NNPC offers 9% funding to shipowners to buy vessels for lifting crude – NIMASA

The Nigerian National Petroleum Corporation (NNPC) has expressed interest in taking part in the funding of ships that would be acquired by Nigerian shipowners using the soon-to-be disbursed Cabotage Vessel Financing Fund (CVFF).

To achieve this, the NNPC offered to provide 9 percent funding that will enable shipowners to access the CVFF and buy new ships, according to the Nigerian Maritime Administration and Safety Agency, (NIMASA).

Delivering a paper on ‘From Crude to Blue,’ in Lagos on Tuesday during the Maiden Annual Lecture organised by Nigeria Institute of Maritime Studies, University of Lagos, Bashir Jamoh, the director-general of NIMASA, made the disclosure, and added that NIMASA will provide 50 percent of the funding, commercial banks selected as primary lenders will provide 35 percent while the selected shipowners will provide 15 percent required, which they will share with the NNPC.

According to him, the shipowners have complained that many of them do not have the financial strength to provide 15 percent of the funding, which is why the NNPC agreed to offer them 9 percent so that the shipowners will only have to source for only 6 percent.

“NNPC said it needs ships to lift Nigerian crude and that it will give Nigerian shipowners the specifications of ships to buy and also give them 9 percent out of the 15 percent of the funding that was supposed to be provided by the shipowner. They said they will take over the ship and provide the cargo until it recovers the amount invested in the acquisition of the ships,” Jamoh explained.

Jamoh said that NIMASA is expected to give each shipowner about $25 million, adding that about $350 million would be provided by the agency while the banks will add another 35 percent and shipowners another 15 percent.

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He said that buying new ships will allow Nigeria to take over its shipping business and the opportunities in the blue economy.

“Nigeria’s future lies in the blue economy because there has been a drastic reduction in the demand for Nigerian crude because the developed nations are finding alternatives to fuel. This is one of the reasons oil prices have continued to fluctuate in the international market.

“As the world continues to work towards phasing out the use of fossil fuels, now is the time for Nigeria to focus on finding alternative revenue sources to crude oil,” Jamoh said.

Identifying Blue Economy as one of such alternative revenue sources, the NIMASA boss said that Nigeria needs to change the way it is utilising the blue economy.

According to him, Nigeria needs to use the water resources sustainably by ensuring that marine resources are used to improve livelihood, enhance growth and create jobs.

Jamoh however said that Nigeria must ensure that it develops its national blue economy assets to the level that the continent and the world can accept it.

He said that Nigeria can generate energy from the blue economy, grow the tourism industry, boost the fishery industry, and build shipyards and coastal infrastructure.

While listing insecurity in the form of piracy and sea robbery as the major threat to the growth of the blue economy, Jamoh said NIMASA has invested in the acquisition of the Deep Blue infrastructure used in the fight against piracy on Nigerian water.

He added that investment has started yielding results as the incidents of pirate attacks on Nigerian water reduced from 35 in 2020 to six in 2021 and ended in zero attacks in 2022.

Dere Awosika, the chairman of the occasion, affirmed that the blue economy holds many lucrative opportunities for Nigerian but said that the financial institutions have to do a lot of work to ensure that the right finance is made available to develop the industry.

Represented by Iyabo Soji Okunsonya, she said that Nigeria cannot continue to depend on crude as the country truly needs to turn blue by everyone putting hands together to do the right thing.