March 27, 2023

Maritime Today Online

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‘War risk insurance will continue until insurers see gains of deep blue project’

Leke Oyewole

Nigeria will remain on the list of war- risk countries and consequently continue to bear the high insurance premium on cargoes coming to its ports until the gains of the deep blue project begins to manifest, former Senior Special Assistant on Maritime Affairs to ex-President Goodluck Jonathan, Leke Oyewole has said.

Oyewole stated this against the backdrop of calls for the removal of war risk insurance premium currently being charged on Nigeria- bound vessels following the launch of the deep blue project.

Director General, Nigerian Maritime Administration and Safety Agency (NIMASA), Dr Bashir Jamoh, had argued that the charge is unjustified given that the country has set up a security infrastructure aimed at tackling insecurity on the nation’s territorial waters.

But speaking in an interview with Maritime Today Online, the maritime security expert said despite the launch of the deep blue project, international insurance underwriters have the right to continue to place charges on Nigeria- bound vessels until piracy is completely tackled and normalcy restored on Nigerian waters.

“The effect of the deep blue project has not manifested. Until it brings normalcy to our waters and no more piracy or sea robbery is reported, that is when they (insurance companies) will say you guys have done well, now we can stop the war risk premium that vessels that come into Nigeria are charged.

“For now, that we have launched the deep blue project does not mean they would take it off. We have done something and they have acknowledged it so they will watch to see how effective that thing is. So, they are right when they said they will continue to charge the war risk.

“In 2011, when we started the Global West project, Lagos became calm in no time but piracy went up in the Benin Republic so much so that the President of Benin came to Nigeria to seek help. The then President in Nigeria also agreed that we should go to Benin Republic and our Navy moved to Benin Republic to restore normalcy and that was to the admiration of the international community. It was loudly mentioned at the September United Nations General Conference in New York and Nigeria was greatly applauded there.

“So, when they see that kind of effect in this one also, they will acknowledge that something is being done. The Global West project slowly spread to the eastern part before the whole thing was finally stopped so that could not make the project claim anything from the insurance companies that they should stop the risk premium on vessels. But if this one becomes very effective and they are able to curtail or minimize piracy and sea robbery, why not? We can demand that vessels coming into Nigeria should stop paying and importers to Nigeria should stop paying,” he said.  

Oyewole, however, noted that what constitutes the risk insurance premium that importers pay is not only limited to sea robbery and piracy but also involves vessel turnaround time at the Nigerian ports among other factors.

“The things that constitute the risk premium that importers pay is not only sea robbery and piracy. There is also the issue of vessel turnaround time. What is the turnaround time for vessels that come to Nigeria? Some vessels are delayed beyond normal. If vessels can come in and go out without much delay, then that is okay because each day a vessel wastes within our territorial waters, it is a huge cost to the operators of that ship. So that is also part of it.

“How easily they retrieve their empty boxes also can be a major thing for them to consider because most of the empties are trapped in the traffic, they don’t get back to the port and they are not easily loaded,” he said.