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Fuel Scarcity Looms over FG’s Indebtedness to Marketers

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Oil marketers, under the auspices of Major Oil Marketers Association of Nigeria (MOMAN), have decried the government’s inability to disburse the outstanding payments due to its members for the import of petrol under the Petroleum Subsidy Fund scheme, warning that it could lead to another round of fuel scarcity if not promptly resolved.

It is understood that the purpose of the scheme is to ensure the reimbursement to marketers of agreed and verifiable costs of delivery of petrol to the consumer which are in excess of the market price (Under Recovery).

Similarly, the scheme ensures the repayment of any excess of the market price over the costs incurred by marketers whenever this occurs (Over Recovery).

In a letter addressed to the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala,  and obtained by an online news medium, Freedom Online, the association, through its Executive Secretary, Mr. Thomas Olawore, stated despite previous assurance from the government to reimburse marketers the Under Recovery due to them as verified by the Petroleum Products Pricing Regulatory Agency (PPPRA), the government has till date failed to honour its agreement.

The letter read: “At the previous meeting, you empathised with the marketers and committed to full restitution provided these were verified by the Petroleum Product Pricing Regulatory Agency (PPPRA). You also assured marketers that they would be fully reimbursed for the interest (incurred due to the late payment) and foreign exchange (Forex) differential elements of their Under Recovery within 30 days of the meeting. Furthermore, you committed to immediately issuing Sovereign Debt Notes (SDNs) for the outstanding Under Recovery with full payment on or before the 28th of April, 2015.

“Regrettably, despite your above commitment and assurances, the industry to date has only received approximately N30billion in Forex differential claims out of the N100billion owed. In the same vein, only N345billion has been received in core subsidy payments covering payments up to Q2, 2014. Specifically only three companies out of the six MOMAN companies received payments for Forex differentials and no company, MOMAN or DAPPMA (Depot and Petroleum Products Marketing Association) has been paid interest charges on delayed payments.”

The letter noted that as at March 31, 2015, the total amount due to marketers based on all claims verified by the PPPRA is in the region of N270 billion but revealed that only N200 billion was earmarked for them in the 2015 budget, this according to MOMAN constituted a ”great cause of concern” for her members.

Similarly, MOMAN enumerated that the delays in the payment of the verified sums has ensured the marketers cannot fulfill their financial and non-financial obligations, notwithstanding this, they have continuously supplied adequate petroleum products into the country especially during the just concluded general elections. Olawore warned that the marketers who are currently experiencing “commercial hardship” as a result of cash flow constraints caused by these delayed payments and compounded by devaluation of the naira, higher inflation, and increase in lending rates might unfortunately down tools if this impasse is not resolved.

The consequences would include a significant scale down in petroleum products supply into the country and MOMAN members being left with no option but to streamline overhead costs and workforce “in the very immediate future.” Consequently, the body requested the federal government to urgently redeem the understanding that it had of about the plan to implement the terms of the petroleum subsidy fund scheme by doing the following:

• PSF outstanding receivables – that the Ministry of Finance issues authorised marketers whose cargoes have been cleared by PPPRA with Sovereign Debt Notes for immediate payment of outstanding principal sums.

• Additional Burdens – that all ancillary burdens such as interest and forex differentials incurred by the marketers as a result of the late payment be immediately reimbursed. • Sanctity of the PPPRA guidelines – that the relevant government agencies vested with the authority to administer the PSF scheme honor the sanctity of the Sovereign Debt Notes and the 45 days payment deadlines. It, however, pleaded that the minister should quickly intervene as the next five working days are crucial to members’ capacity to continue to operate.

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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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