The Nigerian Maritime Administration and Safety Agency (NIMASA) is campaigning to remove war risk insurance premiums that cost Nigeria over $400 billion annually. Despite improved maritime security and a decline in piracy, shipping companies continue to impose these excessive costs. NIMASA’s initiatives, backed by international stakeholders, seek to abolish these unfair charges to bolster Nigeria’s economy and competitiveness in global markets.
War risk insurance (WRI) represents a surcharge imposed by shipping companies for cargo destined to Nigeria, comprising two main elements: war risk liability and war risk hull. This charge originated during heightened militancy and piracy in the Niger Delta. Although precise data on WRI payments is unavailable, reports indicate that Nigeria has disbursed over $1.5 billion to international insurers in the last three years alone. The cost per voyage for a Very Large Crude Carrier (VLCC) can reach approximately $445,000, severely impacting Nigeria’s economy.
In response to the economic strain of WRI premiums, the Nigerian Maritime Administration and Safety Agency (NIMASA), under Dr. Dayo Mobereola’s leadership, has launched a campaign to eliminate these charges. The NIMASA Act authorizes the agency to support shipping development, making the removal of WRI a primary goal of recent maritime reforms. Given that piracy incidents have ceased for over three years and the International Maritime Bureau has delisted Nigeria from piracy-prone areas, there remains a disconnect with international shipping firms that continue to impose these premiums.
To further mitigate WRI issues, the Nigerian government has invested heavily in maritime security initiatives such as the Deep Blue Project, which has upheld a piracy-free record for over 30 months. Nigeria’s collaboration with the International Maritime Organization demonstrates a commitment to combating maritime threats effectively. Despite these advances recognized by international bodies, shipping insurers continue to apply elevated premiums without reconsideration of Nigeria’s security status.
Under directives from Minister of Marine and Blue Economy, Adegboyega Oyetola, Dr. Mobereola has actively engaged with international stakeholders, including discussions at Chatham House and negotiations with key global shipping organizations. Notable associations contacted include BIMCO, the International Chamber of Shipping, INTERCARGO, and INTERTANKO. Dr. Mobereola emphasized Nigeria’s significant investment in maritime security and appealed for recognition of Nigeria’s improved status to eliminate unjust WRI costs.
Acknowledgment of Nigeria’s progress has emerged from figures such as Stinne Taiger Ivø, Deputy Secretary General of BIMCO, who encouraged shipowners to advocate for reduced premiums. Additionally, Zhou Xianyong of INTERCARGO expressed support for Nigeria’s initiatives. It has become evident that reducing WRI premiums is essential for Nigeria’s market competitiveness, facilitating enhanced trade and investment.
A recent meeting with a Danish delegation, which included Chief Technical Advisor Kristin Skov-Spilling, sought to encourage Denmark to advocate for reduced WRI premiums. Although some critics contend that Denmark cannot intervene in private insurance matters, the nation’s vested interest in Maersk Line suggests otherwise. If Denmark advocates for reform, it is likely others will follow.
Ultimately, NIMASA, under Dr. Mobereola’s guidance, has brought considerable attention to Nigeria’s ongoing battle against WRI premiums. Nigeria has effectively secured its maritime domain and curtailed piracy, yet foreign insurance entities persist in exploiting the situation financially. It is imperative that stakeholders unite to initiate the necessary changes, as the continuation of such premiums poses an unsustainable burden on Nigerian businesses and consumers.
In summary, NIMASA’s campaign aims to eliminate war risk insurance premiums that impose a significant financial burden on Nigeria’s shipping industry. The agency’s initiatives have garnered international recognition, affirming that piracy threats have effectively been eradicated. Despite these advancements, shipping companies still impose excessive WRI charges, undermining Nigeria’s economic potential. A collaborative approach from Nigerian authorities and international stakeholders is essential to achieve the desired change and enhance Nigeria’s competitive standing in global trade.
Original Source: www.thisdaylive.com
