Ship owners tackle NNPC over crude lifting

Despite the enactment of the Nigerian Content Act and its introduction into the oil and gas sector in 2013, significant changes have not been recorded in the nation’s coastal shipping business due to resistance from the Nigerian National Petroleum Corporation (NNPC).

 

Challenges
For more than three decades, Nigerian shipping companies have met a lot of brick walls in their efforts to participate in the nation’s crude oil lifting.
In a bid to encourage local ship owners, the Federal Government introduced a protectionist legislation aimed at preserving participation in the cabotage trade to vessels that are locally built, registered, owned and manned.
It also established a Cabotage Vessel Finance Fund (CVFF) whose objective was to promote the development of indigenous tonnage for cabotage operations.
The strategy came after the policy of cargo allocation for indigenous shipping lines was abandoned in April, 2000 by the defunct National Maritime Authority (NMA) because of abuse and corruption, which paved the way for the sale of allocation papers to foreign shipping lines.

Issue

Considering these huge losses incurred by the country due to the exclusive use of foreign companies for carrying the nation’s crude, which is sold on Free on Board (FOB) rather than on Cost, Insurance and Freight (CIF), the ship operators under the umbrella of Ship Owners Association of Nigeria (SOAN) have complained that the country loses N2 trillion annually.

According to them, this is a huge capital flight, which the country had allowed over the years. This incessant breach of extant laws that reserve the shipping of some cargoes for local vessel operators has been condemned by a former Managing Director of the Nigerian Ports Authority (NPA), Chief Adebayo Sarumi, who bemoaned the total dominance of foreign shipping companies in lifting all project cargoes in contravention of Nigeria’s shipping policy that reserves the shipping of all such cargoes for indigenous shipping companies.
He explained at a ship owners’ forum in Lagos that whatever cargo coming into the country must be carried by Nigerians, adding that the challenge faced by the local ship owners was beyond offshore oil support services.
Confrontation

He urged the shipping operators to assiduously fight for their rights to access the cargoes set aside for lifting by indigenous shipping owners. He said: “One point that still remains is that ship owners need to fight for their rights beyond the issue of oil and gas as well as oil exploration support services. Even if we have to start with non-vessel owning common carriers, we should insist on carrying most of our project cargo. We should not leave the business to the supplier to go and look for his countries’ shipping services to bring our cargo to us.”

According to him, shipping business is capital intensive, considering the immense activities in the maritime industry.

 

Counsel

He advised SOAN executive members to think of the possibility of diversification, saying that there was no reason for Nigerians not to trade within the North and Central Africa region.
SOAN President, Mr. Greg Ogbeifun, who is worried about the foreign dominance, said that since the inauguration of the association in 2014 some steps had been taken to reclaim their right of shipping.
He recalled that the association has had several engagements with relevant maritime managing directors as well as stakeholders with a view to facilitating the streamlining of government policy direction to actualise maritime potential.

 

Assurance

Worried by the plight of the ship owners, the Director General, Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Dakuku Peterside, promised that the agency would begin the disbursement of the CVFF in the first quarter of 2019.
He noted that the disbursement would crash the interest rate to single digit, stressing that the effective utilisation of the CVFF would create more jobs in the country.
He explained that the agency would continue to publish the maritime forecasts to enable ship owners understand the direction of the industry with the available statistics.

According to him, “Singapore has established a policy framework on International Maritime Centre 2030, which it intends to be the centre for connectivity and also the hub of innovation and latent in the world.”
Also, the director general noted that United Kingdom was number one in ship financing and maritime insurance while China had wanted to dominate trade in maritime and had done that through a maritime policy called 21st Century Silk Road.
Peterside said: “There was the National Shipping Policy between 1987 and 2003 on cargo sharing rate of 40-40-20, which gave right for NIMASA. There is also the Cabotage 2003 policy, which enables indigenous operators to dominate coastal trade by building and manning of ships, port reform policy and others.”
However, he lamented that poor implementation of policies and lack of enforcement had led to failure of numerous policies in Nigeria.

Last line
Government should make a law that will compel NNPC to patronise local shipping lines in the affreightment of its crude oil and project cargoes.

Source: New Telegraph

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