The Value News

NIMASA: Nigerian Maritime Trade Threatened By High War Risks Insurance Premium As Jamoh Launches Campaign To End It

By Stephen Ubanna

 For years, Nigerian importers have been losing billions of dollars, through the high war risk insurance placed on ocean going vessels conveying cargoes to the Lagos ports of Apapa, Tincan Island and port Multi-service Terminal limited, PTML, including the south east ports of Onne, Rivers, Delta and Calabar ports.

 The International Maritime Bureau, IMB, in their recent reports, had said that the Nigerian shippers, had paid N$2.74 billion in three years over categorization of Nigerian waters as a war risk nation, a development that was said to have led to an increase in insurance premiums slammed on vessels conveying Nigeria bound cargoes by the foreign shipping Companies.

Jamoh: DG, NIMASA And Maritime Poster boy

Take for instance, in 2020 alone, Bashir Jamoh, Director General, Nigerian Maritime Administration and Safety Agency, NIMASA, had said that the total additional war risks premium incurred by the Nigerian bound ships transiting the Gulf of Guinea was $55.5million. The NMASA, Chief Executive officer, CEO, may have shocked Nigerians when he revealed that ‘’35% of the ships transiting the Gulf of Guinea region also carried additional kidnap and ransom insurance totaling $100.7million.

He disclosed that the case of the Nigerian bound vessels may have been made worse as the war Risk Insurance under writers had made provision ’’for Compensation for illegal vessel seizures and Crew kidnappings even in the absence of ransom demands by Pirates or sea thieves’’.

 Note that ‘’the war risk surcharge is a supplementary carrier charge that is applied when Insurance underwriters designate certain zones as war risks’’. The surcharge, according to marine Insurance analysts is levied on the shippers ‘’to recover alleged potential extra costs , such as re-routing  of cargoes  and using  private security companies to safeguard their vessels’’. This may have informed why the cost for imported goods are too high in the country in the recent time as the importers’’ transfer the additional spending on the final consumers’’.

 Many believe that War Risks Insurance Premium , which has two  major components : war Risk Liability , which covers  people  and goods  inside the ship,  is calculated  based  on the indemnity  amount and War Risk Hull. The War Risk Hull, which marine insurance analysts covers the ship itself and it is calculated based on the value of the Container vessel.

According to informed sources, the War Risks Insurance premium varies based on the expected stability of the countries which the Container ship or cargo vessel will travel , the war risk phenomenon, which was initially known to countries with high risk of Piracy, particular, Somalia but have found its way to Nigeria in the last five years following the massive involvement of Youths of the Niger Delta in militant activities. 

A source at the Nigerian Shippers Council, NSC, informed The Value News that the cost of shipping a ‘’20’’ and ‘’40’’ Container load of  cargoes  to the Nigerian ports  from the North American country of the United States City of NewYork port, is the most expensive  in the world’s  47 major port destinations.

War Risks Insurance, Turn Nigerian Ports As The Most Expensive In The World

  The source disclosed that it takes 2,625  to import  a ‘’20’’  Container  from NewYork port  to Cape Town port in South Africa and $3,795 for a ‘’40’’ Container compared to  $4,982 and $7,436, to ship a ‘’20’’ and ‘’40’’ Containers respectively  coming into the Nigerian ports.

 Shipping the same Containers from NewYork port to the port of Duala, Cameroon, which also borders the Gulf Guinea, according  IMB reports,  takes  only  3,150 for a ‘’20’’ Container and $3,765 for a ‘’40’’ Container.  Shipping the same Containers load of cargo from the US, city, to the Autonomous port of Benin, Cotonou and Bollore port, in Benin Republic including Lome port, Togo, is the same.

   Given the high cost of imported goods in the country ‘’due to ‘’the persisting War Risk Insurance premium placed on the  Nigerian  bound cargos, by the Foreign shipping Companies, Jamoh, the NIMASA helmsman,  had expressed his worries over it, insisting that’’’’ there was no basis for the high premium  because ’’the activities of Pirates and sea thieves in Nigerian waters and the Gulf of Guinea have been put under control since February , 2021.  He was said to have begun a sensitization Campaigns ‘’to end the  war risk insurance on the Nigerian bound cargoes to bring  down the inflationary rate in the country which the National Bureau of Statistics had said is too high at present.

Recall that the war risks insurance was so worrisome in 2018, that Hajia Hadiza Bala Usman, a former Managing Director of the Nigerian Ports Authority, NPA, urged Dakuku Pterside, a one-time Director General, NIMASA ,’’to ensure that the Piracy threat in Nigerian waters and the Gulf of Guinea was addressed through inter-agency Collaboration’’ but that was how far she could go.

 Hassan Bello, a former Executive Director, of the Nigerian Shippers Council, NSC, who had lamented that the war risk insurance premium placed on Nigerian bound cargoes by foreign ship owners   are’’ the highest in the West and Central African sub-region’’, was said to have failed to follow it up to stop it.

 In spite of the fact  that in  the last one year that Jamoh, replaced Peterside as the NIMA boss and the apparent drop in piracy activities in Nigerian waters and the Gulf of Guinea   the underwriting firms may not have seen any reason to  reduce  the high premium  paid shipping companies   conveying cargoes to Nigeria. 

  But with the falling piracy incidence in the Nigerian waters and the Gulf of Guinea since February 2021 and now, that NIMASA deployed the Integrated National Security and Waterways Protection Infrastructure popular,  the Deep Blue Project, Jamoh has made it clear to the  foreign shipping companies  the War Risk Insurance on Nigerian bound cargoes’ must be removed’’. There is no gain saying the fact that the Nigeria ‘’maritime trade is to say the least is currently being threatened due’’ to the increasing war risk insurance premium now being paid by Nigeria-bound vessels’’.

At the recent official flag-off of the deep blue project in Lagos by President Muhammadu Buhari, a retired Army General, Jamoh, the NIMASA,  CEO, had  confirmed that: “Since the deployment of the deep blue project assets in February, ‘’there had been a steady decline in piracy attacks in the Nigerian waters on a monthly basis.”

 This may have informed why he has invited the international shipping community to do a rethink on the issue of the war risk insurance on Nigeria bound cargoes. He opined that Nigeria has ‘’demonstrated enough commitment towards tackling maritime insecurity to avert such premium burden’’.

 It is on record that Insecurity got so bad in the region before the deployment of the deep blue project that global insurance firm Beazley now offers “Gulf of Guinea Piracy Plus,”a bespoke insurance plan for maritime crew traveling through the area.

The plan provides compensation for illegal vessel seizures and crew kidnappings even in the absence of ransom demands. It tracks insured vessels on a 24-hour basis, but because the risks are so high, it limits claims to $25 million. 

As the deep blue project has entered the implementation stage the NIMASA Director General had told those that cares to listen, that the agency will not be complacent as ‘’it will continually evolve strategies including wide consultations with stakeholders and application of cutting edge technology in the fight against maritime insecurity to force the  foreign shipping Companies to remove the war risk Insurance.

Jamoh, may have won the heart of the Leadership of the International Maritime Organisation, IMO, A United Nations, UN, Maritime security agency over his leading role in efforts ‘’to secure the Gulf of Guinea’’. The World Maritime body which is very appreciative of what the NIMASA  Director General is   has given its words that ‘’it will continue  to support Nigeria and the Gulf of Guinea to make the region safe from ocean going vessels.

Lim: Secretary General Imo

 Kitack Lim, the Secretary General of the IMO, who could not hide his feelings had said that the country had made  tremendous contributions  ‘’to the fight  against Piracy and sea thieves  in the Gulf of Guinea maritime domain. The IMO secretary General had cited the recent Launch  of the  Deep Blue Project by the Katsina state born Nigerian President, stressing that  that’’ it will help the work of the seafarers and improved shipping in the region , while keeping at  bay illicit maritime activities’’.

Appreciative of Nigeria efforts to curb Piracy in Nigerian waters and the Gulf of Guinea, an Appreciative Lim, had ‘’acknowledged the need  for more Collaboration  and contribution  to the anti-piracy war’’, stating that ;;there is more work ahead  for the member nations of the Gulf of Guinea Commission to enhance security in the region.

Recall that in June 2020,, the IMO boss, had commended Jamoh,  for his Leadership  and proactive response   to the issue of security  in the Nigerian maritime domain  and the Gulf of Guinea. Lim had observed at the early stage of Jamoh assumption of office at NIMASA, that that the programmes he is pursuing including his commitment to see to the acctualisation of the $195 million Deep Blue project has sent a strong  and valuable  message to the International Community  that he is out to  curb Piracy  and sea robbery  against ships  in the Gulf of Guinea. Vintage Jamoh.     

Stephen Ubanna

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