Business

NNPCL’s stance stifles local shipping

Reliance on foreign vessels by Nigerian National Petroleum Company Limited (NNPCL) to lift Nigerian petroleum products has affected local maritime industry and ship owners, BAYO AKOMOLAFE reports

Regardless of the introduction of NIDAS Shipping Services by Nigerian National Petroleum Company Limited (NNPCL) into the international shipment of crude oil and petroleum products, less than five per cent of Nigerian ship owners or Nigerian flagged vessel have benefited from crude oil lifting.

Issues

However, instead of patronising indigenous ship owners, the President of Nigerian Indigenous Ship owners Association (NISA) Mr. Aminu Umar, said that NIDAS was hiring international vessels to do the transportation on the pretext that Nigerians do not have the vessels to handle such cargoes. Currently, there are many Nigerian vessels littering the waters without job because of the NNPCL cargo lifting policy. It was gathered that over 95 per cent of the country’s crude oil were being ferried by foreign vessels, while only few indigenous ship owners are allowed to participate, leading to $5billion loss in freight annually. For instance, a Greece-based shipping company, Unibros, with its vessels deployed to execute contract for NNPCL, has been lifting the country’s oil.

The vessels

The Liberian flagged vessels include: Bora with 46,700 Dead Weight (dwt); Capt Gregory with 31,259 dead weight (dwt); Coromel, 12,279 dwt; Kowie, 16,885 dwt; Leste – 46,803 dwt; Levanto, 19,117 dwt; Maestro, 17,575dwt; Notus, 12,681dwt; Ostria, 40,316dwt; Stellar, 40,316 dwt; Tornado, 40,316 dwt; Vardar, 40,225dwt and Zonda, 46,803 dwt. In 2020, the House of Representatives summoned the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, over alleged award of a coastal shipping contract to Unibros, a foreign company. The Chairman, House Committee on Nigerian Content Development and Monitoring, Hon. Legor Idagbor, during an investigative hearing on the contract allegedly awarded, said that the award of such contract to a foreign company was in breach of the law. However, this had not deterred NNPCL from awarding contract to foreign shipping companies.

Complaints

Miffed by the development, the President of Ship Owners Association of Nigeria (SOAN), Dr. Mkgeorge Onyung, lamented the denial of coastal contracts by NNPCL, saying that the NNPCL had sidelined local ship owners. According to him, without due process, it had awarded the contract to Unibros in spite of the fact that indigenous ship owners had the capacity to carry out the job. Onyung explained: “The NNPC awarded the contract to UNIBROS. It is a coastal shipping contract. It is one contract, but for 11 vessels. That is the whole share of the coastal shipping. This means that when those vessels that bring the product from abroad arrived Nigeria, the ships that would take the products to various jetties that have the shallow draft, which is a cabotage trade to start with, is supposed to be domiciled in Nigeria. They gave it to one company called UNIBROS, and all those ships are foreign flags; all are foreign owned, and they do not hire Nigerians.” The president stressed that NNPCL had breached the local content law, particularly its failure to create commercial opportunities in the downstream petroleum supply chain, adding that the country would have benefited in terms of buoyant economy and employment opportunities, if NNPCL had obeyed the law of the land and collaborated with SOAN. He added that the stance was a total breach and impetuous disregard for Nigeria content laws, the Coastal and Inland Shipping (Cabotage) Act and the Presidential Executive Order No5 to the exclusion of Nigerian ship owners and operators. Also, Vice President of the Association of Marine Engineers and Surveyors (AMES), Emmanuel Ilori, who complained that some Nigerian vessels were idle due to the unfavourable cargo policy of NNPCL, explained that this had led to huge unemployment for Nigerian youths and raised foreign earning power. Ilori said: “l do not understand why we hate to see Nigeria grow. Everybody is just concerned about himself and the narrow benefits they get.”

Also, Barrister Ebenezer Oladimeji, a maritime lawyer, said that the trend was not good for Nigerian economy despite the existing law that protect indigenous shipping companies to control the country’s coastal trade. He explained that a country that failed to used it available resources fully was only short changing itself, saying that it was not wise for the country to be raising earnings of another country without corresponded gain. According to him, some local ship owners were in court today because they could not pay the loan sourced from the banks, stressing that some of their vessels had been seized by the Economic and Financial Crime Commission (EFCC).

Solution

Worried by the dominance of foreign ships in Nigerian coastal trade two decades after the establishment of the Cabotage Act, a shipping stakeholder at the late Otunba Kunle Folarin’s colloquium held in Lagos called for the removal of the waiver clauses in the Act, which create opportunities for foreign vessels. For instance, Mr. Chris Asoluka, a shipping expert, described the waiver clauses in the Cabotage Act as one of the greatest limitations of the Cabotage Act and the Cabotage Vessel Finance Fund (CVFF). Asoluka said that the clause had stifled indigenous shipping in the country. He said: “Foreigners are excused to use vessels not owned by Nigerians, not built or crewed by Nigerians. This was a mistake we made with the Cabotage Act because we thought at time that Nigeria hadn’t grown to the stage where it could handle Cabotage trade in compliance to the requisite standards. We should have inserted a caveat or timeline to give waivers to foreign vessels for five years while growing indigenous capacity for the service.”

Last line

Nigerian cargoes should be handled by local shipping companies in order to create more jobs and halt over $5billion loss in freight annually to foreign shipping lines.

 

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