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DIESEL: WHY has price remained un- slashed, Akabogu task authorities



…In spite of major price crash of the deregulated product?

A Maritime lawyer and industry guru, Barrister Emeka Akabogu is dismayed with the fact that the pump price of diesel has remained same, in spite of an over 50 percent price slide, in the international market.

He expressed the view at the weekend, wondering whether the proponents of deregulation argument were still being fair to diesel users, in view of their keeping mute, when they should be seen, objectively protecting the citizens’ welfare.

“The truly befuddling question is why the more than 50 percent crash in crude oil prices has left the price of diesel unaffected” he asked, noting that he as “one of the fiercest advocate of deregulation of petroleum prices in the last few years” was now genuinely uncomfortable   that diesel as a deregulated product, was not yet allowed, to obey the cardinal principle of major price crash.

“In January 2015, the international price of gasoil (as diesel is technically referred to by oil traders) averaged $445 per metric tonne. A metric tonne of diesel could yield an average of 1,120 litres of diesel, depending on the density of the particular specification. 

“Converted to Naira, the international price of diesel per litre has been about N74.00 in the period under review. Factoring collateral costs including foreign exchange, freight, port and storage, the landing cost of diesel in Nigeria per litre is between N85.00 and N90.00. Actual ex depot price in January has averaged N95.50k. Diesel is therefore being sold at a minimum premium of N50.00 in Nigerian stations for every litre.
“Marketers of petroleum products are often seen as a cartel of rampaging shylocks that will stop at nothing to make profit. They are however faced with significant operational and business challenges that seem to (but do not necessarily) justify the prices that we pay. First off, with the naira in limbo against the dollar, banks have been extremely circumspect about opening Letters of Credit in favour of oil marketers. The forgettable and tragic experiences of 2008 are still very fresh for many, and have encouraged an abundance of caution. More directly, banks have been seeing the short end of the stick in the RDAS market, regularly getting only a slim percentage of what they bid for. Diesel not being as much of a priority as PMS for LCs, has to contend with fewer opportunities for opening of LCs, and necessarily, importation. 

“There is also a nagging suspicion by many that the naira is going to fall further, and many do not want to be caught in-between a transaction when that happens. As a result, fewer LCs are opened for diesel and there are fewer persons able to import the product. 

“Yet the ex depot price of diesel (for January 2015) averaged N95.50. For the very fear of foreign exchange risk, many importers are ready to quickly sell-off stock from the jetty tanks. With no such risk attaching to retail distributors, coupled with the slow turn-around for supply from the few importers, retailers look to padding profit from the pumps. The result is the N50 premium per litre of diesel. Competition seems meaningless in this context as obvious pricing agreements amongst retailers ensure that consumers are robbed of the benefit of a deregulated and potentially competitive market. Profiteering is the name of the game, and consumers seem helplessly at the mercy of its hard-nosed players” he posited further, pointing out that this was despite the fact that some slay had been effected on the side of petrol.

“This diesel scenario does not bode well for the deregulated PMS regime that I have severally advocated. I know as a fact that many market operators are also keen on having that market deregulated. Such deregulation will be meaningless if some dominant players sitting over champagne glasses can agree a minimum price with no correlation to global or even local market realities and trends. 

“The prospects of innovativeness, customer appeal and expanded options that are the drivers of the deregulation advocacy could be stillborn, with the real fear that Nigerians will be left the worse for wear. Even the operators would lose in such a scenario, as the market will not be one of skills or expertise or uniqueness but an open sesame for all comers and a sure road to oblivion. Obviously, successful deregulation needs effective regulation. 

“The truth is that retailers and marketers who have struck price agreements are not breaking any law in Nigeria. In the first place, there is no regulatory framework for competition, or in this case, anti-competitive practices.

“Though the Minister of Petroleum has the power to fix the price at which any particular class of petroleum products may be sold (section 6(1) of the Petroleum Act), President Umaru Yar’adua had by executive order in 2009, removed diesel from the class of price-regulated petroleum products. However the Petroleum Products Pricing Regulatory Agency (Establishment) Act of 2003 states one of the agency’s functions to include prevention of “collusion and restrictive trade practices harmful in the sector”.

“This is the nearest provision there is to prevent abuse of market positions through cartelisation. Unfortunately, this provision on its own confers no powers on the PPPRA to rein in anti-competitive practices since no precise price nor price range has been fixed which retailers could be alleged to have colluded to breach.

“This is expected to be one of the areas where a strengthened legal regime for the agency under the Petroleum Industry Bill will ensure more precise powers of regulatory intervention.

“But pending the PIB what should be done? I think the Honourable Minister of Petroleum Resources should use the strong suasion powers of her office and prevail on retailers to temper their greed. Simple”, he concluded.


WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners



…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development. 

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA  to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity. 

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years. 

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

Mike Igbokwe (SAN)

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further. 

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA. 

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers. 

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being. 

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained. 

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Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live



The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: and on Youtube: Maritimefirst Newspaper.

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Wind Farm Vessel Collision Leaves 15 Injured



…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg. 

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt. 

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital. 

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News

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ADEBAYO SARUMI: Doyen of Maritime Industry Marks 80th Anniversary, Saturday 

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