BusinessDay
Nigeria's leading finance and market intelligence news report.

NIMASA pushes for review of Nigeria’s crude oil affreightment policy

…favours CIF in place of FOB

Determined to create jobs for Nigerian ship owners, the Nigerian Maritime Administration and Safety Agency ( NIMASA) has again revived efforts to change Nigeria’s crude oil affreightment policy from Free on Board (FOB) to Cost Insurance and Freight (CIF).

Bashir Jamoh, director general of NIMASA, disclosed this in Lagos when he received a delegation from the Nigerian National Petroleum Corporation (NNPC) led by Billy Okoye, the newly appointed Group General Manager, Crude Oil Marketing Division of NNPC.

Affreightment is a legal term used in shipping. A contract of affreightment is a contract between a shipowner and a charterer, in which the ship-owner agrees to carry goods for the charterer in the ship, or to give the charterer the use of the whole or part of the ship’s cargo-carrying space for the carriage of goods on a specified voyage or voyages or for a specified time.

The charterer agrees to pay a specified price, called freight, for the carriage of the goods or the use of the ship.

According to a statement signed by Philip Kyanet, head, Corporate Communications of NIMASA, Jamoh, who had recently paid a similar working visit to the Group Managing Director of NNPC, Mele Kyari, at the corporation’s headquarters in Abuja, appreciated NNPC for accommodat

ing the Agency’s interests in transactions where the maritime regulator relied on data from the national oil company.

He also disclosed that the Agency was working towards the implementation of a National Maritime Security Strategy in order to improve security on Nigerian waters and to reduce the cost of shipping.

“Since 2018, NIMASA has been championing moves for a change in the terms of trade with regard to transportation of Nigerian 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,” he added.

Under FOB trade terms, Nigeria has no reasonable control over the delivery of its crude oil as regards carriage, insurance, and other ancillary services. But under the CIF arrangement, the country maintains ample control over the distribution of its oil, which can be leveraged to enhance the competitive advantage of indigenous shipping operators.

Jamoh commended the synergy between NNPC and NIMASA, saying that 70 percent of the Agency’s revenue comes through the sale of crude, which means that the cooperation between NIMASA and NNPC cannot be over-emphasised.

“The Maritime Intelligence Unit recently established by the Agency is part of efforts to ensure a proactive approach to security on 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 Nigerian crude,” he said.

Jamoh however recalled that NNPC granted NIMASA’S requests and generously pledged to cooperate with the agency in actualising the move during his recent visit to the corporation even as he prayed for the continuation of such mutual understanding.

“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 to NIMASA,” he noted.

Jamoh however appealed for more local content in the transportation of the country’s crude in line with the provisions of the Coastal and Inland Shipping (Cabotage) Act.

Earlier, Okoye declared NIMASA as a ‘critical stakeholder in the business of crude oil sale’. He said his goal was to get the two agencies of government interfacing more closely with each other in order to resolve the challenges and ensure seamless movement of crude as well as petroleum products in the country.

Whatsapp mobile

Get real time updates directly on you device, subscribe now.