Phasing out of single hull vessels in Nigeria (part 4):

Impact on the economy and the consequences of languishing behind the deadline set by the United Nations

We started the series by examining the rationale behind the United Nations (UN) via its International Maritime Organisation (IMO) spear heading the global initiative to phase out single-hull vessels. We considered the MARPOL 73/78 as the international convention for the prevention of Pollution from Ships (MARPOL is short for marine pollution and 73/78 short for the years 1973 and 1978). We looked at the approach of the IMO to implement the regulation by phasing out single hull vessels and replacing them with double-hull vessels because double-hull vessels are considered to be environmentally safer as their inner hull helps protect against oil spills in the event of the outer hull being punctured or damaged. The IMO also placed vessels into categories (based on tonnage and year of build) and introduced the Condition Assessment Scheme (CAS) permitting certain single hull vessels to operate. However, the IMO has made 2015 the final deadline for single hull vessels to still be in operation.

It was emphasized that the heart beat behind the UN phase out regulation is to protect and keep our marine environment clean and safe. The importance of a clean water and marine environment can be considered in light of the fact that research has shown that 71% of the surface of earth is water and 29 % is land. With Only 3% of the 71% as fresh water, and the rest salt water. We then went scientific and examined the biological effect of polluting the marine environment and we listed a barrage of legislations in existence to combat such environmental damages. To make matters more alarming, the headline in recent times reports the possible N62 Billion (62 billion naira) to be paid to 69,000 Nigerians  by Shell as a result of 2 oil leaks in 2008-09 that caused devastating damage to the waterways in particular to the fishing community of the Bodo community. Counsel representing the community described the devastating effect of the spill as approximately 20% of the amount that leaked into the Gulf of Mexico following BP’s disaster in 2010. Not only is this worrisome, it is sickening as the appropriate bodies to conduct the clean up exercise (With NNPC to spear head it) seem to be dragging its feet to the detriment of the lives that need to be protected and the source of livelihood that needs to be restored. In part 3 of the series, we highlighted the fact that most reported oil spills reported occur from a burst or vandalized oil pipelines. However, we are concerned with oil carrying vessels that spill petroleum products on water caused by collision or a damage or leakage to the hull of the vessel.

We will examine the ongoing attempts in Nigeria to implement the phase out exercise and whether we can achieve this goal and consider the impact on our domestic ship owners and the likely effects it would have on our economy.

Nigeria and the phase out of exercise:

Since our humble independence, the local shipping industry has been very much dominated by foreigners. Statistics show that Nigeria pays over $2 billion in freight each year to foreign ship owners either to export oil or to import finished goods. At present, practically all Nigerian Exports are shipped “Free on Board” (FOB), while its Imports are shipped ‘Cost Insurance Freight’ (CIF).  The Oil rigs in Nigeria waters and the vessel which service them are owned and controlled by foreigners.  Even the vessels involved in Coastal trade and Inland Waterways are mostly controlled by foreign Ship owners. Statistics from the Nigerian Ports Authority (NPA) have shown an increase in the coastal vessels that called the ports  in 2010 stood at 21,950 a reflection of 26.1% increase over the 2009 figure of 17,403 while the gross tonnage of the coastal vessels in 2010 was 6,818,827 a growth of 18.6% over 2009 figure of 5,747,640. However, 80% of Nigeria’s coastal trade is dominated by foreigners with 20% left for Nigerian ship owners, many of who have been frustrated out of the business.

In an attempt to gradually boost the indigenous (Nigerian citizen’s) capacity and improve national economic performance through indigenous participation in the shipping and logistics services, the promulgation of several laws occurred, specifically noting the Coastal and Inland Shipping Act 2003 (Cabotage Law) and Nigerian Oil & Gas Industry Content Development Act (Local Content Act).

From my dialogue with maritime experts and short trips on our waters, the reality is that many vessels operating in Nigeria are not classed compounded by the fact there are no classification societies in Nigeria with international recognition. The lack of credible P&I clubs also results in Nigerians going abroad to obtain insurance. Most of the vessels owned by indigenous operators have been trading for so many years and they lack maintenance and care, therefore bigger vessels owned by foreigners naturally override these classless vessels. Statistics have showed that 70% of vessels carrying petroleum in our waters are single hull vessels thereby highlighting the fact that many foreign vessels are single hull vessels. I also stumbled on a statement by the MD of Accord Ship management wherein he commented that ‘‘we are receiving enquiries from countries around the world where owners want to utilise single hull tankers in their territorial waters for transhipment purposes. Demand is mostly for use in the crude oil sector. We are working with owners in India and Nigeria who want to use the vessels to transship oil to and from smaller lighters due to draught restrictions in river estuaries or tidal ports.” This statement should be viewed in the light that many nations are looking to dispose single hull vessels and the trend may be that while India is purchasing and demanding the vessels for scrapping because they have the capacity. Nigeria doesn’t have the capacity to scrap or rebuild such vessels.

Attempted implementation efforts in Nigeria:

Once upon a time, the Nigerian Maritime Administration and Safety Agency (NIMASA) had published a marine Notice on the implementation of Regulation 13G Annex 1 of MARPOL 73/78 on phase-out of single-hull tankers, which had declared year 2010 as the final cutoff date. There was a rejoinder from the Indigenous Ship-owners Association of Nigeria (ISAN) requesting NIMASA to employ the Condition Assessment Scheme System (CASS) provision to enable Nigerian-flagged single-hull tankers operate till year 2015 or the 25 years age limit, as provided by IMO for vessels on foreign trade. Since then attempts have been made by NIMASA and the indigenous ship owners Association of Nigeria (ISAN) to set up a joint technical committee to harmonize the modalities for the implementation of the IMO Regulation 13G on the phase-out of single-hull tankers from Nigerian waters. However, the fact remains that category 1 and category 2 vessels which ought to have been phased out with a deadline in 2010 are freely trading in our waters and no one seems bothered or interested to comment.

Effects of not taking the phase out exercise seriously:

• ISAN members bear the risk of not trading in foreign waters even if they obtain a CAS certificate because the UN gives member nations the discretion to reject single hull vessels with a CAS certificate from entering their ports.

• The cost of getting a CAS certificate is high and many indigenous ship owners may not be able to afford it or meet up with the standard requirements.

• We risk being flooded with single hull vessels which put our waters at risk. Greenpeace (an environmental protection agency) warns that the worldwide ban on single hulled oil tankers “threatens to dump thousands of toxic ships on beaches without ensuring environmentally and socially responsible procedures. We risk becoming a dumping ground for single hull vessels which have been banned from other nations.

• If we do become a dumping nation, it will lead to environmental hazards in our waters and we examined the biological impact in part 3.

• We risk creating an atmosphere whereby our waters are open to foreign and domestic single hull vessels with no CAS certificate operating freely with no sanctions.

• On the other hand, the phase out exercise if appropriately enforced would deal a big blow financially to both foreign and domestic ship-owners, however with more impact would be felt by the domestic ship-owners. This will call into question the validity and effect of the Cabotage regime and the Local content development craze.

Proposed implementation initiatives:

• An attempt to protect and implement the phase out exercised may imitate the American’s approach which relies on inspectors at individual ports to identify singlehull vessels subject to the act’s requirements (Oil Pollution Act). Inspectors monitor these vessels as part of their existing inspection and boarding activities. If the Coast Guard were to find that a vessel is still being used to transport oil beyond its phase-out date, it has authority to require the vessel to cease operation, revoke its certificate, and potentially levy a civil penalty against the owner or operator.

• We will need to enact specific legislation banning the use of single hull vessels to carry petroleum or toxic substance.

• The Nigerian government has reiterated its desire to own ships again as it moves to establish a national carrier. This may be a good initiative to boost the possession of double-hull vessels, however stakeholders who condemn the government’s decision to re-enter ship-owning business point to the ill-fated attempts with such ventures in the past.

• NIMASA is reported to be liaising with the members of  ISAN to identify 20 vessels from their fleet, which can be repaired, put in class and made available for employment. This exercise should aim at repairing and upgrading these vessels to become single hulled.

• The long awaited disbursement of the Cabotage Vessel Financing Fund (CVFF) must be released with a clear mandate to boost possession of double hull vessels rather than cheap, aged and malfunctioning single hull vessels.

While we have a long way to go in the phase out exercise, this 4 part series serves as an eye opener to for us to really appreciate the realties facing our marine and environmental life which must be taken seriously. Nigeria has missed and is currently an eon away from meeting the 2010 phase out deadline of certain category 1 and 2 vessels not omitting the fact that many of its vessels don’t have a CAS certificate. From the current trend, the 2015 final phase out deadline seems to be only wishful thinking. We must wakeup.

Source: Business Day. By Kelechukwu O. Okafor. 18 August 2011. 

http://www.businessdayonline.com/NG/index.php/law/legal-culture/26162-phasing-out-of-single-hull-vessels-in-nigeria-part-4