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Crude lifting: NNPC, NIMASA close ranks to boost indigenous shippers’ capacity

If the new arrangement being worked out by the Nigerian National Petroleum Corporation (NNPC) and the Nigerian Maritime Administration and Safety (NIMASA) is anything to go by, there are chances that the end point will be the changing of crude lifting trade terms from Free On Board (FOB) to Cost Insurance and Freight (CIF).

This model will among other things, afford indigenous shipper opportunity to join the international shippers to lift Nigeria crude and ultimately boost indigenous capacity.

The plot according to observers was a fall out from the stakeholders’ engagement on changing Nigeria’s crude oil affreightment trade term from FOI to CIF at the NNPC towers in Abuja on Tuesday.

Minister of State for Petroleum, Dr. Ibe Kachikwu who declared the event open welcomed the development, noting that the issue on this trade term is an aged long challenge that has lingered too far and charged participants to come out with resounding resolutions that would be of National benefit.

Before now, all shipping pressure group had lost confidence on the current leadership in NIMASA especially in the areas of industry development as both the Cabotage Vessel Financing Fund (CVFF) and The Maritime Fund (TMF), all domiciled at NIMASA for the development and boosting of local shippers’ capacities had not been disbursed too long and since the beginning of the current DG, Dakuku Peterside.

However, NIMASA boss, Dr. Peterside who presented a paper titled, ‘The Imperatives of Changing Nigeria’s Crude Oil Affreightment Trade Terms From FOB to CIF’, pointed out that the Changing landscape of Nigeria’s maritime sector viz-a-viz its security architecture, capacity and other determinants has necessitated the Change now than ever before.

He said the implementation of the CIF model will “encourage indigenous fleet expansion, lead to massive job creation for qualified Nigerian Seafarers, create opportunities for mandatory sea time experience for Nigerian cadets and build expertise and competence in international shipping trade”

“Nigeria is one of the major exporters of oil and gas resource in the world, and she averages an output of 1.92 million barrels of crude oil per day so this volume generates huge freight for carriers. Regrettably, Indigenous shipping operators have insignificant share of the freight earned from the carriage of Nigeria’s crude compared to foreign counterparts”. The DG lamented.

NIMASA DG gave instances with other OPEC nations such as Iran, Indonesia, Algeria, Kuwait, Angola, Venezuela, UAE and Libya where indigenous shippers are allowed to participate actively in shipment of the crude oil, and averred that the new policy will just do that.

Earlier in his address, the Group Managing Director of the NNPC, Dr. Maikanti Baru stated that the Corporation does not have any reason not to allow Nigerians lift crude that there were conditions which made NNPC opt for the FOB trade. He however noted that the NNPC also sees benefits in the CIF trade term but processes have to be followed which may include transition period before finally opting for the CIF trade term.

Shipowners and major stakeholders who spoke at the engagement lauded the initiative. Barr. Temisan Omatseye a former DG of NIMASA who is also a Ship owner pointed out that there is a lot of benefit in the CIF trade term. He stated further that that it would eliminate crude theft, create employment and ultimately compliment the diversification drive of the Federal Government.

In the same vein, the President of the Ship Owners Association of Nigeria (SOAN) and Managing Director of Starz Marine Group, Engineer Greg Ogbeifun observed that what is needed to make the great CIF initiative to grow the Nigerian shipping industry and the economy is the needed Government support, which is coming at the right time, when the country wants it most to diversify the economy.

All other stakeholders who spoke at the event including leading members of the Nigerian Shipowners Association (NISA) and Master Mariners unanimously agreed that the CIF trade term would be more beneficial to the country than the present FOB on which the crude lifting is currently based upon.

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