Local content: Nigeria loses N55bn to domination of foreign oil vessels

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Indigenous ship-owners have raised alarm that Nigeria  is losing  over N55 billion nto domination of foreign vessels annually via lighterage operations in the nation’s oil and gas sector despite the existence of a Cabotage law.

Since the nation’s daily consumption of petroleum is at an average of 60 million litres and the freight components per litre in lighter age operations ranging from N2.50 to N3; using the minimum N2.50 freight cost, the nation loses N150 million daily and a colossal N54,750,000,000 yearly.

Lighter age, also called lightering, is the process of transferring cargo between vessels of different sizes, usually between a barge and a bulker or oil tanker. Lightering is undertaken to reduce a vessel’s draft in order to enter port facilities which cannot accept very large ocean-going vessels.

As part of efforts to correct this capital flight, the President of the Nigerian Indigenous Ship-owners Association (NISA) Mr. Aminu Umar has reiterated the need for the government to ensure lighterage operations trade within the nation’s coastal and inland waters is exclusively reserved for indigenous ship owners.

Umar expressed dissatisfaction on the issue sixteen years after the enactment of the Cabotage Act as the government has not lived up to its promise to allow only Nigerian vessels move petroleum products from import vessels anchored at Cotonou/Lome offshore to Nigerian ports.

He said; “The total earnings in the lighterage operations for the oil and gas sector is $150 million at the minimum and Nigerians participating in this business don’t make upto $20 million. The overall business has potentials to be upto $200 million per annum yet Nigeria can’t boast of doing more than 15%, not upto $30 million in the operations”

Umar admonished the government to enforce the Cabotage Act by ensuring that only Nigerians are allowed to do the business in the country.

“We want the government to ensure that only Nigerian owned vessels and Nigerian flagged vessels are allowed to the business. This is already enshrined in the Cabotage Act. The government just has to enforce it” he said.

Also speaking on his maritime agenda for 2019 as an indigenous ship-owner, the Lagos Coordinator, NISA, Capt. Taiwo Franklin Akinpelumi urged the federal government to grow local content by guaranteeing exclusivity to cargo with special emphasis on lighterage.

“Look at the issue of lighterage operations. Indigenous operators need the government to guarantee exclusivity to certain cargo so that the sector can grow. How would indigenous ship owners fare if they have one million ships without cargoes. NIMASA should make concerted efforts and try to convince the Nigerian National Petroleum Corporation (NNPC) on this issue because this is a viable way to grow local content in shipping business”, he said.

Akinpelumi stressed that as the regulatory body in-charge of shipping, the onus was on NIMASA to enlighten and engage NNPC on the need to make certain trade decisions.

“There is no way NNPC would decline such strong recommendation from NIMASA if NIMASA says this is what has to be done to grow local content. NNPC may say Nigerian operators aren’t on par with foreign operators and we aren’t doing things according to the global best standards, they forget that practice makes perfect” he argued.

He also stated that exclusivity to lighterage operations would enable indigenous ship-owners maintain their vessels to meet global standards as lack of jobs had led many ship-owners loss their investments.

Capt. Taiwo urged NIMASA to be more accommodating while he suggested that indigenous operators can enter into agreement with NNPC and sign indemnity to cover for any loss as a result of the state of the vessels.

According to him, this development would make the ship owners sit up and ensure the business goes smoothly even as it enables them meet the global standards enforced by NIMASA.

“All developed maritime nations started from the scratch. They didn’t just emerge with vessels that met global standards. America, Britain, Singapore, among others started by protecting indigenous ship owners who utilized the available ships at the time before they liberalized. They decided to liberalize because they knew that they had reached a level where they could complete on the global scene. Nigeria has to deploy the same strategy” he added.

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