Bayo Akomolafe 
Despite Federal Government’s regulations and tariffs on ship-to-ship transfer of cargoes including petroleum products, Nigeria is still losing $1.5 billion (N2.1 trillion) annually due to recent policies initiatives on foreign exchange by the Central Bank of Nigeria (CBN). Findings revealed that large seagoing vessels with products meant for Nigeria are deliberately avoiding the country and rather engaging in high sea ship-to-ship transfer as the forex regulations appear not to favour them.
Cargoes typically transferred via STS methods include crude oil, liquefied gas, bulk cargo, and petroleum products The apex bank had said that the foreign exchange rate at the point of importation should be used for import duty assessment until the termination date and clearance finalised. Due to bottleneck associated with the policy in the banks, smaller vessels now prefer Togo and Benin Republic for the STS services, thereby denying Nigeria taxes and other levies attached to the shipments.
Data obtained from the sector revealed that Nigeria Customs Service (NCS) charges a 7.5 per cent import duty on cargoes transferred through STS operations and five per cent Value Added Tax (VAT) on the value of the goods. Also, a levy of 0.5 per cent of the Free on Board (FOB) value of the goods is charged by the Nigerian Maritime Administration and Safety Agency (NIMASA) and port charge of 0.15 per cent of the FOB value by the Nigerian Ports Authority (NPA).
Other charges are the cost of transfer operations, cost of lightering, towing and services. Revenue from these charges amounting to $1.5 billion annually has been lost due to the foreign shipping lines insistence on not sailing into Nigerian waters. Worried by the loss, the Nigerian Ports Authority (NPA) blamed the CBN for the decline and dearth of ship bunkering business in the country, noting that the unfriendly policy of the bank was chasing ship owners, and investors away from the business.
The Executive Director Engineering and Technical Services of NPA, Ibrahim Abba Umar, complained about the dearth of STS operations on Nigerian waters, despite the fact that NPA had created a designated area for the services. He said: “Concerning STS operations, we have areas mapped out in all our port locations, what is delaying it is the policy of the Central Bank of Nigeria (CBN) for the payment and the policy is affecting those in the industry.”
In February 2024, the apex bank had directed the Nigeria Customs Service (NCS) and other related parties to adopt the closing rate in the official foreign exchange window for import duty, a development that has negatively impacted revenue for the government. Meanwhile, it was learnt that only 61.68 billion litres of PMS was recorded between 2021 and 2023 as the country imported 22.41 billion litres of fuel in 2020; 24.80 billion litres in 2022 and 14.48 billion litres in 2023.
As part of measures to address the challenge, the Federal Government had introduced some guidelines to ensure that STS operations are carried out in designated areas, noting that approval from NIMASA and NPA was required for STS operations. The guidelines further explained that vessels involved in STS operations must meet certain safety and security standards, cargoes transferred through STS operations must be declared and cleared through customs.
Recalled that a former Director General of NIMASA, Temisan Omatseye had said that a lot of STS operations must be done offshore in national waters. He said: “Now forgetting what is losing on freight coming into Nigerian waters, by virtue of the STS operations, just basically because you have to bring the vessel to the terminal alone, now you have to offload them, do an STS operation to the daughter vessel, which is the smaller vessel with the draft to bring them into the port.
“Now, in just moving the kind of cargo they are bringing in now, about 1.5 trillion litres of petroleum products a month, you are looking in the region of an annual spend of nothing less than $1 billion and that is just on pure freight rate.”
