Monday, 30 September 2013

KILLED BY A PADDLE 4

The management of the shipping line rightly decided to acquire new ships to retonnage the ageing fleet. Decision was made to acquire 19 combo vessels. These were vessels that had the capacity to carry both containers and general cargo.
What was wrong with the acquisition of the famous 19 vessels was timing, the type of vessels acquired and the modality of acquiring them.
By the time the first set of the new ships was delivered in 1976, there have been significant changes in ship technology with containerization coming on strong and fuel-efficient vessels being built.

“Diversification in ship type, size and the evolving technology could not be reflected in the new ships due to inflexibility in government policies as it was the government that provided the fund. This situation ultimately played a part in the failure of the company”, said Gerald Chidi.
One critical error of the model used in acquiring the 19 combo ships was that NNSL did not use its balance sheet to finance the acquisition. Unlike what the management of NNSL did in the acquisition of four new ships in the 1960s, NNSL went cap in hand to government. The General Yakubu Gowon-led military government gave money to buy those ships. It was the era of huge oil revenue for Nigeria and a time when the Head of State told a foreign reporter that "the only problem Nigeria has is how to spend the money she has”.
The shortcoming of this ship acquisition model was that even when it became obvious that there was need to alter the technology of the ships that were being built, it was practically impossible to do so due to unusually long processes and bureaucracy. Besides, it was the military era and nobody wanted to stick his neck out to alter the specifications of an already placed order.
“When they were building the ships, NNSL did not pay a dime. The government paid for all the ships. The government didn’t ask for a dime. The government did well but in doing it, they sat on the shipping line. Everything you needed to do has to get approval from the government. For instance, you are offered five tons of cocoa in Abidjan tomorrow, a ship owner must make the decision that I want to go and load, and I am going to Abidjan immediately to negotiate but then you had to tell the ministry and the ministry had to assign someone to go with you. The owner of the cocoa won’t wait for you, the business is gone”, former Acting Managing Director of NNSL, Captain Abiodun Omotesho told me during one of my interview sessions with him.
Several other analysts and operators that I spoke with believe that if NNSL had ordered and paid for the vessels by itself, it would have had the flexibility of modifying the design and technology before they were delivered.
At this time, some Nigerian elites had started venturing into ship chartering and ownership.

Because acquisition of the 19 ships was not based by any analytical plan, their introduction into the NNSL fleet created more problems for the company. First problem was that the company did not have enough working capital to cater for the vessels.
The situation was so bad that even the initial bunkering of the vessels at the builders' ship yard was done on credit.
Gerald Chidi, who had joined NNSL at the time, told me that the situation was managed “because in 1973 NNSL incorporated a subsidiary company known as Nigerline (UK) Ltd based in Liverpool, England. The subsidiary company acted as General Agents in Europe to NNSL”.
He said Nigerline employed experienced and knowledgeable British shipping technocrats in the field of marine engineering for fleet technical maintenance and commercial operations while a Nigerian served as its head. The company earned the trust of European creditors and shippers alike.
Nigerline became a platform for training Nigerian officers. It also served as a coordination centre of seafarers that were on training aboard NNSL ships.

“One notable advantage of this arrangement was that apart from performing agency services for the parent company, NNSL, and earning agency commission which was hitherto paid to Elder Dempster Lines, Nigerline was supervising ship repairs and making sure that the right work ethics were maintained resulting in reasonable ship maintenance costs and seaworthiness of vessels”, he said.
NNSL became an important source of training Nigerian seafarers. Most of the master mariners, marine engineers and other professionals who hold sway in the maritime industry today were trained onboard NNSL vessels.
According to Chidi, NNSL trained and produced many marine engineers, master mariners, marine communication officers, marine electricians and shore management and transport logistics managers at great expense as if she (NNSL) was a Scholarship Board.
“NNSL indeed trained not only for the whole maritime industry but the petroleum sector, shore engineering outfits like breweries, hotels, etc. It is a statement of fact that in the early 1970s and beyond, Nigerian Ports Authority pilots were Indians, Egyptians, Pakistanis, etc but with the facilities provided by the NNSL, it was possible for the NPA to partner with NNSL in the training of pilots and this position became completely indigenized”, he said.
 

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