Published On: Tue, Mar 28th, 2017

FG Loses Billions of Naira to FoB, Plans New Shipping Policy

By Dipo Olowookere

Federal Government is to adopt a new shipping policy to replace the Cost, Insurance and Freight (CIF) system in national interest, The Nation newspaper is reporting.

For now, goods are bought from Nigeria on FoB basis, but the country trades with others under CIF.

FoB, sources said, gives importers the opportunity to pay for the shipment and landing costs of their goods at the ports.

The government, a source close to the Ministry of Transport said, was adopting the CIF because it gives the seller the right to arrange for the shipping of goods to a port of his choice, and provides the buyer with the documents to collect them from the carrier.

The source said the problem faced by indigenous owners was the failure to enforce the Nigerian Maritime Administration and Safety (NIMASA) Act, 2007, almost 10 years after its enactment.

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Nigeria, he said, is the only country still using FoB and NIMASA management is not happy with this, adding that it is pushing for a change.

He said indigenous shipping firms had over the years been grappling with lack of cargo support, leading many of them to close down.

A maritime lawyer and don, Mr Dipo Alaka, said the country was losing billions of naira from the continued use of FoB.

Mr Alaka described the government’s plan to adopt CIF as “good”, adding that the FoB policy was uneconomical.

Nigeria, he said, loses billions of naira from the continued use of Free-on-Board (FoB) policy.

FoB, he said, is a trade policy that gives the buyer the opportunity to pay for the shipment and landing costs of the goods from the port of origin. He urged the government  to adopt CIF for the lifting of crude oil.

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A member of the group, Mr Segun Ogunsanu, said he policy was being used to the detriment of the economy, despite the NIMASA Act and other legislations, such as the Cabotage Act, 2003 and Nigerian Content Act 2010.

Mr Ogunsanu said the adoption of either the CIF or FoB policy by the Federal Government should be based on how the policy benefits the parties involved in the transaction.

The intention of the Cabotage Act, he added, is to give indigenous shipping firms the support to enable them to compete with their foreign counterparts, who have usurped the shipping of cargoes on the international shipping route and the coastal and inland region.

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The Nation.

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About the Author

- Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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