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EC Confirms Deal with Maersk, Others on Price Hike Changes

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  • As Ex-NNPC GMD confirms: Diezani approved $24bn crude swap without contract

The European Commission has confirmed today that the fifteen container lines suspected of a breach of antitrust rules have committed to change their policy regarding publishing and communicating General Rate Increase announcements so as to avoid further EC investigation and potential fines.

The Commission launched an investigation in November 2013, claiming that since 2009, major global container shipping companies have been making regular public announcements on price increases for transport services on routes to and from Europe, signaling future price intentions to each other and harming competition.

The carriers in question are China Shipping, CMA CGM, COSCO, Evergreen, Hamburg Süd, Hanjin , Hapag Lloyd, HMM, Maersk, MOL, MSC, NYK, OOCL, UASC and ZIM, the EC said.

As the announcements were made several times a year and contained the amount of increase and the date of implementation, generally similar for all announcing companies and were made successively a few weeks before the announced implementation date, a suspicion arised on whether the liners were working in cahoots.

According to the EC, based on the latest deal, any such future announcements will be binding on the carriers as maximum prices for the announced period of validity, but carriers will remain free to offer prices below these ceilings. In addition, price announcements will not be made more than 31 days before their entry into force.

The commitments would apply for a period of three years.

In the meantime, a former Group Managing Director of the Nigerian National Petroleum Corporation, Mr. Austin Oniwon, confirmed on Tuesday that there was no formal contract between the NNPC and trading companies that lifted $24bn worth of crude oil from the country between 2011 and 2014.

Oniwon told the House of Representatives Ad Hoc Committee on Crude Oil Swap that a former Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, merely granted the “extension” of an earlier contract.

He said the extension was not a formal contract before he (Oniwon) left office in 2012.

The committee is chaired by an All Progressives Congress lawmaker from Kwara State, Mr. Zakari Mohammed.

“There was an approval for the extension by the minister; I believe the records are with the NNPC,” he added.

The NNPC began taking 445,000 barrels of crude daily in 2010 for refining in a bid to meet the country’s local demand of petroleum products.

But when the country’s refineries failed to run, the NNPC resorted to exchanging the crude (swap) for refined products through an arrangement with appointed crude trading firms.

The original (first) contract was signed between the NNPC and two crude traders, Duke Oil and Tranfigura in 2010 to last for one year. It expired officially in 2011.

However, Alison-Madueke reportedly granted an extension of the contract without the NNPC formally signing another contract on the new (second) deal.

The committee had earlier heard from the firms that crude lifting indeed continued till 2014 before a contract was formalised.

One of the lawmakers, Mr. Michael Enyong, said, “These companies had lifted crude worth $24bn before the contract was signed in 2014 and backdated to look like it was signed in 2011 when the first one expired.”

The committee had put Oniwon under pressure after he consistently told members that there was no “breach” in the exchange arrangements throughout his tenure.

When he was reminded that there were evidence indicating that the contract expired in 2011, but it continued to run till 2014, Oniwon replied that Alison-Madueke “approved” the extension.

Oniwon also argued that as GMD of the NNPC, he did not require a presidential and Federal Executive Council approval to enter into the swap arrangements.

According to Oniwon, the 445,000 barrels of crude were the property of the NNPC, which it bought from the Federal Government at the prevailing rate for refining.

He added that the swap crude was different from the Federation Crude, the latter being entirely the property of the government.

Besides, he stated that only 150,000 barrels out of the 445,000 were traded under the swap deals.

He added, “I am not a lawyer, but I didn’t need anybody’s approval to take crude to the refinery for refining if the refineries were running.

“This crude had been paid for by the NNPC. If I needed to take the crude for exchange, I am not going to write the Federal Government. It is NNPC’s decision on what to do to guarantee regular supply of products in the country.

“That was the whole essence of the swap arrangement; to ensure that we had adequate products, which we achieved successfully.”

However, the committee insisted that the NNPC under Oniwon and the former minister breached procurement procedures by engaging in a transaction worth well above N100m without FEC’s approval.

Oniwon stood his grounds that he did not feel the NNPC required another approval, since the minister, “the immediate boss”, had approved the crude swap arrangement.

“If there was supposed to be a higher approval, it was the minister who should seek the approval, not the NNPC,” Oniwon added.

When asked what was the spending or approval limit of the GMD, Oniwon replied, “It was put at $10m.”

Oniwon’s successor, Mr. Andrew Yakubu, also appeared before the committee to say that he made efforts to review the swap arrangement with a view to correcting noticeable lapses, but that he was frustrated.

Yakubu, who assumed office as GMD on June 27, 2012, disclosed that he set up a team of experts from the legal and corporate divisions of the NNPC to carry out the review after which he sent a report to Alison-Madueke.

He added, “Among the issues we raised were the controversies generated by the swap arrangement, the need for contract valuation and how to improve on it to be more beneficial to our operations.

“I forwarded a report to the minister in April 2014 and the document never came to me until my removal (as GMD) was announced by 9pm on August 1, 2014.”

Yakubu advised the National Assembly to give more protection to the headship of the NNPC as a national oil company so that it could perform optimally at all times.

He noted that the current set-up, whereby the GMD’s tenure was left to the pleasure of the appointing authorities, called for an urgent review.

The committee directed the NNPC to search its records and produce Yakubu’s report.

Members also asked the corporation to produce evidence of the extension of the contract Alison-Madueke granted without a formal contract.

World Maritime News with additional report from Punch

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

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…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

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

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Wind Farm Vessel Collision Leaves 15 Injured

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…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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