New Telegraph

War Risk Insurance: ‘Nigeria’s $400m annual premium fraudulent’

The $400 million War Risk Insurance (WRI) premium paid by Nigeria annually to Lloyd’s of London on cargoes coming into the ports has been described as fraudulent. It was revealed that the payment by the Federal Government had gulped $2 billion in the last five years. A former Director-General of Nigerian Maritime Administration and Safety Agency (NIMASA), Barrister Temisan Omatseye, who said there was no record of claims to validate the premium, described the administration of the war risk premiums in shipping as the biggest fraud in the world. He explained this while delivering the lead paper at the fifth edition of the Taiwo Afolabi Annual Maritime (TAAM) Conference at the University of Lagos (UNILAG). He said: “War risk premium is the biggest fraud in the world.

It is not only fraudulent and criminal in nature. When I was the director- general of NIMASA, the leadership of NLNG approached me to complain about this war risk premium because it was too high. At that time, Nigeria was paying about $400 million annually for this insurance but there were no recorded claims to validate this insurance premium. “People just sit in Lloyd’s of London and the Joint War Risk Committee to collect these mon- ies. Yet, at that time the rates levied on Nigeria was about four times the rates charged on vessels going to the war-torn Afghani- stan.” According to him, the WRI is an invisible charge that was built into the cost of shipping as all imported goods had to pay for this premium.

Also, Omatseye feared that Nigerian ship owners would not have any significant improvement on the fortunes of the local ship- ping players from the 650,000 per day Dangote refinery. He explained on the sidelines of the conference that local ship owners had no stake in the for- tunes that the refinery would bring to the nation because they don’t have the required vessels. According to him, most of the vessels that would be operating lo- cal distribution of products from the refinery were foreign owned. He added: “Even if Dangote is commissioned tomorrow and kicks off, they cannot evacuate the product; they don’t have the infrastructure, so it is only by ships that product would be trans- ported, so the same foreign ships that are charging us $50,000 per day from Lagos to Calabar would be used.

“Dangote Refinery is going to be producing 650,000 barrels per day, this is not small product, if you go to Lekki now, we have Pinnacle Tank farm; Every time they bring in a vessel, the trailer waiting time is 3 to 5 kilometers long, now that someone is bring- ing 650,000 barrels per day, what trailers are you going to use? “Our logistics distribution for petroleum products is based on coastal shipping, when Port Har- court refinery was working, ves- sels come in from Port Harcourt to discharge product at Lagos Atlas Cove, there is no product pipeline that links these areas to Lagos, the only way to bring prod- ucts to Lagos is by waterways. “The only way Dangote can evacuate it’s products is by water and the same foreign shipowners have dominated that space. “Basically, if we must compete, we need to be loading an LR1 or LR2 which is minimum of 72,000 tonner vessel for maybe three times a day, which Nigerian Ship- owners has that kind of vessel?” Omatseye condemned the

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