owners to write to government through the Board concerning their challenges.

"If we continue to use foreign vessels to do our businesses, what if something happens and foreigners pull out, are we going to be able to run the maritime industry alone," he queried, adding that the situation had become so serious that the NCDMB stopped processing marine tenders until the strategies for improving indigenous participation in shipping are perfected. The IOCs, he said, are working out strategies to finalise this.

Nwakpa said the operators need to arrive at a common position on marine crew, ship registration, ownership and building of the vessels. He said the focus for now must be on ownership to ascertain factors militating against ownership of vessels by Nigerians.