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China Unveils Subsidy Program for Scrapping Old Ships

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HONG KONG — China unveiled a new cash-subsidy program to encourage the scrapping of older cargo ships and tankers, part of fresh measures to support the nation’s struggling shipping sector that is still reeling from low freight rates and overcapacity.

Chinese shipping operators will receive a 1,500 Chinese yuan (US$247) subsidy per gross ton to replace older ships registered in the nation with new, more environmentally-friendly vessels, according to a joint statement published Monday by several government departments including the Ministry of Transport and the National Development and Reform Commission. Gross tonnage refers to the total volume of a vessel.

This means a shipper hoping to scrap and replace an aging Panamax dry-bulk ship—a common class of cargo vessel with gross tonnage of around 35,000 tons—will receive roughly CNY52.5 million in subsidies from the state. Ships must be within 10 years prior to their mandatory retirement age to be eligible for the offer, and for dry-bulk ships, which carry commodities like grain and coal, retirement is 33 years of service, according to Zhang Shouguo, executive vice president at the China Shipowners’ Association.

china scrapping old shipsShip owners will get half of the cash subsidy when they complete the scrapping of an older ship and will receive the remainder once a new ship is built, the government statement said, noting the measure will be valid through the end of 2015. Analysts expect more measures to be announced in coming weeks to help the sector, including tax breaks to ship operators and shipbuilders.

Analysts said it was difficult to predict how much the subsidies are worth, but one estimate values the program at CNY7 billion for China’s major shipping operators, with dry-bulk ships over the age of 23 years accounting for 16% of China’s total shipping fleet. The nation’s fleet of large container ships likely won’t benefit from the plan as the bulk of the vessels are much younger, shipping companies said.

The cash subsidy program is a much-needed lifeline to China’s shipbuilding industry, one of the largest in the world that employs tens of thousands of people. The shipbuilders are suffering from shrinking orders as global trade weakened, while earlier aggressive efforts to build new vessels are contributing to a global capacity glut.

Illustrating the industry’s headwinds, China Rongsheng Heavy Industries Group, the country’s biggest privately-owned shipbuilder, said last week it expected to post a substantial loss for 2013 because of a decline in new orders, extending losses it made in 2012.

The new incentives are an extension of an earlier round of subsidies between 2010 and 2012, when shipowners received CNY1,000 for each gross ton of ship scrapped, though they were reimbursed only if they replaced the ships with new ones.

Zhang Guofa, general manager at state-owned China Shipping (Group) Co., the nation’s second-largest shipping group, said Monday he welcomed the new incentives and added that they will help ease the industry’s overcapacity issues as shipowners that don’t order new ships will also receive cash subsidies.

Mr. Zhang said the group will consider speeding up the scrapping of older ships, without further disclosing details of the number of eligible ships for scrapping.

Still, industry experts fear that requiring shipowners to replace ships to receive the full amount of scrapping subsidies could continue to exacerbate the industry’s overcapacity problems.

“The previous round of subsidies was unsuccessful as few operators ordered new ships after scrapping older ones because of the lingering oversupply and weak demand,” said Mr. Zhang of the China Shipowners’ Association.

– WALL STREET JOURNAL

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Maritime

NIMASA Makes Dockworkers Registration Compulsory

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The management of the Nigerian Maritime Administration and Safety Agency (NIMASA) has advised International Oil Companies, terminal and jetty operators, and all other companies involved in stevedoring in the country to refrain from engaging unregistered dockworkers.

The information was contained in a statement made available to Biztellers by the Head, Public Relations, NIMASA, Osagie Edward.

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According to the statement, all stakeholders, including dock labour employers and stevedoring companies, are encouraged to apply for new operating licenses or renew expired ones within a 30-day moratorium period.

“This requirement,” it added, “is stipulated by the NIMASA Act of 2007 and outlined in the NIMASA Stevedoring Regulations of 2014, which mandates strict compliance from all maritime operators.”

Osagie cited the Director General, NIMASA, Dr. Dayo Mobereola as laying emphasis on the need for stakeholders to comply with extant laws and regulations.

Dr Mobereola said, “No terminal or company shall continue to engage the services of unregistered dockworkers for cargo handling at their work locations.

“This move is part of our broader effort to ensure safe and regulated operations within Nigeria’s maritime industry. Compliance with these regulations will enhance our ability to maintain an up-to-date database of dockworkers operating in the country. It also improves our planning processes, as we are committed to developing their capacity to meet globally accepted standards for dockworkers in Nigeria. We intend to enforce full compliance after the moratorium period.”

It was gathered that the NIMASA Act, 2007, Part IX, Section 27, addressed the registration of Dockworkers with focus on Maritime Labour.

“It ensures the Registration, Regulation, and control of Maritime Labour, including dockworkers. The Act assigns the Agency the responsibility of maintaining standards in accordance with international best practices,” Osagie added.

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Maritime Diplomacy: Nigeria Seeks Election Into IMO Council

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Nigeria has expressed a strong desire to seek election into Category “C” of the International Maritime Organization (IMO) Council.

The Honorable Minister of Marine and Blue Economy, Adegboyega Oyetola, made the disclosure at the 2024 World Maritime Day parallel event in Barcelona, Spain.

Oyetola noted that Nigeria has put in place the basic needs for the development of her maritime industry in line with recognized global best practices.

In his words, “our active participation in upholding key conventions, such as the Safety of Life at Sea (SOLAS) and the International Ship and Port Facility Security (ISPS) Code, reflects our dedication to ensuring the safety of international shipping.

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There have been no incidents of piracy in the last three years, as confirmed by the International Maritime Bureau (IMB). By deploying resources to provide maritime security assets, Nigeria has solidified its role as a key guardian of maritime security in the Gulf of Guinea.

Nigeria remains a valuable source of manpower for the industry. I therefore urge our partners to explore this potential and assist where possible in the best interest of all. Our Maritime Academy has adequate resources and facilities to support this development.

“I am pleased to announce Nigeria’s resolve to seek a Category “C” membership on the Council.

On his part, the Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Dayo Mobereola, assured that no stone will be left unturned to ensure success in the quest for IMO Category C membership at the next elections.

According to him, “We at NIMASA have met with the IMO technical team and have commenced work on all identified grey areas so that Nigeria can address the gaps identified during the last audit by the IMO.

”We have also commenced the process of effective communication with other member states using the IMO GSIS platform, among others. While we at NIMASA focus on the technical aspects of the preparations, our supervising Ministry will provide the political will to guide Nigeria back to the Council at the IMO.”

Oyetola, who held engagement sessions with the IMO Secretary General Arsenio Dominguez and other diplomats, was accompanied on the working tour by the Ministry’s Permanent Secretary, Mr. Olufemi Oloruntola; the Director General of the NIMASA; the Managing Director of the Nigerian Ports Authority (NPA), Dr. Abubakar Dantsoho; the Managing Director of NIWA, Mr. Bola Oyebamiji; and the Director of Maritime Safety and Security Services, Mr. Babatunde Bombata.

This year’s parallel event with the theme: Navigating the Future: Safety First, brought together international maritime leaders and experts to discuss future challenges and opportunities, with the aim of ensuring that safety is prioritized in the day-to-day operations of the global maritime sector.

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Maritime

Why PPP Is Necessity For Nigeria’s Maritime Infrastructural Dev’t – Mobereola 

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The adoption of the Public Private Partnership (PPP) model is essential for the infrastructural development of Nigeria’s maritime sector.

This is the view of the Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Dayo Mobereola.

The DG, shared his views while hosting the Director General of the Infrastructure Concession Regulatory Commission (ICRC), Dr. Jobson Oseodion Ewalefoh.

He emphasized the importance of the Commission’s increased involvement in attracting private investors to develop infrastructural capacity in Nigeria’s maritime sector.

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Dr. Mobereola said, “We appreciate the Management of the ICRC for being responsive. However, you know that the maritime sector is capital intensive and government funds cannot solely put in place the required infrastructure. We need the ICRC to develop PPP based business models that will be attractive to the private sector both from within and outside the country.

“There is the need to streamline processes by the use of technology, as we will continue to count on the support of ICRC to help drive the Agency’s PPP projects for effective and efficient service delivery to our stakeholders”.

Lending support to Dr. Mobereola’s views, Dr. Ewalefoh, underscored the significance of the maritime sector to Nigeria’s economy.

He noted that the PPP model would facilitate increased funding and expertise from the private sector, thereby accelerating the growth and development of the Nigerian maritime sector. Additionally, he stated that the ICRC is prepared to engage with the Agency on its projects and ensure timely execution.

“There is no time to waste; our country needs lots of funding for infrastructure and we need to create an enabling environment for activities to thrive. First, is service delivery, not revenue generation, and people will be willing to pay if they get the right services”, the ICRC boss noted.

The PPP model has proven to be the most viable approach worldwide for driving government policies that promote development and economic growth.

Biztellers reports that as a regulatory agency and Nigeria’s Maritime Administrator, the NIMASA has consistently embraced collaboration and partnership through the PPP initiative to ensure the growth and development of the maritime sector.

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