Blessing Onumajuru
23 October 2009
Director general of Nigerian Maritime Administration and Safety Agency (NIMASA) Mr. Temi Omatseye has identified some of the benefit derivable from effective management of transport logistics mainly as it affects local affreightment of crude oil and other liquid cargo. Omatseye who spoke at a conference last week said that
Petroleum products and other crude oil derivatives are bulk cargoes that are most efficiently transported by maritime mode over a relatively long distance. The NIMASA boss focused his paper on the maritime transportation aspect of petroleum products supply logistics without any intention to diminish the importance and complementary role of other transport modes in the logistic chain.
According to him, the discovery of crude oil in a commercial quantity added value to the economy. He said
maritime transportation is one of the key economic opportunities created by the activities and operations of the Nigerian oil and gas industry, and with the increasing move towards deep water operations which has consequently widened the scope and context of marine based support activities, the marine transport service market and its derivatives have witnessed corresponding growth and are expected to sustain this trend over a reasonable time frame.
On local shipping and product supply he noted that , it is regretable that the huge economic benefits flowing from the maritime aspect of the Nigerian oil and gas industry has not been domesticated for the economic advantage of the country.
After an impressive era of indigenous shipping spanning over two (2) decades (late 1960s to mid 1980s), Nigeria has since the eve of the 21st century recorded almost negative growth in her tonnage capacity.
For a country with a daily crude oil export quota of about 2.4 million metric tons and high consumption level of petroleum products Nigerian shipping companies have not participated actively in the affreightment of her crude oil export and petroleum products import trades despite policies permitting them to do so. Rather, the aggregate market share of Nigerians' participation in the affreightment of the country's crude oil and petroleum products trades is less than 5% in monetary terms.
This figure by extrapolation amounts to mere $50m given that the consolidated market depth of the oil and gas activities in Nigeria amounts to $10billion where transport accounts for 10% ($1billion) of the total cost. It is a matter for concern that by their non-participation, the country loses a substantial amount of foreign exchange annually.
Paradoxically,he observed foreign shipping interests have benefited exclusively from the maritime business opportunities created by Nigeria's oil and gas industry. Through out the period under discussion, foreign operators have dominated activities in the provision of marine transport and logistic services in both the upstream and down stream sectors of oil and gas activities.
There are many overt and insidious factors underpinning this development. The net consequence weighs negatively on the nation's economy and at high cost to the country's socio-political and strategic interest. The present dependency on foreign shipping interests for the supply of petroleum products in the country is a potential risk to Nigeria's economic security.
Speaking on the Cabotage Regime Omatseye said the imbalance in Nigeria's shipping industry has been of serious concern to the government and has inspired a number of policy interventions chief among which is the Cabotage Act of 2003, which subsequently came into force in April 2004.
While the nation awaits the passage of the Nigerian Content Bill into law, it is pertinent to state that the Cabotage Act 2003 is indeed, a maritime sector-specific Nigerian content policy framework. The introduction of Cabotage regime is meant to progressively address the existing imbalance in our shipping trade, particularly on the domestic front.
The implementation of the provisions of the Act has thrown varied challenges which are nonetheless surmountable with determination and sound planning but most importantly, support from all stakeholders and our foreign friends. Economic nationalization has gained global momentum not withstanding the globalization and liberalization of the international economic system. The Cabotage Act therefore, is an attempt to nationalize domestic shipping service in line with global trend.
Omatseye said it has come to government attention that majority of the vessels providing marine services to International Oil and gas Companies (IOCs) in their upstream and down stream operations are not registered with NIMASA despite the clear position of the NIMASA/Cabotage Act on this matter. As a national institution regulating maritime affairs in Nigeria,he pointed out that it is NIMASA's primary responsibility to capture all vessels operating within Nigeria's Exclusive Economic Zone (EEC) in our databank.
"We therefore want to use this forum to call on all the IOCs to immediately review their marine service contracting process in a manner that ensures that only fully compliant Cabotage vessels are contracted to provide marine services. They should also direct that all vessels already in their services but are not duly registered as required by the Act to immediately do so within a reasonable time frame from now.
Also by the requirement of the Act, all Floating Production and Storage Offshore vessels (FPSOs), Drilling Rigs and Mobile Production Platforms (as define in Section 44 of the Merchant Shipping Act 2007 dealing with definitions) operating in the Nigeria waters, are all required to be registered with NIMASA. "
IOCs operating FPSOs, Rigs and Platforms that are not registered are hereby reminded that they are doing so in contravention of the extant law of the land and are thus, advised to without further delay, bring them in full compliant with the requirements of the Cabotage Act.
As a law of the Federal Republic of Nigeria, operators and stakeholders have a duty to abide by the law and should be seen to demonstrate high sense of responsibility by conducting their activities within the rules of engagement as spelt out by the law. It must be stated here that Government has reviewed the progress so far made in the implementation of the Act and has taken fresh measures to reinforce not only the implementation of the provisions, but the enforcement of compliance at all levels of activity.
The key issues in NIMASA's renewed effort to implement the Act are; Scheme for accelerated acquisition of Cabotage service trading assets. Provision of critical maritime infrastructure to domesticate asset maintenance services
Mass production of human capital to meet manning demand and other technical skills.
In summary, our new implementation strategy is focused on achieving national sufficiency in tonnage capacity, shipbuilding & repair capability and seafarers' availability. These three goals together with flag registration, form the four pillars of the Cabotage law which by themselves, constitute the cornerstone of the policy objectives.
In specific terms, modalities for the application of the Cabotage Vessel Finance Fund (CVFF) are being finalized. A model scheme involving elaborate arrangement for mass production of ships based on the demand profile of our Cabotage trade is being considered. Similarly, we have taken the preliminary initiative to expand and modernize some existing shipyard facilities in the country to increase their capacity to handle vessels for the Cabotage trade and the general repair needs of vessels calling at our ports.
The Seafarers development programme (NSDP) is being vigorously pursued as two states have already responded and their candidates are undergoing training in India. In addition to this, we are working on an initiative to domesticate the training of all levels of manpower needs for the industry through collaboration with Nigerian Universities.
While acknowledging that government welcomes the participation of foreign operators in creating value-adding services within the confines of extant laws he said it must be stated that government will no longer tolerate a situation where foreign operators flagrantly violate the law of the land, a practice they cannot contemplate in their own home countries. In this wise, the Agency as the functional arm of government in maritime affairs, has taken steps to rigorously enforce the Act on operators.
"We have embarked on building the critical mass required to have the institutional capacity. Plans are underway to acquire a maritime based ICT capability, otherwise known as the Maritime Electronic Highway. This ICT infrastructure will enable the Agency to effectively monitor our maritime domain and track all vessels entering and leaving our waters".
The new enforcement regime requires that all vessels partaking in the Cabotage trade must register with NIMASA, while foreign owned tankers with single hull wishing to do business in Nigeria within the six (6) years transition period (to phase out single hall tankers in our waters) must be registered in Nigeria's Registry of Ships.
He declare that all vessels currently engaged in Cabotage trade in Nigeria but are not duly registered in the Special Register for Cabotage vessels are in the main, contravening Section 22 of the Caboatge Act and are therefore liable on conviction to the sanctions stipulated in Section 35 of the Act, including ultimately, forfeiture of the vessel. Owners of such vessels are hereby strongly advised to take immediate steps to comply fully with all relevant provisions of the Act as the Agency shall henceforth commerce full enforcement of its powers under the Act.
That Ship-owners, Shipping Companies and Shipping Agents are advised that vessels involved in the importation of petroleum products into Nigeria should henceforth desist from discharging their cargo to non-Carbotage compliant vessels for onward delivery to various points and ports in Nigeria. Such ship to ship transfer contravenes Sections 5 and 22 of the Cabotage Act, and is liable to the sanctions stipulated in Section 35 of the Act.
All foreign vessels involved in the importation of petroleum products are hereby strongly advised to henceforth deal only with Cabotage compliant vessels. Similarly, all lighter vessels wishing to be engaged in such operations are advised to comply fully with all relevant provisions of the Cabotage Act 2003.
All these programmes and measures he said are part of the new management's five- point agenda for driving the integrated development of the Nigerian maritime industry. The thrust of our five-point agenda is to stimulate the growth of the Nigerian maritime sector in terms of fleet capacity, infrastructure, human capital and institutional capacity to effectively deliver on our regulatory roles.
He concluded that the maritime transport mode represents the trunk line in the petroleum products supply chain. The imperative for supply chain security cannot be over stated given the place of energy flow in modern economies.
On this premise, it amounts to compromising the nation's economic security if the affreightment of our energy needs is left in the hands of foreign interest. The success of the Cabotage regime would address this challenge. We therefore have no choice than to safeguard Nigeria's economic interest by supporting the implementation of the Cabotage Act. he added.
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