Private navy planned to counter pirate raids
A private navy costing US$70 million (Dh257m) is being set up to escort merchant ships through the pirate-infested Gulf of Aden.
It will comprise a fleet of 18 ships, based in Djibouti, and will offer to convoy merchant vessels along the Internationally Recognised Transit Corridor (IRTC).
This is the world's most dangerous shipping lane, between the Red Sea and the Arabian Sea. The fleet will be operated by the Convoy Escort Programme (CEP), a British company launched by the international shipping insurers Jardine Lloyd Thompson (JLT) and the Lloyds of London underwriters Ascot.
Full funding will be in place by the end of next month, and the CEP hopes the fleet will be operational by December.
"The shipping industry needs to stand up and be counted," said Angus Campbell, the CEP's chief executive and a former director of Overseas Shipholding Group, the world's second-biggest listed oil tanker company. "The time is now, not in four or five years' time."
Piracy in the region is costing the global economy an estimated US$7 billion a year. For the ship owners alone, every vessel sailing through the waters off Somalia is charged additional insurance premiums of between $50,000 and $80,000.
Ships opting to carry their own armed guards can be charged an additional $18,000 and $60,000 per voyage by security companies.
Although the European Union is spending more than €8m (Dh37.94m) a year to maintain a naval force in the waters - EU NavFor - its warships still cannot provide close support to all merchant vessels.
The CEP, however, offers substantial savings to owners as well as protection from pirate attack. The CEP will buy insurance and use that to cover the ships in its convoys, so owners will no longer need to pay premiums, or hire security.
Instead, they will just pay a flat $30,000 to $40,000 per ship in the convoy.
The CEP is planning to buy seven 150-foot fast patrol boats, understood to be ex-Swedish Navy, and has already earmarked 11 former offshore supply vessels for purchase and conversion.
The ships will be equipped with fast semi-inflatables, called ribs, an array of non-lethal counter-measures, and 0.50 calibre heavy machine guns. They will be operated by a crew of five and carry eight armed security personnel each.
The programme will result in convoys of up to four merchant ships closely escorted by one CEP craft along the IRTC, with additional CEP ships in support, covering east and west-bound traffic.
Once in operation, the force will capable of escorting up to 470 ships a month through the Gulf of Aden, equivalent to about 25 per cent of current traffic.
"Our crews will undergo intensive training in how to implement a graduated response. We will be compliant with maritime law and will observe the International Maritime Organisation conventions, such as the Safety of Life at Sea treaty," said Mr Campbell. "We have had detailed discussions with the Royal Navy, who were a little concerned at first, but are now supportive, as are the British government."
Sean Woollerson, a partner in the marine, oil and gas division of JLT, said the description "private navy" did not apply to the CEP fleet.
The aim is to stop the pirates before they reach the merchant ship, and the emphasis is on non-lethal measures. Use of offensive weapons will be a last resort. "This is not a navy," said Mr Woollerson. "What we're trying to be is a deterrent force. Prevention is within our reach."
The plan has been put together during the past three and a half years and now involves 21 companies, including law firms, auditors and risk managers, as well as JLT and Ascot.
The CEP has agreed with the Cyprus Maritime Administration for its vessels to sail under the island's flag.
"Anything that can prevent piracy in this area is to be supported," Pottengal Mukundan, the chief executive of the Commercial Crime Services arm of the International Maritime Bureau, told the British newspaper TheMail on Sunday.
JLT is a leading British insurance business and was first established as a division of Jardine, Matheson and Company, which was founded in Canton [now known as Guangdong], China, in 1832.
Although floated off, Jardine still owns 40 per cent of JLT, which specialises in risk insurance, such as shipping, kidnap and ransom. JLT insures 14 per cent of the global shipping fleet and is a traded on the FTSE 250 Index.
"While this peril has always existed on the high seas, the scale and intensity of piracy in the Gulf of Aden has focused the attention of the shipping and insurance industries on this exposure," said the company's website regarding its involvement in the programme.
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Updated: May 13, 2012 04:00 AM