NIMASA introduces new compliance strategy for cabotage

The Nigerian Maritime Administration and Safety Agency (NIMASA) recently issued Marine Notice M11/01/19/SIIO2 to further the Cabotage Act’s objectives and to ensure strict compliance. The notice was issued to all local and foreign operators in the Nigerian oil and gas industry and requires them to submit a five-year marine service or vessel engagement plan and a schedule detailing the particulars of existing contracts and other marine projects to the agency.

It also states that the expiration date of any such contract must be communicated in writing to the agency six months prior to the expiration date. In addition, the notice requires that every advertisement for an award of a marine contract in coastal trade must list cabotage compliance as a pre-condition for obtaining such an award.

Where an award is to be given to a foreign firm due to a lack of local availability to satisfactorily execute the job, a certificate of no objection must first be obtained from the agency.

The Cabotage Act was enacted in 2003 with the primary objective of promoting indigenous participation in domestic coastal trade. The act prohibits the use of foreign vessels in:

• the domestic coastal carriage of cargo and passengers within the coastal territorial inland waters; and the waters of the Nigerian exclusive economic zone, unless the vessels are:
• wholly owned and manned by Nigerian citizens; and built and registered in Nigeria.

However, the act allows for waivers to be granted where there is a deficit in indigenous capacity and licences to be issued to foreigners who are keen on participating in domestic coastal trade. In order to boost local capacity, the act established the Cabotage Vessel Financing Fund to provide financial assistance to Nigerian operators to help them to acquire vessels.

Under Section 2 of the Cabotage Act, the NIMASA is responsible for enforcing its provisions. Marine Notice M11/01/19/SIIO2 represents part of the NIMASA’s efforts to bring all marine-related oil and gas contracts and operations in line with the act. It is expected that this notice would, among other things, ensure greater compliance with the cabotage regime and drive wider indigenous participation in offshore marine operations.

 However, as the NIMASA has not introduced a fine or other punishment for non-compliance, full compliance with the notice cannot be guaranteed. All the notice does is to mandate cabotage officers to enforce its demands and ensure strict compliance, without offering further guidance. It is doubtful whether this will be sufficient to compel widespread adherence by all relevant operators.

Without the requisite tools to enforce the notice, the extent of compliance that can be achieved remains uncertain. Considering the importance of the notice, a clearer enforcement mechanism ought to have been prescribed.

For further information on this topic please contact Enare Erim at Akabogu & Associates by telephone (+234 1460 55550) or email (enare@akabogulaw.com). The Akabogu & Associates website can be accessed at www.akabogulaw.com.

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