A Review of the Nigerian Energy Industry

Oil lifting contracts – Indigenous ship owners accuse ministry of deception

Nigeria's Petroleum Minister and OPEC's alternate president Diezani Alison-Madueke adjusts her glasses at the annual IHS CERAWeek conference in Houston03 May 2014, Lagos – For Nigeria’s Ministry of Petroleum Resources, this is indeed a season of scandals and case of fraud that just would not go away in a hurry.

The Minister, Mrs. Diezani Alison-Madueke, is currently battling to wriggle out of the missing $20 billion at the Nigerian National Petroleum Corporation, NNPC, whose board she chairs, as well as a $10 billion private jet scandal that is now a subject of probe at the House of Representatives.

Amidst these, the Minister, the first woman to hold such a portfolio in the country’s history, is under fire again, this time from angry indigenous ship owners, who may have been shortchanged in oil lifting contracts.

They accuse Mrs. Alison-Madueke of deceiving the public, for announcing recently in Abuja that 60 per cent of crude oil lifting contracts in 2014 have been awarded to shipping companies owned by Nigerians, a claim those involved say is a ruse.

The indigenous ship owners under the aegis of the Nigerian Indigenous Shipowners Association (NISA) condemned the claim by the Minister that they now have contracts to lift 60 per cent of the nation’s crude oil, saying that indigenous ship owners were not invited for the prequalification either directly or through adverts.

“There is no end to the game of deception. Nothing has changed at all. What is at play here is what one can describe as the voice of Jacob and the hand of Esau. The process of selection was neither open nor transparent. Nobody can tell how the companies were selected. When and where was it advertised? Some people were handpicked and arrangement was made with them and some foreign companies. As far as we are concerned, nothing has changed at all,” NISA Chairman, Isaac Jolapamo told Daily Independent on Wednesday via telephone.

He said the association does not believe what was done was right, promising to meet and come out with a position on Friday (Today).

Alison-Madueke said last week that the award of 60 per cent of crude oil lifting contracts in 2014 was part of the Federal Government’s objective to encourage effective local participation in the oil and gas industry. She added that over 60 per cent of the 2014 to 2015 annual term contracts for the lifting of Nigeria’s crude oil were decidedly awarded to local firms after a painstaking pre-qualification process. She said the balance was shared among some international trading companies, refineries and to some countries with bilateral trade agreements with Nigeria.

“When we unveiled the Nigerian content law a few years back, the overriding principle was to grow indigenous capacity in an aggressive manner and I am happy to report that today, in the oil and gas sector, Nigerian content has been placed on the path of irreversible progress,” the Minister said.

She noted that the award to local players is in line with the aspiration of President Goodluck Jonathan for effective transformation of the petroleum industry, saying that the advent of the Nigerian content law has encouraged indigenous investment in critical infrastructure.

“We have seen robust indigenous investments in Marine vessels of various categories and wholly owned Nigerian vessels have increased astronomically through the years. These vessels are the Category one and Category two types. Investments in reception, storage and distribution facilities such as jetties, depots, trucks, vessels and modern retail outlets have more than doubled over the past few years, and this has helped to increase the nation’s sufficiency level in petrol,” the Minister said.

40,000 jobs

Alison-Madueke said as at the last count, indigenous investments in the sector have created over 40,000 jobs across the hydrocarbon value chain.

“We have witnessed increased local investments in asset, in land, swamp and offshore rigs which are vital performance indicators in business growth in Nigerian service companies. As we speak Nigerian companies are forging partnerships for deep water rig ownership and are evolving strategies that will increase rig ownership among local players,” she said.

Meanwhile, experts say the proper implementation of the Nigeria Oil and Gas Industry Content Development Act 2010, as well as the Coastal and Inland Shipping (Cabotage) Act 2003, would create employment and generate wealth for Nigeria, a country burdened with high rate of unemployment and extreme poverty, amidst high gross domestic product (GDP).

Virtually all progressive maritime nations provide direct or indirect aid to their merchant fleet and maritime operation, including operation subsidies, construction subsidies, trade in allowance, official-low interest loans, official loan guarantees, accelerated depreciation, tax-free reserve fund, duty-free import or required materials, cargo reserve policy and cabotage regime, according to a maritime expert, Lucky Amiwero.

The Local Content Law requires that Nigeria independent operators be given first consideration in the award of oil block, oil field license, and oil lifting license and in all projects for which contract is to be awarded in Nigeria oil and gas industry.

With operations in the country’s oil and gas industry adjudged as far from being transparent and characterized by high level corruption, indigenous ship owners may have a bases to accuse the Ministry of deception.

However, stakeholders anxiously await the position of indigenous ship owners after its Friday meeting.
*Andrew Airahuobhor-Daily Independent

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