The regulator of maritime activities, Nigerian Maritime Administration and Safety Agency (NIMASA), even though was part of the new arrangement with the Nigerian national Petroleum Corporation (NNPC) to adopt the Cost Insurance and Freight (CIF) trade term rather than Free On Board (FOB) in crude lifting, industry pundits have raised fears of failures ahead.
According to analysts who bared their minds on the matter, majority of indigenous ship owners currently lack the required ocean going vessels capacity to participate in the lifting of Nigerian crude oil under the new arrangement.
Industry experts say, it amounts to misplacement of priority and an embarrassment on collective intelligence of local shippers by NIMASA to be part of the new deal when it has failed over the years to disburse either The Maritime Fund (TMF) or the Cabotage Vessel Financing Fund (CVFF)
Stakeholders further argued that any effort geared towards changing the trade term from Free On Board to Cost Insurance and Freight is an exercise in futility as what indigenous ship owners can only be able to do now, will be merely collection of any Standard Purchase Order (SPO) and still give it to their foreign counterparts who have the needed capacity.
Business Hilights recalls that the Federal Government recently adopted the Cost Insurance and Freight (CIF) trade term rather than Free On Board (FOB) which will make the Nigerian ship owners participate in the business of crude oil lifting.
This method which is likely to attract over N.5 trillion to the coffers of the Ship Owners Association of Nigeria (SOAN) is expected to make crude oil affreightment more attractive and competitive.
Cost, Insurance and Freight (CIF) means the seller pays costs, freight and insurance expenses against the buyer’s risk of loss or damage in transit to destination while FOB gives obligations, costs and risk involved in the delivery of goods from the seller to the buyer under the International Chamber of Commerce (Incoterms).
Before now, stakeholders have condemned the preference of foreigners dominating the shipping business, a situation that resulted in the cabotage vessel financing fund (CVFF). CVFF is a contribution by ship owners with a view to save enough fund to acquire vessels.
In the views of a freight forwarder and co-ordinator of Save Nigeria Freight Forwarders (SNFF), Dr Patrick Chukwu, “the ship owners do not have enough ships not to talk of having ships that are ISPS compliant”.
“Do they really have vessels to compete with their foreign counterparts? They will just collect SPO and sell it to the same foreigners. How many of their vessels have ISPS code? They are not telling them the truth” he said.
President, Merchant Navy Engineers, Matthew Alalade submitted that there will be crisis if indigenous ship owners take over the lifting of oil from foreigners, saying rather than totally remove the foreigners from the business, the domestic vessel owners should partner with them. The government should also help the local ship owners to acquire vessels through cabotage vessel financing fund and the maritime fund which are clearly provided in the Act establishing NIMASA.