The Federal High Court sitting in Lagos has declared that drilling operations fall within the definitions of “Coastal Trade” and “Cabotage” under the Coastal and Inland Shipping (Cabotage) Act and confirmed NIMASA’s right to collect fees therefrom.

Director-General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Dakuku Peterside, who commended the judgement in the case involving Seadrill Mobile Unit Nigeria Limited and the Federal Ministry of Transportation (FMOT), said the judgement was “yet another landmark attempt by the judiciary to set the record straight and boost implementation of our Cabotage law, while generating opportunities for jobs.

NIMASA was joined as a necessary party in the suit originally instituted by Seadrill Mobile Unit Nigeria Limited against the FMOT.

The suit instituted by Seadrill Mobile Unit Nigeria Limited was to determine whether drilling operations fell within the definitions of “Coastal Trade” and “Cabotage” under the Coastal and Inland Shipping (Cabotage) Act, and whether on a proper interpretation of the Cabotage Act, drilling operations fell within the definition of “vessels” under the Act.

On the first issue, the court, presided by Justice Babs Keuwumi, ruled that drilling operations fell within the ambit of exploration, exploitation, or transportation of the mineral or non-living natural resources of Nigeria, whether in or under Nigerian waters, as provided under the definition of coastal trade in the Cabotage Act.

Similarly, the court held that the combined reading of the Admiralty Jurisdiction Act, Interpretation Act, and Cabotage Act meant that drilling rigs fell under the definition of vessel under the Cabotage Act.

Having determined the two questions in the affirmative, the court granted NIMASA leave to collect all outstanding payment of the 2% Cabotage surcharge from owners of drilling rigs and associated platforms.

The implication of the judgement is that oil rigs operating on Nigerian waters are subject to the provisions of the Cabotage Act.

Reacting to the judgement, Dakuku said it marked the opening of an important opportunity for jobs, incomes, and economic growth. He appealed to persons engaged in inland trade to pay their Cabotage fees and reaffirmed the Agency’s commitment to the enthronement of global best practices in the Nigerian maritime sector.

Dakuku said, “The Cabotage Act is very clear and it has again been interpreted and confirmed by the court. We expect that with this judgement, all parties will obey the court order and do the needful. It is all for the growth of the Nigerian maritime sector and the country’s economy at large.

“On our part, as a responsible Agency, we will continue to sensitise stakeholders, because every craft that is engaged in Coastal and Inland Trade must pay the Cabotage fees.”

The DG reiterated the determination of the Agency to end the Cabotage Waiver regime in the next five years. He said measures had been put in place by the Agency, in collaboration with stakeholders in the sector, to achieve a seamless waiver cessation.Section 2(d) of the Cabotage Act provides that Coastal Trade or Cabotage means the engaging by vessel in any marine transportation activity of a commercial nature in Nigerian waters and the carriage of any goods or substances whether or not commercial nature within the waters of Nigeria.