The crude carrier that never was

It baffles many that despite the huge revenue it derives from sale of crude oil, Nigeria is not involved in shipping it.

It baffles me too that the country sells its crude oil on free on board (FOB) terms while it imports petroleum products and other consumer goods on cost, insurance and freight (CIF) terms. By these trade terms, Nigeria loses enormous money to foreign shipping lines that are involved in lifting the country’s crude and bringing in imports.

Nigeria is said to be losing over N2 trillion annually on crude freight. Another report claimed that the country loses $5 million daily to the faulty trade policy. Apart from the huge earnings the country stands to benefit from participating in freighting crude oil to buyers, there are several other multiplier benefits which include enormous job creation.

There has been an attempt by the Nigerian government to own crude carriers to effectively participate in crude oil lifting.

My research revealed that between 1973 and 1974, the General Yakubu Gowon-led federal government set up a technical committee under the Federal Ministry of Transport & Aviation to advise it on owning ocean going tanker vessels.

Members of the technical committee held several meetings and resolved that it would be advisable for Nigeria to own crude carriers under a public-private partnership arrangement.

Members of the committee met with several firms that were interested in funding the tanker acquisition. Meetings were held with Shell International in London and Lonrho also in London.

Roland “Tiny” Rowland, the famous British businessman and Chairman of the Lonrho conglomerate who died in 1998, showed a lot of interest in the PPP project with Nigeria. Series of meetings were held with him and with Shell International on the establishment of a separate company (different from the Nigerian National Shipping Line) that will be concerned with chartering, owning and managing Nigeria’s crude oil carriers.

Gowon reportedly assured Rowland that the new company would be granted national carrier status while the terms of trade would also be changed from FOB to CIF.

Feasibility studies were carried out by the committee and an initial sum of eleven million pounds was required to set up the company with Lonrho and Shell owning 51% and the Nigerian government 49%. The federal military government reportedly gave its blessings to the deal but its closure was delayed due to bureaucracy and entrenched interests.

Some prominent Nigerians placed stumbling blocks on the path of the committee to ensure that the deal was delayed as much as possible. These Nigerians also began to work behind the scenes to set up their own company.

The change of government in 1975, from my findings, finally killed the project as both Shell and Lonrho lost interest. Tiny Rowland requested and got a refund of the part-payment he had made on the project. Since then, the whole idea was left in private hands without appreciable success, except for coastal tanker chartering/ownership by a few Nigerians.

Former Managing Director of the defunct Nigerian National Shipping Line (NNSL), Chief Nelson Oyesiku, told me sometimes ago that one major reason why Nigerians have not been able to participate in the deep sea tanker trade is the lack of appreciation of the technical duties involved in operations as well as programming of tankers.

“Vessels have to work under centrally organized ocean traffic controls, route by route, and thus confirm agreed loading and delivery dates of crude/or refined products. Inmost cases, there is very little or no elbow room for delays. Operators prefer to maintain agreed sailing schedules than pay penalties. It is therefore necessary for prospective Nigerian deep sea tanker owners to readily agree on existing methods of carriage with major oil companies rather than engage in solo efforts. Nothing short of a dedicated joint service arrangement will show good results”, he told me.

We lost a noble chance to grow the shipping sector due to avarice and greed. I daresay that over 40 years after that initial attempt, nothing has changed. No progress has been made. Rather the shipping sector has retrogressed while our greed, short-sightedness and self-serving tendencies have appreciated indeed.

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