Banks swoop on distressed indigenous shipping companies over N5billion loans

More than 90 per cent of the indigenous shipping companies may have gone under and become insolvent over the biting economic crisis that has crippled their businesses.

Due to the combination of many factors such as the unfriendly terms of international trade, inability to access government cargo, dominance of foreigners in the Cabotage trade, difficulty in accessing foreign exchange, the high exchange rate and dearth of cargo to be lifted into the country, many of the operators could not meet their financial obligations to some of the banks that gave them loans to recapitalise their business.

As a result and after several warnings from the agitating banks and their failure to repay the loans, the creditors banks may have taken over these defaulting shipping companies, some of which are already half dead.

To recover their loans, the banks were said to have resorted to assets stripping of the distressed companies.

Ship owners are said to be owing banks huge non-performing loans to the tune of N5 billion accrued from ship purchases and financing.

Those who were wary of complete take- over of their businesses by the rampaging banks were said to have resorted to selling off their properties in choice areas of Lagos, Abuja and Port Harcourt to repay their debts and safe their faces.

It was also gathered that, while ship owners operating in the downstream oil and gas sector have lost about 60 per cent of indigenous shipping companies, 70 per cent has gone under in the upstream sector.

The companies, it was learnt, found it difficult to meet their credit obligations to crews and loans to financial institutions.

The President, Nigerian Ship owners Association (NISA), Aminu Umar, confirmed the bad state of the indigenous shipping companies when he noted that the upstream sector is badly affected by the cash crunch.

He stated that most vessels at seaside along CMS, Snake Island and Sea School have been taken over by banks due to indebtedness of the owners to financial institutions.

“Even though there are no statistics on ground, I can tell you that about 60 per cent of indigenous shipping firms operating in the downstream oil and gas sector of the economy have been liquidated.

“Also, the upstream is affected as about 70 per cent have been liquidated because they can’t meet their financial obligation and when I mean gone down, that means  they can’t meet their credit obligations, they can’t meet their day to day running obligations, they cannot meet technical obligations of maintaining those vessels to be able to stay with their certifications”.

“You can see vessels at CMS, you don’t need someone to tell you. More than 70 per cent of all the vessels at CMS have been taken over by banks. When you go to sea school or Snake Island you will see vessels that have been taken over and have become wrecks. Most of them have been taken over by banks because their owners cannot meet up with their credit obligations.

‘’ This is what has happened to indigenous shipping companies”, Umar lamented.

He disclosed that majority of vessels at the seaside have laid -off their crews and engineers due to lack of business.

“For instance, if you take a helicopter or take a boat to offshore of the port area, you will notice a lot of vessels that are laid off. They are completely cold lay,  i.e the engines are off, the crew have been removed because the owners cannot pay salaries or some have been taken over by financial institutions.

‘’Numbers of vessels that have been taken over by banks are so much that it is difficult to count”.

Umar believed that if ship owners have a greater credit facilities like Cabotage Vessel Financing Fund (CVFF) at a low interest rates, it will be easier to meet their financial obligations and wriggle out of their present financial mess.

He however complained that loans were not forthcoming to operators in the indigenous shipping sector.

“Unfortunately, the loans taken by commercial banks are coming with high interest rate that no one can meet their obligations anymore because of the fall in freight earnings. So, I believe we have so many ship owners that have lost their businesses to banks”.

President of Al-Dawood Shipping, a local shipping firm, Captain Niyi Labinjo said most of the ship owners have either had their vessels or properties seized by banks due to their non-performing loans.

“All the companies are also heavily indebted to banks and are mostly unable to service the loans they took to buy ships”.

The General -Secretary of the Nigerian Ship owners Association (NISA), Tunji Brown, also disclosed that the banks are on the trail of the debtor-ship owners to repay their huge debt.

“We are unable to get jobs, banks are running after us to pay back loans, we are not able to access loans anymore because loans already provided to ship owners are not being paid, So, we are facing a difficult time”, he said.

Indigenous Shipping companies like Equatorial Energy, Oceanic Energy, Morlap Shipping, Peacegate, Pokat Nigeria Limited, Al-Dawood Shipping, Potram Nigeria Limited, Joseph Sammy, Genesis Worldwide Shipping and Multi-trade Group that were once thriving businesses are now either completely dead or are gasping for breath with majority of them selling their properties or have them seized by the banks.