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$120m petroleum shipment fees: Senate asks NNPC patronize indigenous firms

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$120m petroleum shipment fees: Senate asks NNPC patronize indigenous firms

By Levinus Nwabughiogu – Abuja

Senate on Tuesday directed the Nigerian National Petroleum Corporation (NNPC) to prioritize enlarging the capacities of Indigenous shipping firms and also patronize them to save Nigeria of the $120 million annual loss to foreign companies in the shipment of petroleum products.

This was a decision reached by the Senate Committee on local content after a meeting with the NNPC management and Ship Owners Association of Nigeria where it was revealed Nigeria loses more including some $120 million loss to demurrage, using foreign firms.

Chairman of the committee and former Senate Leader, Tealim Folarin, in a ruling at the meeting directed NNPC to allow local shop owners to participate in the transportation of petroleum products

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“It is very important we patronise Indigenous shipping. The whole essence of this investigative hearing is not to trade blames. We understand that they don’t have enough vessels; they don’t have capacity and capacity cannot come from heaven. The GMD here has the capacity to help build capacity. It is very important that we patronize indigenous shipping companies.”Folarin said.

Also speaking, a member of the committee,  Senator Solomon Adeola, who is also the chairman of the Senate Committee on Finance highlighted the economic consequences of using foreign firms, saying Nigeria had been worse for it.

Adeola dismissed submissions that Nigerians do not own vessels that could be patronised.

“There are local vessels owned by Nigerians, it depends on the type of vessels we are talking about. There are two types of vessels”, he said.

Reacting, the group Managing Director of the NNPC,  Mele Kyari who had informed the committee earlier of no Indigenous vessels to patronise, however, promised to engage local partners.

“I am going to work to support these companies. We will engage our partners”, he said.

In a presentation to the committee earlier, the Ship Owners Association of Nigeria (SOAN) led by its President, Dr. Mkgeorge Onyung, told the committee that the provisions of Nigerian coastal and local content laws with regards to the shipping of petroleum products in the downstream sector of the oil industry was being violated in favour of foreign vessels, stressing that the development had encouraged massive capital flight.

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SOAN noted that “in the 2019/2020 DSDP disposition, contract valued at 9 billion USD was undertaken.  Freight expenditure on Import Tankers was approximately 60 million USD monthly or 720 million USD annually. This involved the average monthly importation of 2.4 billion litres (1.8 million metric tons) of gasoline in foreign-owned tankers of 35,000 to 90,000DWT capacity (approximately 40 shiploads monthly).”

“Between January and August 2020, 320 foreign tankers arrived Lagos offshore with imported PMS. This 100% foreign-dominated supply chain activity creates no in-country value for the Nigerian maritime industry with no multiplier-effect on other sectors of the economy. The foreign fleet is chartered by NIDAS Marine, NNPC subsidiary, via foreign shipbrokers namely Clarksons, E.A. Gibson, Brassington, Braemer and Affinity.”

The indigenous ship owners decried inadequate enforcement of the Cabotage and NOGICD Acts in the downstream sector.

“NNPC’s non-adherence to Charter Party Agreements in favour of Nigerian shipping companies, render their investments financially insecure, while Vessel Hire Payment Arrears (averaging 180 days) is a  protracted breach of NNPC’s charter party obligations making coastal shipping unviable for Nigerian-owned vessels”, they said in a petition.

Vanguard News Nigeria

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