The Nigerian National Petroleum Corporation (NNPC)
in conjunction with the Nigerian Maritime Administration and Safety
Agency (NIMASA), yesterday convened a meeting of stakeholders in the
maritime industry with a view to generating ideas on how best attract
maximum benefits from export of the country’s crude oil. A statement
issued by NNPC’s spokesperson, Ndu Ughamadu said the theme of the
meeting was: “Free On-Board (FOB) and Cost, Insurance and Freight (CIF)
Incoterms Framework for Export of Nigerian Crude Oil and Gas.” According
to the statement, Minister of State for Petroleum Resources, Dr. Ibe
Kachikwu, in his welcome address told participants that various attempts
in the past to transit from the Free-on-Board (FOB) to Cost, Insurance
and Freight (CIF) system of exporting the nation’s crude oil had failed.
According to Eyes Of Lagos investigation, The minister stated that
there was no better time than now to revisit the issue holistically to
determine which of the systems best serves the interest of Nigeria. He
therefore urged participants to come up with recommendations to help the
Federal Government take appropriate decision on the issue with a view
to enhancing the nation’s the economy. In his keynote address, the Group
Managing Director of NNPC, Dr. Maikanti Baru, said the corporation’s
preference for FOB was informed by the prevailing security situation and
the need to guarantee steady revenue into the Federation Account. He
explained that under CIF, petroleum cargoes are legally the property of
the Federal Government which could pose a danger to the country’s
earning as creditors could procure court orders to confiscate crude oil
cargoes as a means of securing payment of Nigeria’s indebtedness. “The
experiences of Nigerian Airways and the Nigerian National Shipping Line
both of which had their vessels/crafts and cargoes confiscated on court
orders obtained by creditors is unpleasant to recall. “Due to these
peculiarities, we find it most appropriate to transfer the potential
risks associated with the ownership of the cargo to the buyer at the
load port in Nigeria which FOB incoterm allows. Government/NNPC’s
liability ends as the crude oil passes from loading hose at the vessel’s
manifold to the loading vessel. The buyer pays for Freight, Marine
Insurance, unloading and transportation from the load port in Nigeria to
the destination”, he stated. He said NNPC was, however, not unmindful
of the value erosion inherent in the FOB sale arrangement, adding that
the corporation was open to new ideas on the proper mix that could
enable synergy and collaboration amongst different stakeholders to
guarantee security of federation revenue as well as guard against
associated risks involved in delivery of crude oil and Gas to customers.
On his part, the Director General of NIMASA, Dr. Dakuku Peterside, said
while there was no correct answer to the issue of freight system to
adopt, there was need to be open-minded about possible alternatives that
could help in the quest to diversify the economy. He urged participants
to be guided by the national interest in their discussion and explore
all possible opportunities.
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