Again, NIMASA seeks review of Nigeria’s FOB crude affreightment Policy
The Nigerian Maritime Administration and Safety Agency (NIMASA) has renewed its call for the review of the Free on Board FOB terms of trade for the affreightment of Nigeria’s crude oil and other export products to Cost, Insurance and Freight CIF term, which is believed to be more beneficial to the country.
Under the FOB policy, buyers of the country’s crude oil and other non-oil exports determine the vessel for the carriage of the consignment while her imports are carried on the basis of CIF, which requires that the exporter determines which vessel to be used for the shipment and both ways, Nigeria loses.
Director-General of the agency, Dr. Bashir Jamoh, while speaking in Lagos recently when he played host to a delegation of the Nigerian National Petroleum Corporation NNPC led by the newly appointed Group General Manager, Crude Oil Marketing Division, Sir Billy Okoye, noted that the country has for too long implemented the FOB policy for shipment of her crude oil exports, which weighs against her economy.
Recall that Jamoh had recently paid a similar working visit to the Group Managing Director of NNPC, Mele Kyari, at the corporation’s headquarters in Abuja, when he expressed NIMASA’s appreciation to the NNPC for accommodating the agency’s interest in transactions where the maritime regulator relied on data from the national oil company.
The NIMASA DG also revealed that the agency was working towards the implementation of a National Maritime Security Strategy to improve security on Nigeria’s waters and reduce the cost of shipping.
“Since 2018, NIMASA has championed moves for a review in the terms of trade with regards to transportation of Nigeria’s crude oil, from FOB to CIF to ensure greater benefits for the country from its oil resources. A technical committee involving NIMASA, NNPC, and other stakeholders would be set up to develop a template for the desired change, with workable timelines”, the DG stated.
Investigations show that under FOB trade terms, Nigeria has no reasonable control over the delivery of her crude oil as regards carriage, insurance, and other ancillary services. But under the CIF arrangement, the will country maintains ample control over the distribution of her crude oil, which can be leveraged to enhance the competitive advantage of indigenous shipping operators.
Jamoh commended the NNPC over the synergy that exists between NIMASA and the NNPC, saying that 70 per cent of the agency’s revenue comes through the sale of crude. Thus, cooperation between NNPC and NNPC cannot be over-emphasised.”
The NIMASA Director-General also disclosed, “The Maritime Intelligence Unit recently established by the agency is part of efforts to ensure a proactive approach to security in our waters. The focus is to try to nip maritime attacks in the bud by tracking the criminals from the pre-planning and planning stages.
“The ultimate aim is to develop a National Maritime Security Strategy that would help to minimise the cost of insecurity, which NNPC bears on behalf of the country, in the shipment of Nigeria’s crude.”
The DG also expressed appreciation to the NNPC over its decision to grant the agency’s requests and generous pledge of cooperation during his recent visit to the corporation and prayed for the continuation of such mutual understanding.
He stated, “We appreciate the NNPC for accommodating NIMASA in its processes. We do not delay vessels in the search for information on them because of the confidence we have in NNPC’s capacity to readily supply such information.”
Jamoh appealed for more local content in the transportation of the country’s crude in line with the Cabotage regime.
While addressing the meeting earlier, Okoye declared that NIMASA was a “critical stakeholder in the business of crude oil sale.” He said his goal was to get the two agencies of government to interface more closely with each other to resolve challenges and ensure seamless movement of crude and petroleum products in the country.