Nigeria condemns insurance of Nigerian oil and gas risks abroad

Nov 12, 2008 01:00 AM

Substantial part of the risks emanating from the Nigerian oil and gas industry are still being underwritten by foreign insurance companies, Minister of Finance, Shamsuddeen Usman has lamented.
He said this anomaly has continued unabated in spite of the fact that the nation's insurance companies were successfully recapitalized in line with the ongoing reforms in the economy.

Usman, who spoke during the Champion Insurance Day lecture in Lagos, stated that the local insurance industry is being confronted with all manner of hurdles preventing it from fully participating in oil and gas insurance. Represented by Fola, Daniel, the Commissioner for Insurance, he said the insurance industry should strive to benefit from the local content policy of the Federal Government in the energy sector to ensure that the aims of the policy are not defeated.
While the government has set a local content target of 45 % in 2006 and 70 % in 2010, the minister said even though the country has recorded appreciable progress in other areas, the performance of the insurance industry in this initiative has been dismal.

The overall aim of the local content policy of the Federal Government in the energy sector is to enable Nigerians develop and maximize the potentials for local companies participating in the business of the sector. He therefore charged operators in the local insurance industry to rise up to the occasion by building capacity to underwrite the energy risks, while also undertaking a major review of their operations.
As a growing economy with vision 2020 in focus, he said the nation's insurance industry should not only be seen to be participating optimally in the domestic energy sector, but should also be at the forefront of the development of an African energy market. The local content development programme, he stressed, remains a major policy thrust for the government, noting that if it is properly implemented, it will enable Nigerian firms build capacity, grow the economy and create jobs.

Usman, whoalso pointed out that the government believes that the NNPC should be in the forefront of those supporting and encouraging the attainment of the local content target for the industry, noted that the responsibility of the insurance industry is to demonstrate to the government and multinational oil companies that it has the capacity and workable strategies for achieving and sustaining the set targets.
Also, it will assure the stakeholders that claim obligations will be met in a timely manner.

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