Ship owners and other stakeholders in the maritime sector are on the verge of getting the desired change in trade terms from ‘Free On board’ (FOB) to ‘Cost Insurance and Freight’ (CIF) which would enable them to begin to lift Nigeria crude and ultimately boost indigenous capacity.
The development was a fall out from the stakeholders’ engagement on changing Nigeria’s crude oil affreightment trade term from FOI to CIF which was organised by Nigerian National Petroleum Corporation (NNPC) and the Nigerian Maritime Administration and Safety (NIMASA).
The Minister of State for Petroleum Dr. Ibe Kachikwu who declared the event open welcomed the development, noting that the issue on this trade term is an aged long challenge that has lingered too far and charged participants to come out with resounding resolutions that would be of National benefit.
The Director General of NIMASA, Dr. Dakuku Peterside who presented a paper titled, The Imperatives of Changing Nigeria’s Crude Oil Affreightment Trade Terms From FOB to CIF pointed out that the Changing landscape of Nigeria’s maritime sector, side-by-side its security architecture, capacity and other determinants has necessitated the Change now than ever before.
Dakuku stated further that the CIF if implemented will “encourage indigenous fleet expansion, lead to massive job creation for qualified Nigerian Seafarers, create opportunities for mandatory sea time experience for Nigerian cadets and build expertise and competence in international shipping trade.”
Speaking further, he said, “Nigeria is one of the major exporters of oil and gas resource in the world, and she averages an output of 1.92 million barrels of crude oil per day so this volume generates huge freight for carriers. Regrettably, Indigenous shipping operators have insignificant share of the freight earned from the carriage of Nigeria’s crude compared to foreign counterparts.’’
Dakuku also stated that OPEC nations such as Iran, Indonesia, Algeria, Kuwait, Angola, Venezuela, UAE and Libya allow indigenous operators to participate actively in shipment of their crude oil, stating that with the right policies in place Nigeria can build its own capacity and one of this is the change of terms of trade for Nigeria’s benefit.
In the same vein, the President of the Ship Owners Association of Nigeria (SOAN) and Managing Director of Starz Marine Group, Engineer Greg Ogbeifun observed that what is needed to make the great CIF initiative to grow the Nigerian shipping industry and the economy is the needed Government support, which is coming at the right time and when the country needed it most to diversify the economy.
All other stakeholders who spoke at the event including leading members of the Nigerian Ship-owners Association (NISA) and Master Mariners unanimously agreed that the CIF trade term would be more beneficial to the country than the present FOB on which the crude lifting is currently based upon.