$350million CVFF Fund Disbursement: NIMASA Warn PLI’s Against Demanding Collateral from Shipowners

NIMASA official logo

NIMASA official logo

…Shipowners to Apply for Funds Through Banks

By DAPO OLAWUNI

The Nigeria Maritime Administration and Safety Agency (NIMASA) has warned the five Primary lending institutions (PLIs) selected by the federal government to drive the disbursement process of the $350milion Cabotage Vessels Financing Funds ( CVFF) to desist from demanding for collaterals from Nigerian shipowners seeking to access the fund.

The agency has also said that shipowners who intend to benefit from the CVFF Fund would have to apply through the banks and not through NIMASA.

Dr Bashir Jamoh at the head of the table during a meeting with the PLI for CVFF disbursement

Director General of NIMASA, Dr Bashir Jamoh stated this while ddressing the Heads of the five approved financial institutions at the Corporate Headquarters of the agency Tuesday

The PLIs approved for the fund’s disbursement are Zenith bank, Polaris bank, United Bank of Africa (UBA) Jaiz bank, and Union bank.

Dr Jamoh told the PLI’s that in recovering the loans, they should monitor the cabotage contracts secured by the beneficiaries as well as, monitor the shipyard which would construct the vessel. He said the banks can use these as partial guarantee to recover the loans.

Dr Jamoh explained that NIMASA would contribute 50percent of the total sum of any vessel that shipowners intend to buy, the PLI’s would bring 35percent while the shipowners bring 15percent.

“As bankers, are we ready to come up with the 35percent? Do we have competent hands that understand ship financing?

“On the issue of partial guarantee, the essence of this fund is to accelerate the growth and development of shipping, if we start asking for partial guarantee, before you know it, time would move fast and we wouldn’t go anywhere

“So, we expect that the vessel itself would be tied to a particular shipyard monitored by the banks. The contract between the shipowners and the multinational company to lift cargoes should involve the banks, these are areas to handle it without necessarily asking for collateral or asking the shipowner for C-of-O of his house and things he cannot provide” he said

Dr Jamoh noted that all the funds would be released in Dollars to the banks and by so doing, they would not lack foreign exchange.

He urged the banks to go and come up with unified modalities for disbursement and strategies of recovering the money and report back to the agency within 72hours.

According to him, the banks are expected to come up with issues such as the interest rate, tenor, collateral, and other requirements needed to access the fund.

Dr Jamoh said the interest rate must be of international best practices because the money to be released to the banks is in foreign currencies and not local currency.

He, however, stated further that the disbursement of CVFF can’t start without stakeholders’ engagement, saying that was why the agency met with PLIs.

“We can’t start disbursement without stakeholders’ engagement, therefore, stakeholders’ engagement starts today(Tuesday)

”We are on track, we have started with the PLIs and all five of them are here today. We have listened to them and they listened to us and from all indications, they are ready for us as well.”

“What we want them to do now is to allow them to come up with a collective decision and that cannot take more than 72 hours.

“I mentioned to them on the issue of collateral, you all have NIMASA money with you, so all these things will be deliberated among themselves, let’s allow them to go through our guidelines seriously and see how they can adjust within themselves because we are giving them international currency, not Nigerian currency, they cannot start looking at Nigeria lending rate but the uniform international best practices so we are still on track because the guidelines stipulated everything, “he said.

Earlier, the head of enterprises, Polaris bank, Femi Aribaloye, raised concerns on the risks involved on the part of the banks and the volatility of the shipping industry

A group photograph at the end of the meeting

“Whatever it is that we needed to do in terms of structure and interest will be carried out, but I think the ultimate or the most important thing here is to ensure that this thing is successful and that’s why we are here and that’s why this particular fund is now being disbursed in collaboration with the bankers.

”We are also very much aware of the environment in which we operate, we know things can be a little bit turbulent, and policies and the economic situation might change so, I just want to find out since its also within the purview of the Ministry of Transportation, if there is anything that can be done to further minimize the risk that the PLIs are going to be carrying.

“We look at the chance of the possibility of a partial guarantee because as financial institutions, we would like to ensure that everything is done rightly,” he said.

On his part, the managing Director of Jaiz bank, Dr. Sirajo Salisu, assured indigenous shipowners that the fund would be disbursed to them at the appropriate time.He, however, warned the shipowners that CVFF is not a grant or money that can be received without paying back to the banks.

“We will try our best to partner with the beneficiaries or the proposed beneficiaries of these funds and I believe they are much aware that this is not a grant, this is not money that they will just take away, this is money that is meant for a purpose and we will ensure that that purpose is achieved to the benefits of the country.” he said

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