The CVFF stands for the Cabotage Vessel Financing Fund. The CVFF was established by the Coastal Inland Shipping (Cabotage) Act 2003 (the “Cabotage Act”) and is further governed by the CVFF Guidelines 2006 (the “CVFF Guidelines”). The CVFF aims to promote the growth of the Nigerian maritime industry by providing accessible financing to indigenous shipowners for the acquisition of vessels for use within Nigeria’s cabotage area.
The criteria for eligibility of an applicant include the following:
(a) The beneficiaries of the Fund must be Nigerian citizens and shipping companies wholly owned by Nigerian citizens.
(b) The vessel to be financed with the CVFF facility must be built in Nigeria, owned by Nigerians, and crewed by Nigerians. However, where an applicant does not meet this requirement, a Ministerial waiver can be obtained before applying for the facility.
(c) The vessel to be financed must be registered under the Nigerian flag as administered by the Nigerian Ship Registry. This shall be done after the acquisition of the vessel.
(d) The Applicants or persons designated as the operators of the vessel must possess the necessary experience, ability, and other qualifications to properly operate and maintain the vessel.
Vessels financed with the CVFF must be vessels operating within the Nigerian cabotage area/waters. This includes offshore service vessels, barges, anchor handling tugs, supply vessels, tugs, dredgers, motor tankers, among others.
No, vessels flagged in a foreign country are not eligible for financing under the Fund. While a vessel can be acquired from any country with the Fund it must be registered under the Nigerian flag post-acquisition.
The CVFF is funded by:
(a) A surcharge of two percent (2%) of the contract sum performed by any vessel engaged in the Cabotage trade;
(b) A sum as shall, from time to time, be determined and approved by the National Assembly;
(c) Monies generated under the Cabotage Act, including tariffs, fines, and fees for licenses and waivers; and
(d) Such further sums accruable by the Fund by way of interest paid on and the repayment of the principal sums of any loan granted from the Fund.
The CVFF is to be disbursed as loans or guarantees for the acquisition of vessels or for the refinancing of previously acquired vessels, not more than twelve (12) months from the date of application for the Fund.
Yes, it can. However, only vessels purchased within twelve (12) months of the application date are eligible for refinancing under the CVFF. The Fund can provide not more than eighty percent (80%) of either the purchase price or the current market value of the vessel to be refinanced.
There are three (3) parties to the CVFF transaction, namely: the Nigerian Maritime Administration and Safety Agency (“NIMASA”), the PLI, and the Applicant.
The current list of NIMASA-approved PLIs (alphabetically) is as follows:
(i) Bank of Industry
(ii) Fidelity Bank Plc
(iii) First Bank of Nigeria Ltd
(iv) Jaiz Bank Plc
(v) Lotus Bank Limited
(vi) Optimus Bank Limited
(vii) Stanbic IBTC Bank Limited
(viii) Sun Trust Bank Nigeria Limited
(ix) Taj Bank Limited
(x) Union Bank of Nigeria Plc
(xi) United Bank for Africa Plc
(xii) Zenith Bank Plc
The list of PLIs will be reviewed periodically by NIMASA to ensure participation of competent and compliant Deposit Money Banks (DMBs), duly licensed by the Central Bank of Nigeria (“CBN”), as well as local and foreign Development Financial Institutions (DFIs).
The contribution for each CVFF transaction is as follows:
(a) The Applicant is to contribute a minimum of fifteen percent (15%) of the total cost for acquisition;
(b) The PLI is to contribute a minimum of fifteen percent (15%) of the total cost for acquisition; and
(c) NIMASA contributes up to seventy percent (70%) of the total cost for acquisition/refinancing cost or a maximum of Twenty-Five Million United States Dollars (US$25,000,000) (whichever is lower).
No, an applicant cannot receive the CVFF funding more than once for the same transaction. The Fund is available for different transactions and applicants. There is a need to ensure that the Fund is not dominated by any specific person or entity.
Any Applicant found to have submitted multiple or false applications, directly or indirectly, will be disqualified and may face legal action under the Cabotage Act and other applicable laws.
An applicant may contribute more than its equity contribution, as the fifteen percent (15%) stipulated in the CVFF Guidelines represents a minimum contribution rate. The balance of the facility amount will be contributed by NIMASA and the PLI based on the initial proportions.
The PLI bears one hundred percent (100%) credit risk (for the sums contributed by NIMASA from the CVFF in the transaction).
The interest rate on the Fund is benchmarked at a single-digit weighted average. The combined interest from both the PLIs and NIMASA on their contributions shall be 6.5% per annum.
Yes. Applicants, at their own cost, may request preliminary eligibility screening through their chosen PLI before formal submission to determine compliance with CVFF criteria and reduce processing delays
Application to the PLI/Documentation submissionPLI to review and approve the applicationNIMASA reviews application to ensure it is in line with CVFF GuidelinesNIMASA issues certificate of eligibility or letter of ineligibilityMinisterial ApprovalDisbursement of the CVFFRepayment
The disbursement is expected to take a maximum of ninety-six (96) days as follows:
(a) The PLI reviews an application within a maximum period of thirty (30) days;
(b) The SCU takes an additional maximum period of twenty-one (21) days to conduct its review of the applications recommended by a PLI;
(c) The Ministerial approval is envisaged to be obtained within a maximum period of thirty (30) days;
(d) A maximum period of fifteen (15) days is required to ensure that the Fund is transferred from the Lead PLI to the Applicant’s designated account with the PLI.
The CVFF is available for both categories of vessel acquisitions if they meet the funding requirement.
The tenor of the CVFF transaction has been capped at a maximum period of eight (8) years, subject to the recommendation of the PLI following its financial and risk assessment of the Applicants.
The primary currency of disbursement is the United States Dollar (USD). This is because a single digit weighted average interest rate of 6.5% per annum cannot be achieved where the facility is disbursed in Naira.
The law requires a CVFF-financed vessel to operate within the Cabotage area. As such, a CVFF-financed vessel operation should predominantly be in Cabotage waters. However, if the vessel is to operate outside the Cabotage area, the Applicant must notify its PLI, and flexibility will be determined on a case-by-case basis.
Yes. The moratorium period for CVFF-financed vessels younger than five (5) years is a maximum period of twenty-four (24) months, while the maximum moratorium period of eighteen (18) months is set for vessels older than five (5) years. The moratorium is to be on principal and /or interest/mark-up, but at the discretion of the PLI, supported by the Applicant’s cash flow and the PLI’s credit assessment report on the Applicant and the proposed transaction/project.
Currently, the Fund is only available for acquisition and refinancing, as outlined in the CVFF Guidelines.
For the purposes of refinancing, the facility shall be restricted to eighty percent (80%) of the original cost of the vessel being refinanced or its Fair Market Value, whichever is lower. Applicants must ensure that the date of acquisition of the vessel should not exceed twelve (12) calendar months from the date of the refinancing application to the PLI or the Fund].
This will be determined based on the PLIs recovery process or protocol.
There will be a first and only mortgage on the financed vessel. Other securities to be determined by the PLI (based on the Applicant’s risk assessment) may include personal guarantees, assignment of insurances for the financed vessel, assignment of relevant contracts (like the charter for the financed vessel and other vessels owned or managed by the Applicant), and a charge of any other acceptable asset(s).
The documents required are as follows:
(i) Formal application on the Applicant’s letterhead requesting funding under the CVFF.
(ii) Detailed profile of the Applicant, its shareholders, directors, and key management staff.
(iii) Applicant’s Certificate of Incorporation and constitutional documents duly issued by the Corporate Affairs Commission (CAC).
(iv) Board Resolution of the Applicant approving the CVFF loan application.
(v) Shipping Company Registration Licence issued by NIMASA.
(vi) Evidence of operational permits and licenses.
(vii) Means of identification for the Applicant’s directors/shareholders
The information required is as follows:
(i) Detailed business plan/feasibility report, including cost requirements of the proposed project, cashflow projections for the proposed facility/project, and management plan.
(ii) cost estimates for insurance, underwriting, legal, accounting, and other related services in relation to the financing of the project.
(iii) Relevant documentation on proposed asset(s) to be acquired with the CVFF facility.
(iv) For second-hand vessels, a pre-purchase technical inspection report.
(v) Valuation report on the second-hand vessel from a firm on the panel of shipbrokers approved by NIMASA.
(vi) Details of existing or proposed contract(s) from an international oil company (IOC), national oil company, or indigenous company for which the vessel would be deployed.
The information required is as follows:
(i) Detailed analysis and supporting documentation of the proposed security(ies).
(ii) Draft Technical, Management, and/or Special Purpose Vehicle (SPV) Agreements related to the Applicant and the proposed project (where applicable).
(iii) Undertaking to register the CVFF-financed vessel under the Nigerian flag.
(iv) Affidavit of the Applicant’s directors and shareholders that they and the Applicant have not applied twice to the CVFF either via another company related by way of management or ownership.
(v) Affidavit of the Applicant’s shareholders that they and the Applicant have not applied twice to the CVFF either via another company related by way of management or ownership.
Further to the Treasury Single Account (TSA) waiver approval procured, the CVFF is to be maintained with a NIMASA-appointed Deposit Money Bank (DMBs) duly licensed by the CBN for ease of disbursement for approved CVFF transactions.
The fees to be paid are as follows:
(i) Administrative Fee: zero-point-five percent (0.5%) flat (one-off)
(ii) Monitoring/Investigation fee: one percent (1%) flat (one hundred percent (100%) upfront)
(iii) Management Fee: one percent (1%) flat (one-off).
The interest will start accruing from the date the Fund is disbursed to the Applicant.
The equity contribution from the Applicant will be domiciled with the PLIs.
Yes, any disbursed CVFF facility may be prepaid, in whole or in part, on the last day of an interest period or rental period (for non-interest banks), subject to ten (10) working days’ prior notice.
Yes. The mortgage over the financed vessel and other covenants in other financing documents would cater for this.
Late payments and default will attract interest at the rate stipulated in the facility agreement.