Thursday 23 January 2014

Analysts seek stringent regulation as Nigeria returns to global bunkering business

For Nigeria to effectively tap into the $150 billion global oil bunkering business formerly embargoed by government, there must be stringent regulations on licensed firms and operators, analysts say.
In 1984 the bunkering business in Nigeria was restricted to five major oil marketing companies on account of abuses which led to huge losses to the economy. Then in the year 2000 the business was put on ban for 13 years for the same reason.
With the recent lifting of the ban the business of bunkering is expected to yield over N250 million annually into the Federation Account as license renewal and registration fees for bunker vessels, says George Osahon, director, Department of Petroleum Resources (DPR)

Bunkering is an international business that allows licensed firms to supply Automotive Gas Oil (AGO) or diesel, Low Pour Fuel Oil (LPFO) and Liquefied Natural Gas (LNG) to oceangoing vessels, including container carriers and oil tankers that trade within a nation’s maritime domain.
The resumption of bunkering services in the country will save oil, gas and marine operators the stress of going to Senegal, Cape Verde and Cote D’Ivoire to fuel vessels operating in Nigerian territorial waters and also earn the country some foreign exchange, analysts say.
BusinessDay checks reveal that the business, properly handled, has the potential to take more than 10,000 Nigerians off the employment market. Much of these opportunities are for jobs on Nigerian flagged bunker vessels and licensed firms in a country, where over 5,000 ocean liners shuttle cargoes annually.
Following government’s approval of the resumption of bunkering operations, Navy Captain S. O. Ayeni,  the head of the Directorate of Marine Services, Nigerian Navy, recently warned that any ship that must bunker in the country’s territorial waters must fulfill the requirements of the Navy.
“The operator will be expected to present to the Nigerian Navy headquarters, an application for bunkering clearance, detailing the vessel involved, location of bunkering operation, or discharge point, quantity of bunker fuel and duration of the operation.”
Ayeni further explained that the operator must disclose the source of his bunker fuel, adding that in view of the poor state of the refineries, the product must not come from the country, otherwise it would be regarded as stolen oil.
Operators must obtain licences and certifications from the DPR and the Nigerian Maritime Administration and Safety Agency on the quality of the products and the vessels.
Speaking with BusinessDay on telephone, Adewale Ishola, a renowned master mariner, who described the lifting of ban on oil bunkering in Nigeria as a good development, observed that bunkering is an international business that can fetch the country huge foreign exchange, from ships trading in the nation’s territorial waters.
The Federal Government, Ishola suggested, needs to create designated taxes in all Nigerian ports for vessels used for bunkering, so as to achieve transparency in the business. “This is what is obtainable in the international bunker market.
“Also, our refineries need to be resuscitated for bunker vessels to load their fuel directly from the refineries instead of depending on imported fuel. Loading from the refineries will help to create competitive pricing in the bunker market, thereby reducing the market price for operators”,he added.
Bolaji Akinola, a maritime practitioner, said negligence in regulation of the operations of bunkering firms led to flagrant disregard of standards and abuse of the business ethics in the past.
He suggested that government agencies supervising  bunkering operations must be alive to their responsibilities by granting licenses to companies that fulfill set guidelines and have track records of operating within the ambits of the law.
Akinola further suggested that licensed operators should come together and form a formidable association to protect their operations from quacks and hoodlums. “They must also ensure that their workers are well groomed in the trade, while their operations must be in line with international best practices”.
“The Nigerian Navy and the Nigerian Maritime Administration and Safety Agency (NIMASA) must also ensure that only licensed operators are granted access to vessels. All bunker vessels must be certified and duly registered for effective monitoring and control”.

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