How did you first understand war risk insurance and its implications for Nigeria?
At first, when I was the DG of NIMASA, I didn’t know anything about war risk insurance. And they explained to me that the Joint War-Risk Committee (JWC) in London is charging 0.025 per cent on hull, or whatever the case may be, for every vessel that goes 5 degrees east of the Lagos Harbour. Which means that anything that crosses Lagos slightly, and the moment you enter that area towards the Port Harcourt area, towards Bakassi, there is a fee that is being charged. Interestingly enough, that fee went up to 0.625 per cent. And at that same time, Pakistan, which was under serious attack, was still being charged 0.25 per cent. Now, the reason, quite simple, why that was the case, was that we didn’t have an eye on the ball. So they were charging us all those things, without us in NIMASA really knowing.
So I took it upon myself just now to ask the question on Chat GPT. I asked ChatGPT a very simple question. I said, ‘What is the present rate for war risk premium by the JWC for Nigeria and the Gulf of Guinea?’ And you know what Chat GPT said? It said ‘I wasn’t able to find any publicly available current percentage rates, EGX or whatever, that the JWC imposes specifically for war risk premium in the case of Nigeria and the Gulf of Guinea’.
Now, let me just jump down and say this. It now says, ‘instead, premiums are provided on a case-by-case basis upon reporting a voyage to the insurers. Even ChatGPT does not even know what we are being charged as war risk premium.
During your time as DG, what figures were you working with?
As of 2019, when I was DG, we were paying $400 million a year. Now, that basically corroborates the figure, which I heard the DG of NIMASA mention and I’m worried. Why am I worried? You would ask. If you do not know something that is happening in Nigeria, I should tell you now. Nigeria is a center of attraction for the world. Why? Aliko Dangote has built a refinery which is going to produce 650,000 barrels a day. A gentleman called Samad Bua will very soon commission a refinery which is 200,000 barrels a day. I am very aware that another one is coming up again in Ogun state which is 500,000 barrels a day. They are modular refineries which are producing purely for export purposes.
I am aware that just a few days ago, NUPRC just approved a terminal for the export of LPFO, NAFTA, and AGO from modular refineries out of Koko. What does that mean? LNG comes on stream next year. Now, can you just imagine what that makes Nigeria? Because we are only consuming 55 million liters of PMS or whatever per day, that makes Nigeria a net exporter of petroleum products. Except they are building airports on the high seas, where they will be carrying these petroleum products out of this country. I believe that the majority of these cargoes will be carried out by sea. Now, that is only one part.
How does the JWC determine its rates in the first place?
When we got that information about the War risk, what did we do? We first of all engaged the JWC. And they were not willing to listen to us. They did not care. They just ignored us totally. But how did they work? How did we get from 0.025 per cent to 0.625 per cent? Every time an activity happens in Nigeria, you are depressed, you have to report it. You report it and then the man in JWC sits down there, sees this report, on his way home reads it on social media or whatever, gets home, his wife makes him dinner, and then he reads the news or sees something on TV saying one ship was attacked. He now calls his colleagues and says ‘hey Mike, you see what happened in Nigeria today? Some vessels were attacked. I think we need to increase the rates in Nigeria’. There is no way they use any analysis. It’s based on them just determining what they want to charge us. That is what we do. We know that.
From your perspective, what’s the way forward for Nigeria on this issue?
Look, the economies of UK, Europe, and America are collapsing. The next frontier is Africa, led by Nigeria. I am totally against going to beg anybody for anything. Let’s create competition. We have it now, let’s create our own. Let’s form our own insurance. Find the people that can do it. I was going to tell you to invite the Nigeria Insurance Association here. Call them here, they will do it. We have the capacity and we have the capability to create our own. I’m not saying they will take us out. Well, first, they will crash the premium. When they see it crash so low and it becomes negligible, I think they will pull us out. Let’s create competition. We should not go and beg anybody for anything. And this is where NIMASA comes in, especially in administrative enforcement. Why can any how vessel be coming in? Under the ISPS Code, a vessel cannot lift anchor from Nigeria to go to America without the Coast Guard clearing that vessel first. That’s the ISPS scope. You do that, you cross America, they blow you out of the water. If that is part of the requirement of the ISPS code, why can we not also impose that? Because some of these vessels that are coming in, even the Master does not even know they’re in Nigeria. So what then happens is that they now get attacked. So how can I protect a thief in my compound? Of course, we know they are coming to carry stolen crude or whatever they are coming to carry. But the moment they get attacked, they go to wherever and make a lot of noise that they’ve been attacked in Nigeria. But if you don’t tell me you are coming to Nigeria, how can I protect you?
We need to see a situation whereby any vessel coming to Nigeria must declare that they are coming and say how long they will be in Nigeria. And it is then the likes of C4i and Falcone Eye can work better because then they can track that vessel from the moment it leaves anchor to come to Nigeria. Nigeria has become a free for all. And we must stop it. Sierra Leone alone was on war risk premium. But they took them out because their money is peanuts.
On the war risk premium discussion, what constructive measures will you propose?
We can create corridors on the ocean. What do I mean by corridors? You can create a 50 by 100 nautical mile corridor. And when those vessels are cutting notice to leave anchor, you give them the coordinates of that corridor. And then we have people like the Navy having their security boat, patrolling that corridor. So as soon as they come into that corridor, they become our responsibility. But that corridor takes you straight. So, we know that. Because we cannot control 91,000 square kilometers of water, we can start small and begin to grow. And then we can have a small fee. Because what happens is that, if you do it by whatever, you can get a small fee, a small security fee. Then we can even have the fishing trawlers become part of it. Because you know what is happening, our trawlers are going to the deep sea, the Chinese are attacking them, and are stealing their catches and beating their crews. That is why our fishing thing is not working. It’s a security issue. That’s what’s going on. We know what is happening out there in the high seas.