Market News

By Adaku Onyenucheya

The Nigerian Maritime Administration and Safety Agency (NIMASA) has lamented that foreign insurers impose a war risk insurance (WRI) charge of $445,000 per voyage for a very large crude carrier (VLCC) valued at $130 million plying Nigerian waters and $525,000 per voyage charge for a new container vessel valued at $150 million.

The Head of Public Relations at NIMASA, Osagie Edward, disclosed that Maersk and other shipping companies have introduced additional surcharges, including a transit disruption fee of up to $450 per container and a war risk surcharge of $40 to $50 per 20-foot container.

He revealed that over the past three years alone, Nigeria has paid more than $1.5 billion to Lloyd’s of London, Protection and Indemnity (P&I) insurance, and other foreign insurers.

Edward emphasised that these surcharges were initially introduced at the height of Niger Delta militancy and piracy, even though the security concerns that justified them no longer exist.

“Nigeria has not recorded a single piracy incident in over three years. In 2021, the International Maritime Bureau (IMB) officially removed Nigeria from its list of piracy-prone countries. Over the past five years, NIMASA, in collaboration with the Nigerian Navy, has led an unprecedented crackdown on piracy in the Gulf of Guinea, earning global recognition from the International Maritime Organisation (IMO).

“Despite these achievements, international shipping companies continue to impose war risk insurance premiums on Nigeria-bound cargo. In 2023, the International Bargaining Forum (IBF) further validated Nigeria’s progress by removing the country from its list of high-risk maritime nations. With piracy no longer a concern, why does the international shipping community continue to impose these excessive premiums?” he questioned.

Meanwhile, security experts argue that the use of foreign military personnel on vessels operating in Nigerian waters is one of the key reasons for the continued war risk insurance surcharges.

The Executive Director of Operations at Tantita Security Services Nigeria Limited (TSSNL), Captain Warredi Enisuoh, stated that ships pay exorbitant security fees while navigating Nigerian waters.

He pointed out that private security companies providing escort services play a critical role in securing inbound and outbound vessels, but at a significant cost.

“The Nigerian maritime domain is filled with foreign military ships providing security for their respective nations and allies. It has become a free-for-all environment,” he noted.

The former NIMASA director shared his firsthand experience with private maritime security in Nigeria, revealing that many firms operating in the sector are run by ex-military personnel from conflict zones such as Iraq.

“The first private maritime security firm I encountered here was represented by a former British soldier from Blackwater in Iraq. After that, the next was Irish, and so on,” he recalled. He also highlighted that insurance firms covering security risks in the region are predominantly based in Europe, further inflating operational costs for vessels navigating Nigerian waters.

The Head of Research at the Sea Empowerment and Research Center (SEREC), Eugene Nweke, explained that the current system imposes a heavy economic burden. He pointed to increased insurance premiums for ships operating in Nigerian waters, additional security surcharges imposed by shipping companies, and potential trade losses due to perceived insecurity.

Nweke urged NIMASA, the Nigerian Navy, and the Nigerian Ports Authority (NPA) to enhance their security capabilities and reduce reliance on foreign security forces to mitigate these costs.