Nigerian Importers Pay $2.74bn War Risk Surcharge Annually

Abiola Seun

Nigerian importers have paid a whopping $2.74billion (N984billion at prevailing rate of N360/$) in three years over categorization of Nigeria waters as a war risk nation, a development that led to a spike in insurance premiums slammed on vessels and cargoes destined for Nigeria by offshore.

Recall that foreign shipping companies have slammed a war risk surcharge, a supplementary carrier charge that is only applied when insurance underwriters designate specific zones as war risks.

The surcharge covers more than actual wars (invasion, insurrection) including international events that may be escalating toward war, and areas where hijacking (piracy) is prevalent. The surcharge is levied to recover potential extra costs, such as re-routing or additional security.

But according to the International Maritime Bureau (IMB), Nigeria has paid $2.74billion as insurance surcharge due to pirate attacks.

Piracy Reporting Centre recorded 66 incidents in the first quarter of 2018, up from 43 for the same period in 2017, and 37 in Q1 2016.

Worldwide in the first three months of 2018, 100 crew were taken hostage and 14 kidnapped from their vessels. A total of 39 vessels were boarded, 11 fired upon and four vessels hijacked. IMB received a further 12 reports of attempted attacks.

The Gulf of Guinea accounts for 29 incidents in 2018 Q1, more than forty percent of the global total. Of the 114 seafarers captured worldwide, all but one was in this region.

All four vessels hijackings were in the Gulf of Guinea, where no hijackings were reported in 2017. Two product tankers were hijacked from Cotonou anchorage in mid-January and early February, prompting the IMB PRC to issue a warning to ships.

Towards the end of March, two fishing vessels were hijacked 30nm off Nigeria and 27nm off Ghana in 2018.

Nigeria alone recorded 22 incidents. Of the 11 vessels fired upon worldwide, eight were off Nigeria – including a 300,000 MT deadweight VLCC tanker more than 40nm off Brass.

However, the Nigerian Shippers’ Council (NSC) has criticized Nigeria’s categorization as a war risk nation; a development he said has led to a spike in insurance premiums slammed on vessels and cargoes destined for Nigeria by offshore insurers.

The Executive Secretary/ CEO of the Council, Hassan Bello who made the condemnation said that the few incidents of attacks recorded on Nigerian waters were not sufficient to warrant tagging the country a war-risk nation.

“We do not deserve the war-risk clause tagged on us. Our waters are safe. Again, this is where I have to commend the Marine Police for greatly streamlining procedures for cargo clearance at the ports. We’re also ensuring lesser vessel dwell time at ports. The responsiveness of the new IGP has been remarkable in this direction ‘’, he said.

Bello urged both offshore and onshore shipping companies to continue calling at Nigerian seaports to load and offload their cargoes for the fact that the nation’s territorial waters are very safe.

Also speaking, the director general of NIMASA, Dr Dakuku Peterside said designation of Nigeria water as war risk was as a result of false reportage about attacks on the nation’s territorial water.

Peterside who disclosed this when members of the Shipping Correspondents Association of Nigeria (SCAN) paid a courtesy visit on the agency recently lamented that Nigeria is slammed war risk surcharge over lumpsuming data on maritime crime in the country.

The DG who was represented by the Executive Director, Finance and administration, Bashir Yusuf Jamoh said while attacks in Gulf of Guinea are erroneously considered as attacks on Nigeria territorial waters said sea robberies are mistakenly referred to pirate attacks thereby giving Nigeria false image in the international communities.

“Someone read out a statistical report that about 88 Piracy attacks are being reported but there are misconception because I just finished my PhD and my area of specialisation Is maritime security and what I discovered in the course of my research is that number without time, we lump sum data on issues of maritime crime, Nigeria and gulf of Guinea.

“In GoG we have over 120 countries within the GoG and anything can happen within that circle and environment so the international community considered Nigeria as the biggest country around the GoG so we produce the highest number of crime in that region.”

But, Peterside enjoined journalists to correctly educate and inform the public about attacks saying crime that occurred in Benin republic shouldn’t be referred to crime that occur on Nigeria water.

“It’s your duty as reporter to ensure you reported the issue correctly. A situation where a crime happened in Benin republic or Togo or any part of Ghana, Cameroon and we lump in on Nigeria because we are part of gulf of Guinea as Nigeria.

“We will continue to send a very wrong signal to the international communities and as a nation, people will be scared to be around and already we are paying war premium in terms of insurance and we stand to be the highest payee of freight all over the world because of the dangers attached to our own territorial waters.”

Comparing freight rate from America to Ghana, Peterside said Nigeria paid highest freight rate despite same distance.

His words, “You check the cost of probably freight from America to Ghana which is almost the same distance to Nigeria with that of US to Nigeria, you will find out that Nigeria pays more and at the end, all of us here pay the premium because it ends on the consumer and when we consumes definitely anything we pay In excess will be distributed among the consumers.

“Accurate reporting must be there if you report accurately, we are projecting Nigeria to a very good platform and if we go to International Maritime Organisation (IMO) that is what they will check. What is the position of Nigeria last year or two years ago after that election then do we see any changes in what they are doing interns of piracy and what they are doing.

“So, when those improvements are not there then definitely we stand a chance to lose the IMO election again and the election is coming up in December and we are in March already so we lost about three months now and we have only nine months.

“These nine months we look at it as if it’s a very long time but we have to start preparing now and we can’t prepare alone but to start from you journalists.”