Bloomberg: Nigeria’s Oil Shipping Costs Soar as Tanker Owners Steer Clear

*Protest rocks Angola over fuel price hike 

*Fuel subsidy: NLC, TUC resume talks with FG today

Deji Elumoye and Emmanuel Addeh in Abuja with agency report

The cost of shipping oil from Nigeria surged the most in more than a year this weekend, prompting some ship owners to stay away from Africa’s largest oil producer, a Bloomberg report has said. This emerged as the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) were expected to resume talks today with the federal government over steps being taken to alleviate the suffering associated with the withdrawal of fuel subsidy by the administration of President Bola Tinubu.

Freight for ships hauling about one million barrels of crude from Nigeria to Europe jumped almost $16,000 a day, the biggest gain since April 2022. It rose to just over $64,000 a day, data from the Baltic Exchange, quoted by the report showed.

Earlier in the week, at least two ship-owners said they were keeping their vessels away from Nigeria after a series of multimillion dollar tax bills were sent out, seeking to claw back unpaid duties from 2010 to 2019.

“Some owners have decided to stay away and, if nothing else, it’s really shifted sentiment because there’s a smaller pool of vessels willing to go there,” said Halvor Ellefsen, a tanker broker at Fearnleys Shipbrokers UK Ltd.

Quoting international news agency, THISDAY reported last week that at least two oil tanker owners were staying away from Nigeria after several companies received backdated tax bills totalling millions of dollars.

Multiple businesses received demands from Nigeria’s Federal Inland Revenue Service (FIRS), according to a member notice by industry group Intertanko.
They cover the period from 2010 to 2019 and range in amount from $400,000 to $1.1 million per vessel. In aggregate, some claims reach tens of millions of dollars, the report stated.

As a result, at least two ship-owners, who asked not to be identified discussing commercial matters, are steering clear of Nigerian ports to avoid the risk of having their ships arrested.

Tanker earnings from West Africa to Europe have soared more than 42 per cent in three days so far during the week, according to Baltic Exchange data.
Ships staying away from Nigeria make it easier for those owners still willing to go there to get higher rates for their vessels.

Many of the tax bills referred to a previous law published by Nigeria’s revenue service in July 2021. That measure says any vessel carrying crude oil, gas or refined fuels from Nigeria is liable to pay tax there.

Meanwhile, Angolan police have fired tear gas in the capital Luanda and other cities, like Benguela and Namibe, as thousands of protesters took to the streets a week after clashes over a recent fuel hike killed at least five people.

President Joao Lourenco on June 8 fired the economic coordination minister and replaced him with the central bank governor in the wake of the deadly protests.
Africa’s second biggest crude oil producer earlier this month joined its larger continental rival, Nigeria, in reducing gasoline subsidies, almost doubling pump prices and triggering protests.

The subsidy cut nearly doubled the petrol price to almost 300 kwanzas ($0.4781) per litre, although that was still below the market rate.
Local media at the time quoted Angolan Economic Coordination Minister Manuel Nunes Junior, who was subsequently fired, as saying the aim was to rein in government spending.

On Saturday in Benguela, a large crowd of protesters holding cardboard placards were shown on social and local media as anti-riot police with batons and helmets patrolled the streets, a Reuters report said.

In Luanda, police shot teargas to control the crowd, with TV footage showing at least one burning barricade spewing smoke.

Angola had reduced its gasoline subsidy, almost doubling pump prices in a nation that has some of the world’s cheapest fuel.

The decision came the same week that Nigeria, Africa’s biggest oil producer, scrapped its own subsidy, causing pump prices to triple. Like Angola, Nigeria is seeking to rein in expenditure as its economy languishes.

During his inauguration, President Bola Tinubu announced that fuel subsidy was “gone”, promising to re-channel the savings to education, health, infrastructure, among others.

There has been no major public protest in Nigeria, as the federal government said it would continue negotiations with organised labour after the courts earlier halted a planned strike.

Fuel Subsidy: NLC, TUC Resume Talks with FG Today

Meanwhile, NLC and TUC would today resume talks with the federal government over steps to alleviate the suffering associated with the withdrawal of fuel subsidy by the Tinubu administration.

TUC and NLC had after meeting with representatives of government at the State House, Abuja, a fortnight ago, suspended its planned nationwide indefinite strike action to protest last month’s withdrawal of fuel subsidy.

A top official of NLC confirmed to THISDAY yesterday that the meeting would hold as scheduled at 4pm, at the office of the Chief of Staff, inside the State House.
The official, who spoke on condition of anonymity, said the labour centres (both NLC and TUC) would insist on the implementation of all the agreements reached with the federal government’s representatives two weeks ago.

According to him, “We will not budge or shift ground on all the issues already contained in the agreement we signed the last tme we met with government.”
Labour and government had at a meeting on June 6 arrived at a seven-point resolution at the end of a negotiation meeting between the federal government, TUC and NLC, held at the conference room of the Chief of Staff at the State House, Abuja.

The resolutions in the form of a communiqué were signed by six members of the negotiating team, including President of NLC, Joe Ajaero; President of TUC, Festus Osifo; Permanent Secretary of the Federal Ministry of Labour and Employment, Ms. Kachollom S. Daju; and then Speaker of the House of Representatives, Femi Gbajabiamila (now Chief of Staff to the Presdent).

According to the communiqué, the agreements are that “the NLC to suspend the notice of strike forthwith to enable further consultations.
“The TUC and the NLC to continue the on-going engagements with the federal government and secure closure on the resolutions above.
“The labour centres and the federal government to meet on June 19, 2023, to agree on an implementation framework.”

The communiqué further read, “Following the engagements between the federal government, TUC and the NLC, with the intervention of the Speaker, House of Representatives to resolve the disputes that arose from the withdrawal of subsidy on PMS, the following resolutions were reached:

“The federal government, the TUC and the NLC to establish a joint committee to review the proposal for any wage increase or award and establish a framework and timeline for implementation.

“The federal government, the TUC and the NLC to review World Bank-financed cash transfer scheme and propose inclusion of low-income earners in the program.

“The federal government, the TUC and the NLC to revive the CNG conversion program earlier agreed with labour centres in 2021 and work out detailed implementation and timing.

“The labour centres and the federal government to review issues hindering effective delivery in the education sector and propose solutions for implementation.
“The labour centres and the federal government to review and establish the framework for completion of the rehabilitation of the nation’s refineries.
“The federal government to provide a framework for the maintenance of roads and expansion of rail networks across the country.

“All other demands submitted by the TUC to the federal government will be assessed by the joint committee.”

Tinubu had on May 29, while giving his speech after his inauguration at Eagles Square in Abuja, declared that fuel subsidy regime was gone for good, which led to increase in fuel price by the Nigerian National Petroleum Company Limited (NNPC).

That had elicited immediate reaction from both NLC and TUC, which claimed necessary consultations were not made by government before removing the fuel subsidy.

The National Economic Council (NEC), chaired by Vice President Kashim Shettima, had last week proposed palliatives for workers and vulnerable groups in the country, to cushion the effects of fuel subsidy removal.

Bauchi State Governor, Senator Bala Mohammed, who disclosed this, had said the council considered recommendations from the National Salaries, Incomes and Wages Commission to pay N702 billion as cost of living allowance to civil servants as part of the intervention plans.

Mohammed had also announced the setting up of a committee by NEC to work out, within two weeks, modalities for organising and distributing the palliatives. He noted that the council also discussed the possibility of obtaining funds from the World Bank and London partners to implement the programme of Compressed Natural Gas (CNG) for vehicles in the country as part of measures to bring down the price of fuel.