section one
TRANSCRIPT
The Importance of Building Ship Dockyard in the Nigeria Maritime Industry
SECTION ONE
1.0 INTRODUCTION
1.1 SHIPBUILDING
Shipbuilding is the construction of ships and floating
vessels. It normally takes place in a specialized facility
known as a shipyard. Shipbuilders, also called shipwrights,
follow a specialized occupation that traces its roots to
before recorded history.
Shipbuilding and ship repairs, both commercial and
military, are referred to as "naval engineering". The
construction of boats is a similar activity called boat
building.
Shipbuilding is known as one of the oldest, most open
and highly competitive markets in the world. Although
shipbuilding industry has a big experience in how to survive
over peaks and slumps of economy, the current global crisis
hit shipbuilding industry rather severely. The global order
book over the past 6 quarters since the end of 2008 was 4.5
times lower than that for the 6 previous quarters. In 2009,
the portfolio of new orders of European shipyards was almost
4 times lower than in 2008.
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With such a decline, the world’s shipbuilding industry
is certainly among the sectors worst affected by the
financial and economic crisis. It can have the most painful
impact on many shipbuilding countries of the world due to
the biggest overcapacity of shipyards ever seen and far
greater supply of fleet than required by the market. Not all
lessons were learnt from historical development of the
shipbuilding industry. Until the middle of the last century,
European shipbuilding dominated the world. Fast growth of
the Japanese economy and successful coordination of
supporting program for shipbuilding as a strategic industry
helped to win leadership for this country.
For some time, Japan and Europe controlled 90% of the
market, but gradually dominance was overtaken by Japan. In
1970s, S. Korea following previous experience of its
neighbor country announced shipbuilding as strategic
industry and in combination with low labour costs began to
reach the leadership. Next Asian player, China, caught the
industrial expansion strategy and surpassed Japan in 2006
and S. Korea in 2009 (if measured by order book volumes).
New shipbuilding entrants such as Vietnam, India, Turkey,
the Philippines, Brazil, and Russia grew up and together
reached the quantity of orders to equal European total
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Europe has gradually been losing its positions in
shipbuilding despite of its strategic specialization as a
niche player. Unfair competition on the part of Asian
shipyards and delayed agreements in global playing field
have distorted the market, shifted it to the Far East and
created extra problems fighting against crisis. In September
2008, the new building boom that ran since 2003 ended
sharply. The crisis didn’t have pity neither for leaders nor
for ordinary players. Even at the end of 2010, despite the
signals of economic recovery, order book for new building
was decreasing continuously. By the end of September 2010,
new global building portfolio was 26% smaller in comparison
to the quantities of the same period in 2008. Good news is
that the total number of contracts in 2010 was higher by
205% than in 2009.
Shipyards should begin thinking about new orders by
investigating new patterns for successful competition.
Factors affecting the shipbuilding industry can be divided
in two groups: macro factors (world seaborne trade, oil
prices, economic stability, and political stability) and
market factors (subsidies by the government, scrapping of
old vessels, charter rates, vessels on order). According to
some experts, seaborne trade should grow by 6.7% next year.
Less optimistic experts wait for a double fall instead of
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real recovery of the world’s economy. The Organization of
the Petroleum Exporting Countries (OPEC) informs that in
2009 global oil demand reduced to 84.5 million barrels per
day but grew at 1.8 million barrels per day in 2010 partly
because of cold winter.
Despite the fact that Japanese economy experienced
phenomenal growth in 2010 at 3.9%, the earthquake suspended
a successful recovering of their economy. The combination of
various factors even natural forces complicates talks about
economics stability in these days. The next factors
determining competitiveness of particular shipyard is the
productivity, production range, and attractiveness of
product, subsidy rate, exchange rate and cost position
(Bertram, 2003). Productivity is influenced by technology,
facility, management competence, work organization, work
practice, the level of workers’ skills and motivation. The
competitiveness of the European shipbuilding has been
increasing through excellence, as it is defined in the
LeaderShip 2015 – the strategy of the European shipbuilding
industry. Created in January 2003, document summarizes the
results of an intense discussion process among stakeholders.
After the last revision of Leadership 2015, the
conclusions about weak impulse in the implementation of
strategy were announced. Experts have especially been
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worrying about the lack of trade rules because Europe again
chooses quality and excellence over the low costs. A new
European maritime policy proposes opportunities for
innovative companies working on the development of energy
efficiency and low emission ships. A large part of technical
innovations have to be presented in relation to the goal of
eduction of exhaust gas emissions NOx, SOx and CO2.
New hull designs, advanced hull paint, udder and
propeller design, speed nozzle, LNG as fuel, ballast water
management systems, and etc. – all promise to have an
environmental edge. Many issues related to the environment
and climate change are relevant to the shipyards, too.
Carbon trace associated with production, transportation of
ship construction, ship maintenance and repair, dismantling
and recycling have to be reduced. “Green growth” challenges
provide the shipbuilding industry with the possibility of
moving toward life-cycle environmental approach.
1.2 THE INDUSTRIAL DEVELOPMENT OF GLOBAL SHIPBUILDING
In time wood was replaced by iron and steel, leadership
in the global shipbuilding (in GT, CGT) went from hand to
hand: from G. Britain to Japan, then to S. Korea, and
finally to China (Table 1). Nowadays ex-leader S. Korea is
on the post-growth stage (Lorentzen & Stemoco, 2006). The
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world has been waiting for lodgment of a new leader,
doubtless China. Announced by China, the programme “5 – 3 –
1” put down a marker to reach global leadership by 2015
(Dan, 2009). However, fortune was kinder to China than it
might have expected. Its emerging economy, huge human
potential, and State support have resulted in its target
accomplishment in half the time.
Britain took over the leadership in shipbuilding in the
1850’s and lost this position because of failure to
modernize their shipyards. Some experts say that Britain was
too slow in increasing its productivity by implementing new
technologies and production management methods, unlike their
competitors in Scandinavia, Germany, Japan. In the 1950’s
leader’s position was gradually being taken over by Japan,
mainly due to the rapid growth of the Japanese economy after
the Second World War and well coordinated State shipping and
shipbuilding program. Japan dominated the world for more
than three decades.
For some time European and Japanese shipbuilders
together controlled even 90% of the market. The Japanese
shipbuilders began to lose their global dominance for
several reasons. Firstly, Japanese shipyards faced
difficulties in recruiting new young engineers and suffered
from high labour cost. Secondly, Japanese shipbuilders were
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not flexible and did not adapt to changes in the global
market that demanded bigger and bigger vessels. Third, over
60% of Japanese ship production was for the domestic market
which didn’t promote technological development and
implementation of new production management methods. The
latest reports of 2010 confirm this: Japanese shipbuilders
are working for Japanese owners at 82.4%. Then the gap
between the demand and supply for materials, increased
delivery time and prices of its national currency
strengthening against USA dollar – all in total hit the
competitiveness of the Japanese shipbuilding industry (Song,
2003).
It caused ceding the leadership to S. Korea in the
middle of 1990’s. On-stream as continuous low cost
shipbuilders, they focused on large tankers, large/ultra
large containership, LNG/LPG, offshore drilling rigs, and
even on cruise ships that it is still niche of a few
specialized European shipyards. Despite the fact that S.
Korea still has many advantages some experts imply that S.
Korea’s competitiveness has been diminishing because of high
cost of human resources, insufficient quantities of domestic
steel and ever-rising prices of imported materials and
components. The appreciation of Korean Won is worsening the
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competitiveness of their shipbuilders, too (Lorentzen &
Stemoco, 2006).
1.3 AIMS AND OBJECTIVE
This presentation will cover the following:
Place the shipbuilding in an economic context
Consider the transition from public to private
ownership
Foreign investment and cross-border participation
Factors driving foreign investment
Industry views of FDI
Employment generator
Economic kick-start to depressed regions
Contributor to industrial capacity
Strengthen technical and technological capacity
Defence capability
Investment vehicle
Public sector policy delivery
Profit/tax potential
1.4 LIMITATION OF STUDY
The building in Nigeria is a little bit expensive and
required more Marine professions with experience. The
Nigeria Government has to do it best to boost the maritime
sector in term of Dockyard and Shipbuilding.
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1.5 STATEMENT OF STUDY
They are many problem face in Nigeria ship yard, such
are:
Lack of access to technical services for the
development of owner’s requirement, review of contract
specifications, drawing review, equipment inspections,
on-site supervision, etc. The National Engineering and
Technical Company Limited (NETCO), a subsidiary of the
Nigerian National Petroleum Company, provided these
kinds of services for the Oil and Gas Industry at the
start of the campaign to build local capacity for the
oil and gas industry. A similar organization is
necessary for the shipbuilding industry to make up for
expertise that are lacking and make them available for
the shipbuilding industry to access.
Poor infrastructure such as electric power supply, road
and rail network including fresh water supply makes
production cost to be high.
Difficulty in accessing funding for shipyard
development is a major challenge more so, that there is
investors’ apathy for long-term investment as a result
of political uncertainty, poor security environment and
the craze for quick returns on investment.
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Most Nigerian ships are old and therefore tend to spend
more time in dock. The result is that other ship owners
whose ships may have been programmed for docking would
become disappointed.
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SECTION TWO
2.0 LITERATURE REVIEW
2.1 HISTORY
2.1.1 PREHISTORY
Archaeological evidence indicates that humans arrived
on Borneo at least 120,000 years ago, probably by sea from
the Asian mainland during an ice age period when the sea was
lower and distances between islands shorter (See History of
Borneo and Papua New Guinea). The ancestors of Australian
Aborigines and New Guineansalso went across the Lombok
Strait to Sahul by boat over 50,000 years ago.
2.1.2 4th millennium BC
Evidence from Ancient Egypt shows that the
early Egyptians knew how to assemble planks of wood into
a ship hull as early as 3000 BC. The Archaeological
Institute of America reports that some of the oldest ships
yet unearthed are known as the Abydos boats. These are a
group of 14 ships discovered in Abydos that were constructed
of wooden planks which were "sewn" together. Discovered by
Egyptologist David O'Connor of New York
University, woven straps were found to have been used to
lash the planks together, and reeds or grass stuffed between
the planks helped to seal the seams.
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Because the ships are all buried together and near a
mortuary belonging to Pharaoh Khasekhemwy, originally they
were all thought to have belonged to him, but one of the 14
ships dates to 3000 BC, and the associated pottery jars
buried with the vessels also suggest earlier dating. The
ship dating to 3000 BC was about 25 m, 75 feet long and is
now thought to perhaps have belonged to an earlier
pharaoh. According to professor O'Connor, the 5,000-year-old
ship may have even belonged to Pharaoh Aha.
2.1.3 3RD MILLENNIUM BC
Early Egyptians also knew how to assemble planks of
wood with treenails to fasten them together,
using pitch for caulking the seams. The "Khufu ship", a
43.6-meter vessel sealed into a pit in the Giza pyramid
complex at the foot of the Great Pyramid of Giza in
the Fourth Dynasty around 2500 BC, is a full-size surviving
example which may have fulfilled the symbolic function of
a solar barque. Early Egyptians also knew how to fasten the
planks of this ship together with mortise and tenonjoints.
The oldest known tidal dock in the world was built
around 2500 BC during the Harappan
civilisation at Lothal near the present day Mangrol harbour
on the Gujaratcoast in India. Other ports were probably
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at Balakot and Dwarka. However, it is probable that many
small-scale ports, and not massive ports, were used for the
Harappan maritime trade. Ships from the harbour at these
ancient port cities established trade
with Mesopotamia. Shipbuilding and boatmaking may have been
prosperous industries in ancient India. Native labourers may
have manufactured the flotilla of boats used by Alexander
the Great to navigate across the Hydaspesand even the Indus,
under Nearchos. The Indians also exported teak for
shipbuilding to ancient Persia. Other references to Indian
timber used for shipbuilding is noted in the works of Ibn
Jubayr.
2.1.4 2ND MILLENNIUM BC
The ships of Ancient Egypt's Eighteenth Dynasty were
typically about 25 meters (80 ft) in length, and had a
single mast, sometimes consisting of two poles lashed
together at the top making an "A" shape. They mounted a
single square sail on a yard, with an additional spar along
the bottom of the sail. These ships could also be
oar propelled. The ocean and sea going ships of Ancient
Egypt were constructed with cedar wood, most likely hailing
from Lebanon.
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2.1.5 1ST MILLENNIUM BC
The naval history of China stems back to the Spring and
Autumn Period (722 BC–481 BC) of the ancient Chinese Zhou
Dynasty. The Chinese built large rectangular barges known as
"castle ships", which were essentially floating fortresses
complete with multiple decks with guarded ramparts.
2.1.6 EARLY 1ST MILLENNIUM AD
The ancient Chinese also built ramming vessels as in
the Greco-Roman tradition of the trireme, although oar-
steered ships in China lost favor very early on since it was
in the 1st century China that the stern-mounted rudder was
first developed. This was dually met with the introduction
of the Han Dynasty junk ship design in the same century.
Archeological investigations done at Portus near Rome
have revealed inscriptions indicating the existence of a
'guild of shipbuilders' during the time of Hadrian.
2.1.7 EARLY MODERN
With the development of the carrack, the west moved
into a new era of ship construction by building the first
regular ocean going vessels. In a relatively short time,
these ships grew to an unprecedented size, complexity and
cost.
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Shipyards became large industrial complexes and the
ships built were financed by consortia of investors. These
considerations led to the documentation of design and
construction practices in what had previously been a
secretive trade run by master shipwrights, and ultimately
led to the field of naval architecture, where professional
designers and draughtsmen played an increasingly important
role. Even so, construction techniques changed only very
gradually. The ships of the Napoleonic Wars were still built
more or less to the same basic plan as those of the Spanish
Armada of two centuries earlier but there had been numerous
subtle improvements in ship design and construction
throughout this period. For instance, the introduction
of tumblehome; adjustments to the shapes of sails and hulls;
the introduction of the wheel; the introduction of hardened
copper fastenings below the waterline; the introduction of
copper sheathing as a deterrent to shipworm and fouling;
etc.
2.2 PRESENT DAY SHIPBUILDING
China is an emerging shipbuilder that overtook South
Korea during the 2008-2010 global financial crisis as they
won new orders for medium and small-sized container
ships. China is now firmly the world's largest shipbuilder
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with 45% of the world's total orders, and its quality and
technology have improved very much.
Today, South Korea is the world's second largest
shipbuilding country with a global market share of 29% in
2012. South Korea leads in the production of large vessels
such as cruise liners, super tankers, LNG carriers, drill
ships, and large container ships. In the 3rd quarter of
2011, South Korea won all 18 orders for LNG carriers, 3 out
of 5 drill ships and 5 out of 7 large container ships. South
Korea's shipyards are highly efficient, with the world's
largest shipyard in Ulsan operated by Hyundai Heavy
Industries slipping a newly built, $80 million vessel into
the water every four working days. South Korea's "big three"
shipbuilders, Hyundai Heavy Industries, Samsung Heavy
Industries, and Daewoo Shipbuilding & Marine Engineering,
dominate global shipbuilding, with STX Shipbuilding, Hyundai
Samho Heavy Industries, Hanjin Heavy Industries,
and Sungdong Shipbuilding & Marine Engineering also ranking
among the top ten shipbuilders in the world.
In 2007, STX Shipbuilding further strengthened South
Korea's leading position in the industry by acquiring Aker
Yards, the largest shipbuilding group in Europe. (The former
Aker Yards was renamed STX Europe in 2008). In the first
half of 2011, South Korean shipbuilders won new orders to
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build 25 LNG carriers, out of the total 29 orders placed
worldwide during the period.
Japan had been the dominant ship building country from
the 1960s through to the end of 1990s but gradually lost its
competitive advantage to the emerging industry in South
Korea which had the advantages of much cheaper wages, strong
government backing and a cheaper currency. South Korean
production overtook Japan's in 2003 and Japanese market
share has since fallen sharply.
The Philippines has placed fourth among shipbuilding
nations around the world producing more than six million
deadweight tonnes of ships built in 2012. The country is
anchored by South Korean Hanjin and Japan's Tsuneishi
shipbuilders. The country has shipyards in Subic and Cebu.
The market share of European ship builders began to
decline in the 1960s as they lost work to the Japanese in
the same way as Japanese builders have lost work to South
Koreans more recently; Europe's production is now a tenth of
South Korea's and is primarily military, although cruise
liners and some cargo ships are still built in Italy,
Finland, France, Germany and Denmark. The largest shares of
the European shipbuilding market belong to Germany, Italy,
Norway, the Netherlands and Spain, which accounted in 2010
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for over 70% of total deliveries by the yards. This activity
accounted in 2010 for 1.5% of European GDP. Over the four
years from 2007, the total number of employees in the
European shipbuilding industry declined from 150,000 to
115,000.
World shipbuilding market share by
countries (2012) Rank Country Combined GT %1 China 67,000,000 45%2 South Korea 53,000,000 29%3 Japan 28,000,000 18%4 European
Union
4,500,000 1%
Rest of the
world
11,000,000 7%
2.3 SHIP REPAIR INDUSTRY
All ships need maintenance and repairs. A part of these
jobs must be carried out under the supervision of the
Classification Society. A lot of maintenance is carried out
while at sea or in port by ship's staff. However a large
number of repair and maintenance works can only be carried
out while the ship is out of commercial operation, in a
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Shiprepair Yard. Prior to undergoing repairs, tankers must
dock at a Deballasting Station for completing the tank
cleaning operations and pumping ashore its slops (dirty
cleaning water and hydrocarbon residues).
2.4 REVIEW OF THE MARITIME INDUSTRY IN NIGERIA
Marine transportation is one of the various modes of
transportation especially for littoral countries and it is
on record as the largest carrier of freight worldwide. In
fact about 90% of world trade is transported by sea. Nigeria
is a littoral state with a coastline that stretches about
420 nautical miles, a territorial sea of 12 nautical miles
and Exclusive Economic Zone (EEZ) of 200 nautical miles.
Furthermore, Nigeria has a total of about 8,600km of inland
waterways including Rivers Niger and Benue and smaller
rivers and creeks. It is known fact that there are vast
resources in Nigeria’s maritime environment ranging from
hydrocarbons to living and non-living resources most of
which have remained untapped. Exploitation of these requires
ships and other marine vessels and platforms. These thus
elicit variety of investment potentials cutting across
mining, manufacturing and services industries.
It is on record and commonly so, that more than 90% of
Nigeria’s import and export are by sea and over 80% of
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Nigeria’s Gross Domestic Products (GDP) derive from the sea.
In fact the Nigerian Ports Authority statistics revealed
that 4,962 vessels entered all Nigerian ports and crude oil
terminals in 2010 with a total tonnage of 108,621,872. This
is exclusive of the numerous vessels and platforms engaged
in various oil and gas exploration, fishing and other forms
of maritime activities. Such a number of vessels trading in
Nigeria’s waters and volume of maritime activities in the
country demand vibrant dry dock facilities to provide
services to the vessels as they may need. With a large
population, Nigeria's maritime industry especially, shipping
and shipbuilding ought to have been one of the largest in
Africa.
Rear Admiral (USN) Alfred Thayer Mahan (1840 - 1914)
believed that national greatness is inextricably associated
with the sea, with its commercial usage in peace and its
control in war. Military strategists and historians may see
the theory of sea control from naval perspective with the
view to ensuring free commerce for the benefit of nations'
uplands while depriving others of same in time of war. Many
Nigerian leaders and strategists are no doubt scholars of
Seapower and they may have been drawing inspirations from
the works of Seapower strategists and historians like Alfred
Mahan and Sir John Laughton. The extent to which the
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principles of Seapower have influenced them in the process
of formulating policies and making maritime related laws for
our great nation is yet to be seen. No doubt, the Nigerian
Navy is charged with the responsibility to safeguard
Nigeria’s maritime environment and ensure safe and free sea
lane of communication (transportation). These roles assigned
to the Nigerian Navy call for a sizeable naval fleet. The
Nigerian Navy fleet also add to the number of ships
operating in Nigerian’s water that require dry dock
facilities to maintain and repair them as needed.
I would like us to look at the theory of Seapower from
another perspective by considering the impact a viable
shipbuilding industry would have in achieving Seapower.
Seapower in this context therefore meaning to dominate
maritime shipping in West African sub-region to the extent
that Nigeria and Nigerians could not only control but also
could influence international trade by the size of its fleet
of merchant ships. Could this be possible if the nation does
not have good shipbuilding infrastructure and shipbuilding
policy? What is the state of health of shipbuilding and ship
repair industry in the country one may therefore ask? Could
a nation determine how much its citizens could participate
in its maritime shipping if it lacks ability to build and
dock ships for repair or maintenance? The decision to
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discuss at this Conference, the subject ‘Dry Dock Facilities
for Building and Repair of Ships’ is not only apt but a sign
that professionals that are key to industrialization in this
great country are reviewing their strategy.
Having a vast maritime environment that is very rich in
resources calls for a large fleet of merchant ships, marine
vessels and platforms and associated equipment. The Cabotage
Act 2003 aims to reserve commercial transportation of goods
and services within Nigerian coastal and inland waters to
vessels flying Nigerian flag and owned by persons of
Nigerian citizenship. International industrial standards for
the maritime industry expect certain level of performance
and maintenance of these ships, vessels, platforms and
equipment. The ships must undertake mandatory docking for
inspections and maintenance at specific intervals if they
must remain in class. Being in class is a necessity if they
must participate in trading at the level and magnitude
desired by many Nigerian ship owners.
These therefore necessitate a robust shipbuilding and
repair industry that would make ships and marine platform
acquisition, repair and maintenance affordable. May be this
is a panacea to ensuring that the Cabotage Act works for the
benefit of people of Nigeria?
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Nigeria Maritime Administration and Safety Agency
(NIMASA) Act 2007 established NIMASA and gave it the mandate
to:
a. Pursue the development of shipping and regulate matters
relating to merchant shipping and seafarers.
b. Administer the registration and licensing of ships.
c. Regulate and administer the certification of seafarers.
d. Establish maritime training and safety standards.
e. Regulate the safety of shipping as regards the
construction of ships and navigation.
f. Provide search and rescue service.
g. Provide directions and ensure compliance with vessel
security measures.
h. Carry out air and coastal surveillance.
i. Control and prevent marine pollution.
j. Provide direction on qualification, certification,
employment and welfare of maritime labour.
k. Develop and implement policies and programmes which
will facilitate the growth of local capacity in
ownership, manning and construction of ships and other
maritime infrastructure
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l. Enforce and administer the provisions of the Cabotage
Act 2003.
m. Perform port and flag state duties.
n. Receive and remove wrecks.
o. Provide National Maritime Search and Rescue Service.
p. Provide Maritime Security and
q. Establish the procedure for the implementation of
conventions of the International Maritime Organisation
and the International Maritime Labour Organisation and
other international conventions to which the Federal
Republic of Nigeria is a party on Maritime Safety and
Security, Maritime Labour, Commercial Shipping and for
the implementation codes, resolutions and circulars
arising there from.
It is evident from these that NIMASA cannot achieve the
technical aspects of their mandate if Nigeria does not have
world class dry dock facilities yet, no mention of dockyard
development was made as a precursor to developing local
capacity in ship construction.
Nigerian ship owners must have easy access to good
ship repair yards that would enable them to maintain their
ships in good conditions. The industry expectations are to
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have ships/vessels that are seaworthy and cheap to operate.
These are conditions that must be met if Nigerian ship
owners are to be competitive and remain in business. The
questions now are, how much are we involved in shipbuilding
and repair, what is the state of dry dock facilities in
Nigeria and, how viable is shipbuilding and repair industry
in Nigeria? What must we do to develop and sustain a
shipbuilding industry that would aid indigenous ship owners
and shippers achieve their business objectives.
The purpose of this paper “Dry Dock Facilities for
Building and Repair of Merchant and Naval Ships” is to
provoke debates on how best to bring about a vibrant and
viable shipbuilding and ship repair industry in Nigeria that
would ensure ship ownership and operation by Nigerians would
be affordable and competitive. This paper will present the
state of ship-repair and shipbuilding facilities in the
country; make a brief gap analysis in the laws of Nigeria
that ought to serve as catalysts for the development of
maritime transportation in Nigeria. Finally, it will
identify some challenges confronting shipbuilding and repair
in Nigeria and recommend way forward.
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SECTION THREE
3.0 DOCK YARD IN NIGERIA
3.1 STATE OF DRY DOCK FACILITIES IN NIGERIA
The state of dry dock facilities in Nigeria could
be deduced from the state of some notable
shipyards/dockyards in the country.
3.1.1 Nigerian Naval Dockyard, Victoria
Island
The Nigerian Naval Dockyard has a 10,000T main
dock and 500T twin docks. The docks are all operating
albeit with challenges associated with aging equipment.
Facilities are gradually being refurbished and upgraded
in some cases but the pace of rehabilitation is slow
because of paucity of funds. The Dockyard provides dry
dock serves for the Nigerian Navy and to merchant ships
as well. This dockyard belongs to the Nigerian Navy.
3.1.2 Nigerian Naval Shipyard, Port Harcourt
The Nigerian Naval Shipyard Port Harcourt has a
200T slipway and a 50T slipway. While the 200T slipway
is not functional, the 50T slipway is fully functional
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having been completely rehabilitated recently. The
major challenge here is the state of siltation which
limits approaches to the facilities. This shipyard also
belongs to the Nigerian Navy.
3.1.3 Nigerdock Nigeria Plc, Snake Island,
Lagos
The Nigerdock has a 25,000T Dry-dock and a 5,000T
Floating Dock. The company is busy but the extent that
it attends to docking of ships for repair or routine
maintenance can best be imagined as the yard’s main
focus now tends more towards providing services to oil
and gas equipment than to ships. This is evidently
expressed on the company website. In effect, they
hardly have space for docking of
ships. This dockyard used to belong to Ministry of
Transport, now it is privatized.
3.1.4 West Atlantic Shipyard, Nigeria, Onne
Oil and Gas Free Zone.
West Atlantic Shipyard has a 7000T floating dock
and covered workshops for new ship construction5. The
shipyard is fully operational. It has the capacity to
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build new ships and dock ships for repairs and routine
maintenance. It is operating at the Onne Oil and Gas
Free Zone.
3.1.5 Starzs Marine and Engineering Limited,
Onne Oil and Gas Free Zone.
Starzs Marine and Engineering Limited has a 500T
floating dock and it is fully operational6. This yard is
the only fully indigenous shipyard operating at Onne
Oil and Gas free Zone.
3.1.6 Continental Shipyard Limited, Apapa,
Lagos.
Continental Shipyard Limited has a 6,000T floating
dock and a 350T slipway. This is a subsidiary of the
Nigerian Ports Authority. The shipyard if functional.
There are other shipyards that are doing well but
they specialize in building small boats in composite
materials. Such yards as Modant Marine Limited at
Rumuolumini and Almarine at Borikiri specialize in the
use of glass reinforced fibre in boat construction. I
want to state here that my objective is not to
enumerate all the shipyards or dry dock facilities in
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the country but to stress that they are few and in fact
they are less than 20 including those that operate in
open spaces where they pull vessels out of water by
unconventional means. It is also to emphasize that even
the best facility amongst those listed lacks what it
takes to build the kind of ships that could effectively
engage in the Cabotage trade. All of the facilities
have limitations and we must tell ourselves the truth.
Accordingly, from the foregoing it could be said that
dry dock facilities in Nigeria are inadequate both in
number, capacity and capability. This is pitiable if
compared with a small nation such as Taiwan that has
about 140 shipbuilding yards and these include 2 large
Chinese shipyards.
A few of dry dock facilities listed earlier that
have managed to maintain acceptable level of
performance have done so because they played down on
ship repair and focused on construction and maintenance
of platforms for the oil and gas industry. Thanks to
the Nigerian Oils and Gas Industry Content Development
Act 2010 (Local Content Act) and the earlier local
content policy of Nigerian National Petroleum Company
(NNPC). The Local Content Act, and the policy before
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it, emphasized Oil and Gas industry and hence the
shipyards took advantage of the situation and began to
shift attention to servicing equipment deployed in the
oil and gas industry. Shipbuilding, ship repair and
maintenance therefore suffer as a result. It would have
been nice if the shipyards had expanded by developing
capacity to serve the oil and gas industry without
sacrificing the growth of their shipbuilding
capability. The truth is, without a good shipbuilding
and ship repair infrastructure in the country, there is
very little that could be achieved in enforcing the
provisions in the Cabotage Act and the Local content
Act on shipping. There must therefore be an effort at
developing the shipbuilding industry in order to drive
the process for achieving the objectives of the
Cabotage Act. Could Nigeria's lack of adequate
shipbuilding and ship repair facilities explain the
lack of local capacity to handle the shipping for
export of the nation's oil and gas, solid minerals,
agricultural produce, manufactured industrial and
consumer goods, provision of maritime related services
for shipping and mining (i.e. tug services, anchor
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handling and cable/pipe laying vessels, logistics
support vessels) etc?
3.2 CHALLENGES CONFRONTING DRY DOCK FACILITIES IN
NIGERIA
The challenges confronting dry dock facilities in
Nigeria are numerous. They include amongst others:
a.Lack of human resource and technical capacity
is made more acute by lack of human capacity
development canters for shipbuilding industry.
Skilled artisans, mechanics and professional
engineers are very few and for now, training
for naval architects and marine engineers
specialized in shipbuilding is only available
abroad.
b.Lack of access to technical services for the
development of owner’s requirement, review of
contract specifications, drawing review,
equipment inspections, on-site supervision,
etc. The National Engineering and Technical
Company Limited (NETCO), a subsidiary of the
Nigerian National Petroleum Company, provided
these kinds of services for the Oil and Gas
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Industry at the start of the campaign to build
local capacity for the oil and gas industry. A
similar organization is necessary for the
shipbuilding industry to make up for expertise
that are lacking and make them available for
the shipbuilding industry to access.
c.Poor infrastructure such as electric power
supply, road and rail network including fresh
water supply makes production cost to be high.
d.Difficulty in accessing funding for shipyard
development is a major challenge more so, that
there is investors’ apathy for long-term
investment as a result of political
uncertainty, poor security environment and the
craze for quick returns on investment. This
calls for concerted efforts between NIMASA and
NNPC in facilitating access to funding for
shipyard development pursuant of the Cabotage
Act and Local Content Act respectively.
Shipyard development and shipbuilding are
closely associated with the oil and gas
industry because large proportion of activities
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in the oil and gas industry are maritime
related. If capacity building is one of the
objectives of the local content Act, it is
expected that Nigeria will not only be able to
repair but also design and build vessels and
platforms required for offshore activities in
oil and gas industry. The Cabotage Vessel
Financing Fund (CVFF) should not be for vessel
acquisition alone but should be available for
dockyard development as well.
e.Critical to the establishment of a viable
shipyard is availability of land adjacent to
water that provides access to the sea and this
water should have sufficient depth that could
accommodate the size of ships envisaged would
visit the shipyard. The Nigerian Ports
Authority (NPA) amongst its functions
administers land and water within ports limits,
including planning and development of port
operational infrastructure. Sadly, it would
appear as if NPA leans more favourably to
giving access to these parcels of land for tank
farm development than for the development of
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shipbuilding facilities. While it is possible
to site tank farms beyond seaport vicinity, it
is not possible to do so for shipbuilding
facilities. It is therefore worrisome that more
tank farms are being built around places
adjacent to large bodies of water when no
sizable shipbuilding facility is being
developed. There is a contradiction of purpose
here?
f.Most Nigerian ships are old and therefore tend
to spend more time in dock. The result is that
other ship owners whose ships may have been
programmed for docking would become
disappointed. The consequence of such is far
reaching in the sense that the ship may have
been taken off trade for docking. If the reason
for wanting to dock the ship is for class
maintenance and it is taking a long time to
carry out such class maintenance docking, the
ship might have to stay longer out of trade. No
ship owner wants to experience such and this,
to a large extent, explains why local shipyards
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are hardly patronized by ships entering or
operating in Nigeria’s waters.
3.3 WAY FORWARD
There must be convergence of efforts by all
stakeholders. Ship owners must:
a.Endeavour to acquire serviceable ships.
b.Strive to make ships available for mandatory
periodic docking.
c.Try as much as it is possible to be specific on
scope of work so that dry dock operators could
plan well and avoid failing other ship owners
waiting for dock space.
d.Provide those spare parts that are peculiar to
their ship especially if such are likely to be
replaced while in the dry dock.
Dockyards must be able to provide:
a.Good survey services and assist ship owners to draw
up scope of work for dry docking.
b.Good and functional dry dock facilities to make
docking swift and efficient.
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c.Inspection services during docking should be
available on demand and should not be delayed.
d.Train and retrain their technical staff to update
their skills and expertise.
e.Aim at proper scheduling ships of ships for
docking. This can only be achieved if thorough
survey of ship is carried out before docking her.
f.Develop good and steady sources of supply of
materials that would often be required by ships in
dry dock.
There must be deliberate effort by both the
government and the private sector in resolving issues
that have been militating against dockyard development
in the country including amending the Cabotage, NIMASA
and Local Content Acts where necessary to emphasize
development of dry dock facilities and enforcement of
the provisions of the Acts policies that would emerge
there form.
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SECTION FOUR
4.0 UTILIZING SHIPYARDS FOR ADVANCED BUILDING CONSTRUCTION
Ships have many similarities with buildings: size,
structure, materials used, providing shelter, etc. and huge
ships are even organized similar as whole (swimming) cities.
As we will show in this chapter also concerning the
production processes and production technologies strong
similarities can be identified.
These similarities today can be used to transfer
processes and technologies from highly advanced ship
building industry into construction industry.
4.1 OVERVIEW OF NIGERIAN TONNAGE AND THE SHIPBUILDING
INDUSTRY
This section presents an overview of Nigerian tonnage
and shipbuilding industry. It further highlights commercial
issues that would assist an entrepreneur to decide whether
or not to invest in the shipping industry.
Everyone associated with the shipping administration in
Nigeria is familiar with the lack of reliable up-to-date
data from the Nigerian Ship Registry. A study carried out by
the International Maritime Organization (“IMO”) on Nigeria’s
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maritime industry in April 1999 reported that only 97
vessels excluding fishing vessels were registered under the
Nigerian flag. Of the 97 vessels 66 were tankers, 20 were
cargo vessels and 1 passenger vessel.
An unconfirmed data from the office of the Registrar of
Ships in 2002 indicated that the Registry has 98 tankers and
26 cargo vessels. This means that between 1997 and 2002
Nigeria recorded an increase of only 32 tankers and 6 cargo
vessels. The office of the Registrar of ships is currently
undertaking an inventory of registered vessels which are
still operational and flying the Nigerian flag. Section 3 of
the Cabotage Act reserves the carriage of goods within
Nigerian coastal waters to vessels owned by Nigerian
citizens and built in Nigeria except where such vessels are
not available in the market.
It is thus hoped that by reserving the coastal trade to
Nigerians, there would be an increase in ship acquisition by
Nigerians and indeed a boost for the ship building and
repair. For an entrepreneur this is a dream come true. A
market for vessels is already in existence especially for
the types of vessels used in the offshore exploration and
exploitation industry (supply boats, crew vessels, barges,
tug boats, tankers etc) The market for Nigerian built vessel
is not only created but is protected under the Act.
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Conscious of the capacity of the industry in this
respect, Nigerian built vessel is defined to include vessels
rebuilt i.e. refurbished in Nigeria or where “the
construction of any major component of the hull or
superstructure are fabricates or assembled in Nigeria.” Most
importantly there is no ownership requirement for the ship
building and ship repair companies. This means that
Nigerians could partner with foreigners who are willing to
inject foreign capital to take advantage of the captive
market and develop Nigeria’s shipbuilding industry.
Nigerian ship building industry is at an infancy stage.
To be quite candid, we do not have a shipbuilding industry.
Reference to shipbuilding by some people erroneously
includes ship repair yards. Ship building yard as the name
connotes is for the construction of a new building while a
ship repair yard is for dry docking or afloat repairs
(repair and maintenance).
If we were to limit ourselves to purely shipbuilding
industry then my job would be finished in the next one
minute. What we do have in sizeable number are ship repair
yards. Available data indicates that Nigeria has about 19
ship repair yards. Ship repair yards basically provide
services such as drydocking for repairs, inspections,
refurbishment, maintenance and alterations. They sometimes
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build small vessels such as barges and tug boat. Ship repair
yards also carry out afloat repairs for example hull and
machinery repairs, welding, blasting and painting services.
A study of Table 1 reveals that about 85% of them are not
operational.
Table 1- Ship Repair Yards in Nigeria
s/n Name Facility Location Remark1 Nigerdock 30,000T, Dry-dock
plus 3,000 tons
Floating Dock
Lagos Not
Functional
2 Damen 180T, Syncrolift
Non functional
Lagos Partially
functional3 Continental
Shipyard
6,000T, Floating
Dock
Lagos functional
4 Naval
Dockyard
Grave Dock Lagos Functional
5 Nigeria ship
Builders
150T, Slipway Port-
Harcourt
Temporaril
y6 Naval
Shipyard
Partially
150T, Slipway Port-
Harcourt
functional
7 W.A.
Drydocks Ltd
2500T, Floating
Dock
Onne Functional
8 Nigerian 100T, Slipway Port- Not
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Ports Plc Harcourt functional9 Technitrade 250T, Floating
Dock
Warri Functional
10 Nigerian
Ports
Authority
Slipway Warri Not
functional
11 Nigerian
Ports
Authority
Slipway Burutu Not
Functional
12 Nigerian
Ports
Authority
Graving Dock Calabar Not
Functional
13 Starzs
Shipyard
Floating Dock
500T
Onne Functional
14 Ed-Zacharah - Port-
Harcourt
Not
Functional15 Oscar Marine
Limited
700T Warri Not
Functional16 Steelways
Limited
1,200T Warri Not
Functional17 Niger Benue
Transport Co
400T Warri Not
Functional18 Python
Engineering
1,000T Lagos Not
Functional19 Ijora 100T Lagos Not
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Fisheries Functional20 Taraba 100T PortHarcou
rt
Not
Functional21 Atlantic
Star
Shrimpers
100T Lagos Not
Functional
22 Underwater
Engr.
1000T Lagos Not
Functional4.2 Shipbuilding Contract
Like every contract, a shipbuilding contract defines
rights and obligations of parties and also allocates risks
to be borne by the parties. The Japanese Shipowners Form is
annexed to this paper as Annex 1 but a few salient issues in
a typical shipbuilding contract is itemized hereunder.
1. Obligation of Builder – The Builder is expected to
build the vessel to specification for a fixed
price and to
deliver the vessel on time
2. Obligation of Buyer – The Buyer is expected to
pay the price which is usually a fixed price
and to
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accept delivery if the vessel is built to
specification and delivered on the agreed time
3. Allocation of risks
a. market risks:
price fluctuation, charter rates
costs of labour and materials
b. technical risks:
may cost more to achieve specification and to meet
timely delivery
poor performance after delivery
c. risk of physical loss or damage
accident in yard or during trials etc.
d. non performance
4. Ancillary contracts
specification is set out
guarantees, refund, guarantees to refund of
installments,
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performance bond to cover installmental payments
etc
4.3 APPLICABLE LAW ON SHIP BUILDING CONTRACT
To the builder, shipbuilding contract is a construction
contract (work and material) but from a buyer’s point of
view especially if it is a new ship it is a contract for the
purchase of a ship i.e. sale of goods contract. The problem
for the courts is therefore to decide whether it is a sale
of goods contract or a construction contract. The
uncertainty is understandable because the law defines a
contract of sale as a contract where the seller transfers or
agrees to transfer the property in goods (usually
ascertained goods) to a buyer for a price – Section 3 Sale
of Goods Law Cap 174, Laws of Lagos State, 1994.
The Court would have to determine whether an agreement
to construct a building, in this instance a vessel, can
properly be regarded as a contract of sale where the subject
matter is unascertained. This confusion is applicable only
to a contract for a new building. Sale and purchase of an
existing ship falls squarely under the sales of goods
contract since the second hand vessel is an ascertained and
specific good. Historically, English law treated
shipbuilding contracts as sale of goods contracts and thus
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the principles of contract law governed the obligations and
liabilities of parties. See McDougall v Aeromarine of
Emsworth [1958] 2 LR 345 where a yacht delivered by builder
to buyer was held not to be seaworthy or of merchantable
quality. Applying the principle of contract for sale of
goods, the court held that the Buyer was entitled to rescind
the shipbuilding contract and that the builder was not
entitled to any further installment rather the Buyer was
entitled to the refund of the purchase price.
However, English Courts have in recent times recognized
common features between ship building contracts and
construction contracts. In Stocznia v Latvian Shipping
[1995] 2 LR 592 where the facts were similar to McDougall,
it was held that the second installment remained due to the
Builder despite the cancellation of the contract because
there was no total failure of consideration. The court
applying construction laws held that the contract was not
merely for the sale of the hull but for construction and
sale of the hull and that the construction was part of the
consideration.
The practice now is that the courts will look at
particular issues to be addressed and apply either sale or
construction principles or both as may be appropriate.
Generally when the issue is on title or passing of property,
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sale of goods law is applied but if the issue is on
construction or installmental payment then it is treated as
construction contract. The consensus though is that
shipbuilding contract falls squarely under the law of
contract albeit of a “hybrid nature”. The Merchant Shipping
Act requires a formal evidence of transfer of ownership by
way of a Bill of Sale as evidence of ownership. The sale may
affect third party rights, but will not affect maritime
liens or mortgages as these attaches to the vessel and
survives transfer of title with the exception of judicial
sale. The seller usually warrants or guarantees that there
are no encumbrances.
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SECTION FIVE
5.0 RECOMMENDATION, SUMMARY AND CONCLSION
5.1 CONCLUSION AND SUMMARY
I will conclude by saying that given the large number
of ships providing services, trading or performing other
activities in Nigeria’s waters, dry dock facilities in the
country is grossly inadequate. The available dry dock
facilities are confronted with myriads of challenges
including poor state of equipment and facilities, lack of
skilled artisans and professional engineers.
Accessibility to land for dockyard development and
funding were identified as major challenge in dockyard
development. Finally, deliberate efforts must be made to
develop dockyards and shipbuilding capability if the country
is to derive the benefits for the Cabotage, NIMASA and
Local Content Acts.
5.2 RECOMMENDATION
I am of the firm opinion that ISAN alone cannot see
this huge venture through without government's support
especially at the teething stage which is most crucial.
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The role of basic infrastructure, flexible financing,
adequate research, planning and forecast can also not be
overemphasized. Since ISAN is aiming at a national carrier
that would replace the moribund Nigerian National Shipping
Line (NNSL), I expect government's support to be full in
terms of policy and funding, just the way NNSL was given
prominence in National Development Plans in the 70s and 80s,
and which was invariably responsible for the successes it
recorded in its glorious years.
5.3 WAY FORWARD
There must be convergence of efforts by all
stakeholders. Ship owners must:
A. Endeavour to acquire serviceable ships.
B. Strive to make ships available for mandatory periodic
docking.
C. Try as much as it is possible to be specific on scope
of work so that dry dock operators could plan well and
avoid failing other ship owners waiting for dock space.
D. Provide those spare parts that are peculiar to their
ship especially if such are likely to be replaced while
in the dry dock.
Dockyards must be able to provide:
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A. Good survey services and assist ship owners to draw up
scope of work for dry docking.
B. Good and functional dry dock facilities to make docking
swift and efficient.
C. Inspection services during docking should be available
on demand and should not be delayed.
D. Train and retrain their technical staff to update their
skills and expertise.
E. Aim at proper scheduling ships of ships for docking.
This can only be achieved if thorough survey of ship is
carried out before docking her.
F. Develop good and steady sources of supply of materials
that would often be required by ships in dry dock.
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REFRENCE
1. Badejo D. (2001): Future of shipping in Nigeria. A
paper Presented at the maritime summit, February (20-
24) at Abuja
2. Bellefontaine N. (2010), Lecture hand out on Marine
Environmental Science. World Maritime University.
Malmo, Sweden
3. Donovan, (2006), Environmental management Handbook,
Washington D.C. American Association of Port
Authorities
4. Donner P. (2011), Lecture Hand out on shipping
management. World Maritime University, Malmo, Sweden
5. Elem R. (2008) Economic opportunities available in the
Nigerian Maritime Sector. The voyage magazine by NIMASA
April 2008 p.12
6. Federal Ministry of transport (1995), Increasing
Indigenous Participation in Cargo Affreightment Abuja.
Federal Ministry of Transport (FMOT).
7. Gius O. (2009), Wet Cargo Lifting and the Nigerian
Economy,Abuja. Being a paper presented at the Maritime
Summit, February (24-26)
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The Importance of Building Ship Dockyard in the Nigeria Maritime Industry
8. Bock, T., Robot Oriented Design, Shokokusha, Tokio,
1988
9. Bock, T., Lauer, W. “Location Orientation Manipulator
by Konrad Wachsmann, John Bollinger and Xavier
Mendoza”. 27th International Symposion on Automation
and Robotics in Construction (ISARC), Bratislava, 2010
10. Bock, T; Eibisch, N. “The Helix-Tower by Konrad
Zuse: Automated Con- and Deconstruction”. 27th
International Symposion on Automation and Robotics in
Construction (ISARC), Bratislava, 2010
11. Dr. Yusuke Yamazaki, Vice-Director Shimizu
Institute of Technology
12. Bock, T., Linner, T., Lee, S. “Integrated
Industrialization Approach for lean Off-On -site
Building Production and Resource Circulation”. 7th World
Conference on Sustainable Manufacturing, India, 2009
13. Logimatic, MARS vertical ERP solution for
shipyards, Website: www.logimatic.com, last visited:
12.03.2011
14. Master Course ”Advanced Construction and Building
Technology”, www.br2.ar.tum.de - T. Bock, T. Linner
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