• War risk insurance premium highest in 10 years
• Ship owners hire personal security
• NIMASA launches Deep Blue project next month
As the Nigerian Maritime Administration and Safety Agency (NIMASA) prepares to begin aggressive fight against piracy and all forms of criminalities in the Nigerian maritime domain next month, PAUL OGBUOKIRI reports that the Gulf of Guinea (GoG) piracy issues cost Nigeria over $1.1 billion last year
Gulf of Guinea piracy
The Gulf of Guinea, which covers 11,000 square kilometres (4,247sq miles) and stretches from Angola to Senegal, is one of the world’s most important shipping routes for both oil and gas exports from the Niger Delta and consumer goods to and from Central and West Africa.
There are about 1,500 fishing vessels, tankers and cargo vessels navigating the gulf’s waters on daily basis, according to the European Union’s maritime safety fact sheet. However, the gulf is not very well guarded, a combination that creates ideal conditions for piracy according to experts.
“Congestion at the Lagos ports and the lack of other options means that ships are spending a long time queuing, meaning there are a large number of ships in a relatively small area to target,” said Chidi Nwaonu of UK-based security firm, Peccavi Consulting.
“Due to that and a lack of naval presence, there is the motive of high financial reward and comparatively low risk of detection or capture.” Industry experts say kidnappings at sea have become so common; endanger the lives of over 400,000 seafarers, even as the number and severity of the attacks on the Gulf of Guinea continue to rise, posing serious threat to global trade and Safety of seafarers, according to the International Maritime Organisation (IMO). In a letter to all agencies of the United Nations (UN), dated February 10, Secretary General of IMO, Kitack Lim, said that the piracy in the Gulf of Guinea presents a “serious and immediate threat to crews and vessels operating in West Africa.”
He called for better coordination between stakeholders and regional organisations to improve safety for ships and their operatives, while also highlighting a fatal incident involving a container shop in late January as the catalyst for action. Mozart, a Liberian-flagged vessel, had been on its way from Lagos to Cape Town when it became the target of a pirate attack that resulted in the death of one Azerbaijani seafarer and kidnapping of 15 Turkish crew members. Lim said the situation has increased the cost of shipping operations in the Gulf, with Nigeria, where over 65 per cent of attacks emanated from and take place; being the worst hit. He added that businesses have to factor in the costs of independent security contractors, extra insurance, and, sometimes, ransom money, making the cost freight to Nigeria the highest in the world. To this end, the economic cost of piracy in on Nigeria in 2017 was $818.1million, up from $793.7 million the year before. In 2018,
dropped to $810 million, but jumped to $900 million in 2019 and $1.11 billion in 2020; an indication that rather than abetting, the piracy menace is rising in the gulf at a time the incidence of piracy has fallen drastically around the world. According to nonprofit Oceans Beyond Piracy’s 2020 reports, a quarter of that $1.11 billion was spent contracting maritime security, adding that insurance also represents a huge cost.
The group further, in its analysis, disclosed that the total cost of additional war risk area premiums incurred by Nigeria bound ships transiting the gulf was $55.5 million in 2020 alone, and 35 per cent of ships transiting the area also carried additional kidnap and ransom insurance totaling $100.7 million. Insecurity is so rife in the region that global insurance firm, Beazley now offers “Gulf of Guinea Piracy Plus,” a bespoke insurance plan for maritime crew travelling through the area. The plan provides compensation for illegal vessel seizures and crew kidnappings even in the absence of ransom demands. It tracks insured vessels on a 24-hour basis, but because the risks are so high, it limits claims to $25 million.
A spokesman for Beazley disclosed that premiums for this type of coverage are decided on a case-by-case basis, however, because the risks are so great. Fabrizio Barcellona, coordinator of the seafarers’ unit in the International Transport Workers’ Federation, a trade union, said in a statement: “The severity of this latest attack must now drive robust action from government to protect seafarers and the movement of trade around West Africa and particularly Nigeria. Based on the 2020 report submitted to the IMO, the number of piracy incidents in the Gulf of Guinea increased to 90 (up by 20 compared to the 2019 record), with a total of 112 crew members reported kidnapped or missing.
This was a significant proportion of the 226 incidents of piracy and armed robbery against ships that occurred or were attempted in 2020 globally. To date, this year, over 23 incidents have been reported in the West African region, IMO said in a statement.
War risk insurance premium
Nigeria’s maritime trade is to say the least, threatened due to increasing war risk insurance premium now being paid by Nigeriabound vessels. Although reports of piracy in the Niger Delta appears to be waning, stakeholders in the industry are worried that offshore underwriting firms still insist on very high premium to be paid by those conveying cargoes to Nigeria.
Unpredictable attacks on vessels and subsequent kidnapping of the crew members for ransom by Nigerian militants have been a source of worry to the Federal Government and stakeholders in shipping business as the act has discouraged most vessel owners from doing business to the country.
War risk insurance is a type of insurance which covers damage due to acts of war, including invasion, insurrection, rebellion and hijacking. Some policies also cover damage due to weapons of mass destruction. It is most commonly used in the shipping and aviation industries. It generally has two components: War Risk Liability, which covers people and items inside the craft and is calculated based on the indemnity amount; and War Risk Hull, which covers the craft itself and is calculated based on the value of the craft. The premium varies based on the expected stability of the countries to which the vessel will travel.
The war risk phenomenon, which was only known to countries with high rate of piracy such as Somalia, also found its way into Nigeria following massive involvement of youths in the Niger Delta in militant activities.
The concern was recently highlighted by no less an authority in the person of the Executive Secretary of Nigerian Shippers’ Council (NSC), Hassan Bello. Bello had expressed concerns over high insurance premium tagged ‘war risk insurance’ slammed on Nigeria-bound ships by foreign insurance companies to insure ships against attacks in the nation’s Niger Delta region and the larger Gulf of Guinea area. Bello said there was need for collaboration between the NSC and NIMASA to tackle the problem and ensure that such charges were removed from Nigerian-bound vessels.
He said: “Our concern is the surcharges on war risk insurance clause on Nigerian cargo because of piracy. We need to collaborate on that. Because of the issue of security in the Gulf of Guinea and because of apprehension, insurance companies usually levy cargo coming to Nigeria as war zone but it is not really true because you can see that the incidence of piracy and armed robbery have reduced drastically. NIMASA and the Nigerian Shippers’ Council will find ways to tackle that and ensure that such surcharges are removed from our cargo.”
Countering illicit maritime activity
With the Gulf of Guinea tagged the worst body of waters in the world for mariners with high rates of piracy, the task of stamping out the menace appears undaunting.
However, as regards to reducing the attacks by pirates on vessels, several things are happening, states the IMO in its letter. The organisation is working with the International Chamber of Commerce (ICC) to better support countries’ adoption of the Yaoundé Code of Conduct (YCC), the widest regional initiative by governments in and around the Gulf of Guinea, signed in 2013 to repress illicit maritime activity.
However, the World Economic Forum says that in order to counter piracy in the gulf, four steps needed to be taken: affected states need to share information on what is happening on their coastlines, countries must look to develop strong legislation and prosecute maritime criminals, joint training activities are required, so that countries can develop procedures and improve their inter-operability, and countries should also set aside funds to build local security capacity.
It is against this backdrop that stakeholders and maritime experts are doffing their caps for the Dr Bashir Jamoh led management of the Nigerian Maritime Administration and Safety Agency (NIMASA) for breathing life into the Deep Blue project which the Federal Ministry of Transportation in a recent statement, said that it will be launched by President Muhammadu Buhari in June.
The Deep Blue project is a $195 million comprehensive maritime security architecture initiated by the Federal Government, driven by the NIMASA to tackle piracy in the Nigerian waters and stamp it out menace completely.
Speaking on the coming launch of the deep blue project, Special Assistant to the NIMASA Director-General on Communications and Strategy, Ubong Essien, described the Deep Blue project as the nation’s integrated surveillance and security architecture in the maritime industry, saying that the project includes air, maritime and human assets.
He stated that in the area of human assets of the project, there were well-trained special forces drawn from the Nigerian Navy, the Nigerian Army and other security agencies to support the programme.
Essien said: “The Deep Blue Project is the nation’s integrated surveillance and security architecture in the maritime industry. Integrated in the sense that NIMASA is investing in the air assets, such as three special mission helicopters, two special mission aircraft, four unmanned air vehicles, drones.
“Then, in maritime asset, there are two special mission vessels known as DB Abuja and DB Lagos, well-equipped to be out there on the high seas, patrolling our waters with a capacity to deploy about 17 fast-moving interceptor boats. “Those boats are designed for expeditious purposes. Should there be any crisis, should there be any development requiring a swift response, they can be deployed so that intervention can come in good time.
“Then, we have human assets where we have well trained special forces from the various arms; from the Navy, the Army and other security agencies. That is why it is integrated; we are all working together.
“Then, of course, we have what we call the C4i, which has to do with intelligence gathering centre, wherewith an assemblage of computer network, NIMASA has the capability of monitoring activities. “So, through the C4i, we are able to monitor what goes on the sea online in real-time. In a matter of weeks, this project is going to be launched.”
He said the Deep Blue project will ensure safer navigational channels for ships and vessels and marine litter and plastics clearing for the restoration of the cleanness of the waters in the zone at various hotspot locations. He identified some of the hotspots as Okutukutu in Yenagoa, Port Harcourt to Bonny axis, Otamiri-Nworie River in Imo State, Epie-Oxbow creek in Yenagoa, Otubhi-Elebele Ogbia, Idundu-Calabar axis in Cross River and Ikot Abasi in Akwa Ibom.