New Telegraph

Nigerian importers face N110bn war risk insurance challenge

Moves by the Federal Government to ensure that importers are relieved from annual payment of N110billion ($155million) war risk insurance premium paid from 2022 has been rebuffed by ship owners, charterers and global maritime bodies. According to the ICC International Maritime Bureau, there was no incident of piracy and armed robbery against ships in the first half of this year in Nigeria.

The Director-General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Bashir Jamoh, was hopeful that the war risk insurance would be removed this year after the drastic pirate attacks on Nigerian waters. War risk insurance is an insurance model that covers damage due to acts of war, including invasion, insurrection, rebellion and hijacking.

It has two components: war risk liability, which covers people and items inside the craft and is calculated based on the indemnity amount; and war risk hull, which covers the craft itself and is calculated based on the value of the craft. In 2020, Oceans Beyond Piracy (OBP) report revealed that the total cost of additional war risk area premiums incurred by Nigeria-bound ships transiting the Gulf of Guinea was $55 million in 2020, while 35 per cent of ships transiting the area also carried additional kidnap and ransom insurance totalling $100 million.

The director-general, who was represented by the agency’s Executive Director, Finance and Administration, Mr Chudi Offodile, said in Abuja at a three-day national transport summit of the Chartered Institute of Transport Administration of Nigeria (CIOTA) that the 2022 date was no longer feasible and that all entreaties for the premium removal had been rebuffed by concerned global bodies.

He explained that the International Maritime Organisation (IMO) had hinged the removal on sustained reduction or total eradication of attacks on ships coming to Nigeria. According to him, NIMASA had made moves to ensure international ships coming to Nigeria remove the war risk insurance on Nigeria-bound cargo, but IMO had insisted that the success in reducing piracy must be sustained for that to happen. Also, speaking during a panel session with the theme, ‘Maritime Safety and Security Administration in Nigeria,’ Emmanuel Jime, the Executive Secretary of the Nigerian Shippers’ Council (NSC), confirmed that shippers still paid high freight on goods coming to Nigerian ports. He said that cargoes that were supposed to go to the Eastern ports in Calabar, Warri and Port Harcourt were being diverted to Lagos ports due to the high rate of insecurity in the Niger Delta waters. Jime, who was represented by a Director at the Nigerian Shippers Council, Chief Cajetan Agu, said that there was a high freight differential between the Lagos Ports and Eastern ports due to the payment of war risk insurance charges on cargoes. He said that shippers paid between $1,000 and $1,500 as freight on Eastern port-bound cargo when compared to the freight for Lagos port-bound cargo. Jime noted: “Insecurity impacts negatively on the cost of doing business at our ports and the cost is being transferred to the consumers of goods and services. “Even ships coming to Lagos Ports used to pay about $2,500 at the Lagos secure anchorage zone, which was terminated by the government at the introduction of the Deep Blue Project of the NIMASA.”

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