Federal Minister of Transport has the power to grant Vessel/ Ship Waiver. In this post, we shared the Requirements to obtain vessel waiver and the process in Nigeria.
VESSEL: The Merchant Shipping Act 2007 define “vessel” includes any description of vessel, ship, boat, hovercraft or craft, including air cushion vehicles and dynamically supported craft, designed, used or capable of being used solely or partly for marine navigation and used for the carriage on, through or under water of persons or property without regard to method or lack of propulsion;
By this definition, it can be discerned that the FPSO capable of being partly used for marine navigation; it does receive and carry oil or gas on, through or under water even though lacking propulsion which was often the argument posited against the need for registration.
SHIP: It define ship as “a vessel of any type whatsoever not permanently attached to the seabed including dynamically supported craft, submersibles or any other floating craft which shall include but not limited to Floating Production Storage and Offloading (FPSO) platform as well as Floating Storage and Offloading (FSO) platform”.
Read: Registering Ship/ Vessel in Nigeria & Requirements
LICENSE: A license issued by the FMOT is a necessary requirement for the registration of a foreign owned vessel in the Cabotage Register. The FMOT Cabotage Trade Form 3 must be duly completed and submitted to the Ministry of Transport with the applicant’s corporate documents, certificate of waiver and vessel documents as specified in the Guidelines on Implementation of the Coastal and Inland Shipping (Cabotage) Act in 2003.
The validity of such issued license is for one (1) year subject to annual renewal. For renewal purposes, applicants are expected to show evidence of an improved level of compliance with the provisions of the Cabotage Act on manning, ownership and shipbuilding requirements.
What is Vessel Waiver Certificates?
It is a certificate issued by Federal Minister of Transport to foreign vessel/ ships operating in Nigerian coastal and inland waters to operate in reserved services for indigenous vessel owners.
The primary objective of the Nigerian Coastal and Inland Shipping (Cabotage) Act1 (the Cabotage Act) is to restrict the use of foreign vessels in domestic coastal trade within the Nigerian coastal and inland waters and also promote indigenously built Vessels wholly owned, registered and manned by Nigerians. The Cabotage Act therefore restricts foreign participation in Nigeria’s domestic coastal trade.
Vessel Waivers Areas:
a. Waiver on the requirement for the vessel to be wholly owned by Nigerian citizens: Upon being satisfied that there is no wholly owned Nigerian vessel that is suitable or available to perform the activities specified in the application.
The applicant, typically a joint venture (JV) consisting of a foreign entity and a Nigerian partner who own 60% unencumbered equity of the JV must submit with its application the following documents: certificate of Nigerian Registry; detailed crew list; certificate of minimum safe manning; evidence of registration of JV company with NIMASA; and certified true copies of form CAC 2 and CAC 72 .This waiver would typically be applicable for large ocean going tankers (VLCCs) and FPSOs given the substantial capital required by Nigerians to acquire same . The Cabotage Act in Part VIII sections 42 to 45 envisages the development of indigenous ship acquisition capacity by providing financial assistance to Nigerian operators in the domestic coastal shipping through the Cabotage Vessel and Financing fund. The fund has hardly been accessed or made available to assist Nigerians with the acquisition of vessels hence the high rates of waivers granted under this category by the FMOT.
Read: What to Expect in Nigerian Oil & Gas Local Content Act
b. Waiver on the requirement for the vessel to be fully manned by Nigerian citizens: Upon being satisfied that there is no qualified and available Nigerian officer and crew for the position(s) specified in the application. The applicant must provide certificate of Nigerian Registry; detailed crew list; certificate of minimum safe manning; evidence of registration with NIMASA; and certified true copies of form CAC 2 and CAC 7.
c. Waiver on the requirement for the vessel to be built in Nigeria: Upon being satisfied that there is no Nigerian ship-building company that has the capacity to construct the particular vessel or that there is no available Nigerian built vessel of the particular type specified.
Also under the Cabotage Act, a priority system is established for the grant of waivers as follows:
- to wholly owned Nigerian vessels;
- to Joint Venture Owned Vessels; and
- to any vessel registered in Nigeria and owned by a shipping company registered in Nigeria (foreign owned vessels).
It is worthy to note that the validity of waivers granted by the Minister is for a period of one (1) year, subject to annual renewals. Applicants are required to show evidence of improved level of compliance with the requirements of the Cabotage Act on manning, ownership and ship-building for the purposes of the renewal.
There has been some debate on the application of the Cabotage Act or otherwise to drilling rigs and FPSO vessels. An FPSO is generally known as a converted oil tanker or purpose built vessel, designed to receive oil and gas produced from nearby platforms or subsea template, process and store same until offloaded onto a tanker or transported through the pipeline for shipment. It is pertinent to note that FPSOs are recognised as a registrable vessel by virtue of Section 22(5) (i) of the Cabotage Act. Moreover, an FPSO ordinarily possesses all the characteristics of a vessel as defined in Section 2 of the Cabotage Act.
Read: How to obtain Oil & Gas Business Permits & Licenses
EXEMPTIONS:
Vessels (both foreign and Nigerian owned) engaged in certain activities are exempted from the provisions of the Act.
These activities are:
i. Commercial Salvage Operations;
ii. Activities related to Marine Pollution Emergency;
iii. Ocean Research Activity;
iv. Marine Scientific Research; and
v. Humanitarian Salvage Operations.
Vessel Operators that intend to engage in the above activities, except humanitarian salvage operations are required to apply for exemption from the Federal Minister of Transport.
Foreign participation in the cabotage trade within Nigerian waters particularly as it relates to drilling rigs and foreign registered support vessels utilized in the oil and gas industry is permissible subject to the procurement of the necessary licenses and waiver.