Senate Laments $120m Annual Revenue Loss To Fuel Shipment

The Senate, yesterday, expressed worry over the alleged loss of $120million annually to patronage of foreign firms in the shipment of petroleum products into the country.

The alleged loss was disclosed to the lawmakers during a meeting between the Senate Committee on Local Content, the Management of NNPC and Ship Owners Association of Nigeria (OAN) in the National Assembly Complex.

The Senate committee, therefore, directed the Nigerian National Petroleum Corporation (NNPC), to initiate the processes of boosting the capacities of indigenous shipping firms and engaging them instead of foreign firms in the shipping of petroleum products.

The Chairman of the committee and former Senate Leader, Senator Teslim Folarin, at the meeting, also stressed the need to help build capacities among indigenous shipping.

He said: “It is very important we patronise Indigenous shipping companies.

“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. The GMD here has capacity to help build capacity. It is very important that we patronize indigenous shipping companies.”

The Senate committee also decried the flagrant disregard to the Local Content Act, which stipulated, among others, that local firms be encouraged in the conduct of businesses of any public company business.

A member of the committee, Senator Solomon Adeola (APC Lagos West), who is also the chairman of the Senate Committee on Finance, noted that the preference of foreign shipping    had left negative effects on the nation’s economy.

Adeola countered the submissions that Nigerians do not own vessels that could be patronised.

The Group Managing Director of the NNPC, Mele Kyari, who had informed the committee earlier that there was no indigenous vessel to patronise, assured the Senate that the agency would work to support the local companies, saying “we will engage our partners.”

Earlier in a presentation to the committee, the SOAN, led by its President, Dr. Mkgeorge Onyung, explained that the provisions of Nigerian coastal and local content laws with regards to the shipping of petroleum products in the downstream sector of the oil industry was being breached in favour of foreign vessels, a situation, he said, had encouraged massive capital flight.

“In the 2019/2020 DSDP disposition, contract valued at $9billion was undertaken. Freight expenditure on Import Tankers was approximately $60million monthly or $720million 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 ship loads monthly).

“Between January and August, 2020, 320 foreign tankers arrived Lagos offshore with imported PMS. This 100 per cent 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 ship brokers namely Clarksons, E.A. Gibson, Brassington, Braemer and Affinity,” Onyung stressed.

He told the committee that foreign ship owners account for 95 per cent of freight spending associated with this downstream activity which is repatriated overseas as capital flight to the detriment of the local economy.

By: Nneka Amaechi-Nnadi, Abuja