Nigeria lost over $50 billion to foreign ship owners between 2018 and 2022, sources at the Federal Ministry of Budget and Planning has revealed. Between 2015 and 2017, it was gathered, the country lost about $25 billion to foreign ship owners, while it lost additional $25 billion between 2018 and last year.
However, industry experts say this trend would have been reversed if the Federal Government had empowered indigenous shippers using the statutory Cabotage Vessel Financing Fund (CVFF) domiciled in NIMASA to grow local content in shipping.
A senior official said over $20 billion was paid as freight for dry and wet cargoes to foreign ship owners in 2018 and 2019 due to the absence of Nigerian-owned fleet plying the international route. The official said the trend had been recurring over the years, adding that in 2010, over $9 billion was estimated as opportunity loss.
According to him, about $9.60 billion was freight opportunity loss from import and export of dry and wet cargoes in 2020. The Nigerian National Petroleum Corporation (NNPC), the official said, needs to encourage subsidiaries to engage indigenous shipping companies in their businesses. NNPC, he said, needs to grant local shipping companies the right of first refusal in crude oil lifting contracts, saying it would help grow the economy and sustain their businesses.
Will NNPC Crude Swap allow Nigeria to gain from Russia’s cut
Depending on the bargaining power of the Government, Nigeria may or may not earn higher revenue from oil this year if the Organisation of the Petroleum Exporting Countries (OPEC) and partners stick to their position of not boosting oil production to fill in for cutbacks announced by Russia.
However, this will be dependent on the negotiating capacity of the Federal Government through the NNPCL considering the prevailing crude-refined products swap scheme.
The OPEC+ group, led by Saudi Arabia, will maintain output despite plans by the Moscow to cut 500,000 barrels daily in retaliation for international sanctions. Oil jumped after Russia’s announcement, with Brent rising 2.8 per cent to $86.90 a bbl. It later pared gains to 1.4 percent, or around $85.65. If this is adhered to, then a spike in international crude oil price is not unlikely, translating to more revenue for Nigeria and other member states. This is the target of the oil nations. For instance, Riyadh and others in the producers’ alliance have indicated their aim to stick to targets fixed late last year for the rest of 2023. They believe these will keep global oil markets broadly in balance. “We really believe OPEC+ will hold production flat for the full year,” Amrita Sen, co-founder of consultancy Energy Aspects, said to Bloomberg TV on Friday, after visiting Saudi Arabia.
