2008-12-27 08:13:00
Somali pirates threaten fuel supply to Tanzania
By Damas Kanyabwoya
THE CITIZEN
The increased hijack of cargo ships by Somali pirates in the Indian Ocean is threatening fuel supply to Tanzania.
Oil marketers have said unless the piracy is stopped on the Gulf of Aden, Tanzania was likely to experience critical fuel shortages in the near future.
The effects of the hijackings have become apparent in the cancellations of trips to the east African region by some bulk oil transporters.
More than 30 ships have been hijacked by Somali pirates in the Gulf of Aden, with hundreds of crew members taken hostage this year.
The Citizen has been informed that some bulk oil transporters have cancelled their trips to the region due the heavy presence of pirates.
"The situation is fast becoming critical and we are expecting the worst to come in a short while," an oil marketer with Chevron Tanzania Limited said.
"We have just received communication from the owner of some tankers, which were destined for the region, that they have cancelled their trip due to major security worries," he said on condition of anonymity, and declined to name the vessels that called off their trips.
Chevron, which imports about 70 per cent of Tanzania's petroleum products, recently told The Citizen that fuel supply into Tanzania was fast becoming erratic since most suppliers were refusing to risk their tankers on the Gulf of Aden.
Kenya is already reportedly experiencing oil shortages although officials have not said it was due to piracy. They have said the shortages are mainly due to the ongoing repairs of the Mombassa-Nairobi pipeline.
Oil marketers in Kenya previously rebutted fears of a looming fuel shortage in the country over the increased hijack of cargo ships by Somali pirates in the Indian Ocean.
But the whole region has been affected by the problem as pirates on Somalia waters make it even more dangerous to send tankers to east Africa.
Alternative routes, which can be used to transport bulk oil to the region, have been found to be too expensive.
Once confined to the Gulf of Aden, Somali pirates have of late extended their business to the territorial waters of Tanzania and Kenya.
Recently, pirates targeted a Dutch-operated container ship in the vicinity of Tanzanian waters but their attack was foiled after an early warning saved the vessel, which outran the pirates.
And there were reportedly at least 11 actual and attempted robberies of ships near Tanzania this year alone.
Most oil transporters all over the world usually defy similar circumstances to continue with their businesses due to high demand of oil.
However, there have been indications that a significant number are increasingly shunning areas where there are high incidents of piracy.
Mr N. Faisal, the executive director of Dubai-based ETA Shipping Company that operates several oil tankers on the Gulf of Aden, said many operators were avoiding such waters.
He said some tankers were using the longer but safer Cape of Good Hope route to avoid putting their ships at risk in the Gulf of Aden.
Frontline, the world's largest operator of supertankers, has already said it might divert vessels from Somalia waters after the recent capture of a Saudi owned tanker.
It also made the announcement following an attempted hijacking of its Front Voyager tanker in the same area in September this year.
And the Joint Hull Committee, a group representing ship insurers, has also advised ship owners to avoid troubled waters in the region.
This puts nations on the eastern Africa coast at high risk of getting no supplies, which is likely to trigger a surge in oil prices and threaten the viability of several businesses.
However, the Tanzania Peoples Defence Forces allayed fears of piracy on Tanzanian waters, saying it was well equipped to handle any ship attack.
And Energy and Water Utilities Regulatory Authority director-general Haruna Masebu said no oil importer had proposed to increase insurance charges as a result of high risk.
But a source in the oil transport business said insurance charges had been increased to between $1 and $2 per metric tonne.
He also said due to piracy, most tankers now wait for escorts for up to a week, which was putting extra costs on ship owners who have to pay about $25,000 a day a vessel for medium-range vessels and $30,000 a day for long-range vessels.
Costs vary depending on the route taken and value of the ships' contents, he added.
Ship owners are also paying insurance premiums of up to $1.5 million a vessel for ships sailing up the coast of Somalia and through the Gulf of Aden.
Somalia, caught up in an Islamic insurgency, has not had a functioning government since 1991. It has no navy or coast guard and cannot guard its coastline, which includes the Gulf of Aden, one of the world's busiest and most dangerous shipping lanes.
About 20,000 ships pass annually through the Gulf of Aden. Pirates have attacked more than 60 ships in the Gulf of Aden this year alone.
As much as $30 million in ransom may have been paid this year - money that is helping finance Islamic militants in their war against the government, said a report from Chatham House, a London-based Institute that analyses foreign affairs.
There is an international arrangement under which vessels Nato forces escort vessels in groups of between 15 and 20.
But apparently, the arrangement has not helped much to reduce the surging transport charges on insurance and freight. Besides, the viability of the Nato escort arrangement is yet to be fully tested.
In Tanzania, the effects of piracy on local oil prices have not yet manifested themselves as prices are currently on a downward trend following a slump in global crude oil prices.
Pump prices have fallen from an average of Sh1,900 a litre in July 2008 to the current average of Sh1,500, but any shortage of supply is likely to trigger a fresh rise in prices.