Worried by reports that the nation loses over $120 million yearly to foreign shipping firms while contending with budget deficits, the Senate has directed the Nigerian National Petroleum Corporation (NNPC) to shift towards patronising indigenous shipping firms.
The upper chamber said this would reduce capital flight and boost the capacities of Indigenous shipping firms.
The decision was reached at a meeting convened by the Senate Committee on Local Content between the NNPC management and Ship Owners Association of Nigeria (SOAN)
The committee was miffed that the patronage of the foreign firms had resulted in huge revenue losses including some $120 million loss to demurrage.
Chairman of the committee and former Senate Leader, Tealim Folarin, in a ruling after a marathons debate, directed that the NNPC should allow local ship owners to operate in the transportation of petroleum products
He said, “It is very important we patronise Indigenous shipping. The whole essence of this investigative hearing is not to trade blames. We understand that they don’t have enough vessels; they don’t have capacity and capacity cannot come from heaven.
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“The GMD here has the capacity to help build capacity. It is very important that we patronize indigenous shipping companies,” Folarin said.
The committee emphasised the need to obey the Local Content Act, which requires government agencies to patronise local firms in the conduct of business.
A member of the committee, Senator Solomon Adeola, who chairs the Senate Committee on Finance, disclosed that the failure to carry Indigenous shipping companies along had dealt a serious economic blow to the country.
Adeola dismissed insinuations that Nigerians did not own vessels that could be patronised.
“There are local vessels owned by Nigerians, it depends on the type of vessels we are talking about. There are two types of vessels.”
Earlier, the Group Managing Director of the NNPC, Mele Kyari, informed the committee that there were no Indigenous vessels to patronise.
He, however, assured the Senate of his readiness to “work to support these companies. We will engage our partners.”
In a presentation to the committee, the President of SOAN, Mkgeorge Onyung, lamented that local firms had been neglected in the downstream sector.
He said, “In the 2019/2020 DSDP disposition, a contract valued at 9 billion USD was undertaken. Freight expenditure on Import Tankers was approximately 60 million USD monthly or 720 million USD annually. This involved the average monthly importation of 2.4 billion litres (1.8 million metric tons) of gasoline in foreign-owned tankers of 35,000 to 90,000DWT capacity (approximately 40 shiploads monthly).
“Between January and August 2020, 320 foreign tankers arrived Lagos offshore with imported PMS. This 100% foreign-dominated supply chain activity creates no in-country value for the Nigerian maritime industry with no multiplier-effect on other sectors of the economy.
“Foreign fleet is chartered by NIDAS Marine, NNPC subsidiary, via foreign shipbrokers namely Clarksons, E.A. Gibson, Brassington, Braemer and Affinity.”
