Surging shipping costs, tax will harm Nigeria’s oil industry – Bloomberg

Bloomberg says ship owners have begun to avoid Nigeria due to the escalating shipping costs,

According to a Bloomberg report, ship owners have begun to avoid Nigeria due to the escalating shipping costs, marking the most significant increase in over a year.

As a result, the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) are set to resume talks with the federal government today to discuss measures aimed at alleviating the hardships caused by the withdrawal of fuel subsidy by President Bola Tinubu’s administration.

Data from the Baltic Exchange reveals that the freight for ships transporting approximately one million barrels of Nigerian crude to Europe skyrocketed by nearly $16,000 per day, representing the highest surge since April 2022.

The shipping costs soared to just over $64,000 per day. Several ship owners expressed their decision to steer clear of Nigerian ports after receiving hefty tax bills, seeking to recover unpaid duties from 2010 to 2019, amounting to millions of dollars.

The tax claims, which varied from $400,000 to $1.1 million per vessel, have unsettled the shipping industry, with some ship owners fearing the risk of having their ships detained.

The situation has caused a significant shift in sentiment among ship owners, leading to a reduced pool of vessels willing to operate in Nigeria. Consequently, tanker earnings from West Africa to Europe have surged by over 42% in just three days, benefiting those ship owners who are still willing to venture into the Nigerian market as they can demand higher rates for their vessels.

The tax bills sent to multiple businesses by Nigeria’s Federal Inland Revenue Service (FIRS) pertain to a previous law published in July 2021. The law states that any vessel transporting crude oil, gas, or refined fuels from Nigeria is liable to pay taxes in the country. These unexpected tax demands, which collectively amount to tens of millions of dollars, have further exacerbated the challenges faced by ship owners.

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