NNPC $100m Debt to Indigenous Shipowners: Fuel Scarcity Looms.
The Ship Owners Association of Nigeria (SOAN) recently threatened to strike over the Nigerian National Petroleum Company Limited’s (NNPC) outstanding payment of $100m for services rendered in the past eight months and gave a two-week ultimatum.
This has generated a lot of controversy as industry watchers ponder why such an amount was owed by the state oil firm recently incorporated, and also weigh potential fuel scarcity in the country if SOAN declared a strike. A Majorwaves investigation into the matter revealed that the case had roots in a 2020 petition by the indigenous ship owners who felt they were being sidelined in contravention of the Nigerian Oil and Gas Industry Content Development (NOGICD) and Cabotage Acts.
A reliable source with intimate knowledge of the matter who plead anonymity told Majorwaves that SOAN had in January 2020 petitioned the Nigerian Content Development and Monitoring Board (NCDMB), Nigerian Maritime Administration and Safety Agency (NIMASA), NNPC and the Senate Committee on Local Content on the need to probe a breach of the NOGICD and Cabotage Acts by NNPC’s contracting of foreign vessels through a company called UNIBROS to ship imported Premium Motor Spirit (PMS) and other refined petroleum liquids within our coastal waters. SOAN claimed that this could hamper the development of indigenous shipping capacity which was part of the intent of both acts.
NCDMB responded promptly and wrote to the NNPC Group Managing Director, Mr Mele Kyari seeking his intervention to stop the non-compliance with NOGICD as it undermined the laws of the country and could encourage other players to do the same. After the senate sat on the matter, Kyari pledged to engage domestic shipping companies that met international standards in the activity. However, it was later discovered that NNPC offered to pay less than the $22,000 per day it paid foreign contractors to SOAN members at $18,000 agreed as of February 2022, which was then later reduced to $14,000 in May 2022.
“This was a complete u-turn from earlier negotiated and agreed commercial terms and SOAN tried severally to meet with the GED Downstream Engr Adeyemi Adetunji on numerous occasions to no avail. A series of letters were also dispatched notifying that this rate was untenable as it was way below the prevailing market rate of $25,000/day at the time.
“Today the market rate is $45,000 per day,” the source said, adding that “As of today 8 months after commencement of operations none of these indigenous shipping companies has been paid by NNPC and no contract issued let alone signed, despite working day and night transporting refined petroleum products from import tankers offshore Lagos to tank farms and terminals in Lagos, Oghara, Warri, PH and Calabar to keep Nigerian petrol stations and industries fully supplied with gasoline and diesel.”
Ironically, NNPC charges indigenous petroleum marketing companies $30,000 daily to load and deliver these PMS cargoes to their coastal tank farms and terminals on these indigenous ships but still refuses to pay the Nigerian shipping companies for the services rendered.
SOAN’s president, Dr Mk George Onyung was quoted as saying in a report now public that most ship owners want to stop operations because they could no longer afford the running costs.
“The market is so poor. The price NNPC is paying these indigenous shipowners is less than half of what the foreign ship owners get, yet the indigenous ship owners are being owed that much. At our last meeting, the ship owners agreed to first give NNPC a warning. We agreed that in two weeks’ time, if NNPC has not paid any part or whole of its debt, ship owners will refuse to load petroleum products. And you know what this means. If ship owners refuse to load petroleum products, then there will be fuel scarcity in the country.”
