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Nigeria bleeds as pipeline bombings, vandalism wreaks economy

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The recent spate of bombings of oil facilities in the Niger Delta has put the Nigerian economy in dire straits, plunging the country further down the road to a financial crisis.

Latest data released by the National Bureau of Statistics, NBS, said the Nigerian economy is teetering on the brink of recession and the increase in bombings is throwing the country deeper into the abyss.

The situation becomes worrisome when viewed against the backdrop that crude oil exports account for about 70 per cent of Nigeria’s revenue and 90 per cent of Nigeria’s foreign exchange earnings.

In the wake of the return of hostilities in the Niger Delta, Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, had a few weeks ago, stated that Nigeria’s crude oil output had dropped to 1.4 million, but analysts are of the view that the country’s crude oil output would have dropped significantly to about 900,000 barrels per day as at today. What is this means that the country is currently losing about 1.3 million barrels of crude oil daily due to the bombing.

This is exclusive of the huge volume of gas that is transported through the affected pipeline. In monetary terms, with the current price of Light Crude oil at about $48.94 per barrel, Nigeria is currently losing about $63.622 million on the deferred 1.3 million barrels of crude it could not export.

This is an equivalent of N12.724 billion per day and N381.732 billion per month. Already, the NBS GDP report for the first quarter of 2016 had stated that the crude oil component of the country’s total trade decreased by N716.7 billion or 46.6 per cent against the level recorded in fourth quarter 2015.

In addition to the loss in revenue to the country, power supply is gradually inching closer to zero, as the attacks have crippled almost all of the country’s power plant.

Currently, power supply is put at about 2,800 megawatts (MW), dropping to as low as 650MW within the week, from a high of 5,074MW recorded in February. Dallas Peavey, Chief Executive Officer of Egbin Power Plc, stated that the company’s power generating capacity had dropped to less than 10 per cent of its 1,320 megawatts capacity.

“We are just sitting idle here,” he told newsmen. In addition, he stated that until the violence ends and gas supplies resume unhindered, the company has suspended plans to double the capacity of power plant, saying that “We cannot double the capacity if we cannot find fuel.”

Desmond Ogba, Managing Counsel and Head of Energy Projects at Templars, a Nigerian law firm, also warned that if the vandalism is not addressed urgently and comprehensively, electricity will continue to deteriorate and the government’s aspiration to significantly increase power generation by 2019 would be a mirage.

As a result of all these negatives, economic analysts are of the view that the future for the Nigerian economy appears bleak, and it is expected that the country’s Gross Domestic Product for the second quarter would be negative, meaning that the country is officially in recession.

The situation worsened further for Nigeria, especially with the low oil price, as revenue accruable to the Federal Government would drop drastically. Already, the amount shared by the Federal, state and local government, had over the months been dwindling.

Even with the slight rebound recorded in the price of crude oil in the last couple of days, the country would still be at a disadvantaged, as its low oil output would further worsen the situation.

Reacting to the bombings, Acting Director-General of the proposed Maritime Security Agency (MASECA), Mr. Jacob Ovweghre, said the actions of the Niger Delta Avengers, NDA and other militant groups would wreak the Nigerian economy and cause even greater pain to the people of Niger Delta, who would bear the direct burden of the crisis and not the government.

According to him, the destruction of the pipelines in the Niger Delta will reduce the states’ revenue bases and bleed the nation’s economy, increase environmental degradation, pollution, poverty, hunger, school drop-out, unrest, insecurity, under-development and economic loss.

He called on the NDA and other militant groups to desist from bombing crude oil facilities in the Niger Delta and from engaging in other acts of economic sabotage.

Ovweghre advised the NDA to have a rethink of their action and use intellectual agitation within the ambit of the law to pursue their demands, so as to gain credibility. It is hoped that the Federal Government resolve the crisis amicably so as to prevent the economy of the country from being brought to its knees.

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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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