Senate Probes NNPC Over Violation Of Law

The 9th Senate has commenced a probe of Nigerian National Petroleum Company, NNPC following an alleged violation of maritime laws.

The senate began a probe into the actions of the NNPC in ensuring participation of indigenous companies in the freight of Petroleum products, in line with the provisions of Presidential Executive Order 5(2018).

Consequently, the Senate has mandated its Committees on Local Content chaired by Senator Teslim Folarin, All Progressives Congress, APC, Oyo Central and Petroleum Downstream chaired by Senator Sabo Mohammed, APC, Jigawa South West to carry out the probe.

The Upper Chamber has also asked the Committees to carry out an investigation with a view to unravelling the influx of foreign vessels in the Coastal Region and the level of patronage of Nigerian shipping companies.

Resolutions of the Senate yesterday were sequel to a motion entitled, “Urgent need to investigate the breach of Nigerian laws by foreign vessels in coastal shipping of petroleum products in the downstream sector of the Nigerian maritime industry.” and sponsored by Senator Olalekan

Mustapha, All Progressives Congress, APC, Ogun East and co-sponsored by ten others.

The Committees were also asked to investigate the flagrant abuse of the NOGICD Act 2010 and Cabotage Act 2003 respectively, by the operators and stakeholders in the Maritime Industry, through a ship-ship transfer with Coastal foreign vessel.

The Upper Chamber is also investigating foreign ship owners of freight associated with downstream activities repatriated overseas by NNPC to the detriment of the local economy or patronage.

The Senate particularly mandated the Committee on Local Content to investigate the reasons for the dominance of foreign vessels above locally owned, manned and registered vessels in the domestic carriage of petroleum products within the coastal territory and Inland waterways of Nigeria.

​Presenting the motion, Senator Mustapha said that the Senate “Notes that the Nigerian Content (NOGICD) Act 2010 was enacted to promote value addition to the National Economy by stimulating growth and industrial development in the Oil and Gas Sector of the Economy;

​”Aware that section 105 of the NOGICD Act, grants powers of enforcement to both Nigerian Content Development and Monitoring Board (NCDMB) and Nigerian Maritime Administration and Safety (NIMASA) as matters pertaining to Nigerian Content Development in the Coastal and Inland shipping sector of the Maritime Industry;

​”Worried that the influx of the foreign vessels into Nigerian downstream sector is alarming against the Coastal and Inland Shipping (Cabotage) Act 2003 which clearly restricts vessels engaged in domestic coastal trade, such that only wholly-owned, manned and registered Nigerian Vessels can engage in the domestic coastal carriage of Petroleum products within the Coastal Territorial and Inland waterways.”

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​According to him, the Senate is “Further Aware that over the past 15 years, indigenous tonnage capacity and coastal shipping capabilities have grown remarkably with Nigerian operators owning multiple tanker vessels in their fleet; Notes that NNPC is the largest employer of downstream shipping services in Africa on account of Direct Sale of Crude Oil and Direct Purchase of Petroleum Products (DSDP) fuel import contract; Coastal and Bunkering Vessels Service Contracts for mid-stream transfer; and Coastal shipping of imported petroleum products to in-country depots and tank farms;

Notwithstanding these activities and the numerous opportunities generated therein, the indigenous capacity and capabilities have not been enhanced;

“Also notes that the capital freight spent by NNPC through Direct Sale of Crude Oil and Direct Purchase of Petroleum Product (DSDP) is approximately U$60 million monthly to about U$720million annually.;

​”Aware that the value of DSDP for 2019/2020 contract period is at the range of U$9billion, out of which foreign ship-owners amount for 100% of freight spends associated with this downstream activity, most of which is repatriated overseas to the detriment of the Nigerian economy.”

He said that the Senate, “Regrets that lack of Contract of Carriage and the absence of guaranteed cargo tonnage in the Maritime Industry have led to significant losses and collapse of domestic and indigenous shipping.”