Mauritius Seeks Quick Backdoor Deal With Japan For $34 Million Over Wakashio Oil Spill

The Japanese media were reporting on 1 September that the Mauritian Government and Japan were in secret talks for quick $34 million deal for the cleanup of the Wakashio oil spill.

The funds would reportedly be used for the purchase of 100 new fishing vessels.

According to reports in Japan’s largest news agency, Kyodo news, “under the proposed scheme, the Indian Ocean island nation has estimated the construction of 100 fishing boats will require 1.2 billion rupees ($30m), with 9.7 million rupees ($245,000) needed to provide training for 475 fishermen and 60 skippers unaccustomed to fishing in rough seas.

The country is also requesting 134 million rupees ($3m) to renovate the Albion Fisheries Research Center, an aging facility built in the 1980s with the assistance of Japan, and to provide training to staff there.”  This amounts to $34 million, or 3.6 billion Japanese Yen. 

There was no mention of any environmental costs to rehabilitate any of the unique coral, mangrove, or low lying ebony forest biodiversity in the area, rehabilitation of any of the rare and endemic species being cared for on a series of protected coral atolls such as Ile aux Aigrettes that had been impacted, or the impact to the pristine marine environment that had resulted in almost 50 dolphins, whales and many other sea creatures that had died or been impacted by the massive bunker fuel oil spill and subsequent salvage operation. 

Wakashio operated by powerful the Mitsui OSK shipping line

The Wakashio was owned by Japan-based Nagashiki Shipping, but operated by Mitsui O.S.K. Lines (MOL), the world’s second largest shipping company that earned $12 billion in revenue last year. Mitsui O.S.K. is one of Japan’s most powerful corporations.

In a statement to investors on 10 August, Mitsui O.S.K. said it did not expect “an earnings impact from the incident to be big enough to warrant timely disclosure” to investors. There has been no comment on any earnings impact since this statement, when the vessel split in two, spilling more oil into the coral lagoon, and was then deliberately sunk. 

The total amount of oil in the lagoon has still not been disclosed almost a month since the vessel first started leaking oil on 6 August.

100 new fishing vessels from Japan and Sri Lanka

Japan TV News Network was also reporting on the $30m (3.2 billion Yen) new vessel request by the Mauritian Government on 1 September, saying “it means that about 100 inshore fishing boats used off the coral reefs and beaches will be procured from Japan and Sri Lanka, and will be used for the purchase costs.”

Commentators in the Japanese media were surprised at how low this figure was, with one saying “The Mauritius government is hoping to get a quick compensation and use it to rebuild the domestic economy and fisheries, but the suggested amount of 3.2 billion yen ($30 million), which was cheaper than I expected, and was probably to speed up the negotiations. It is seen as a compromise.”

There had been no official statement in Mauritius about any formal approach to conduct the Natural Resources Damage Assessment, approach to the ship insurance company or formal approach to Japan for these cleanup costs, or purchase of 100 new fishing vessels.

This comes amid strong citizen concerns for the environment with over 100,000 demonstrators protesting on the streets of Port Louis at the weekend against the Mauritian Government, and several international NGOs calling for transparent and independent marine science to be conducted in Mauritius, amid a secretive cleanup operation that resulted in the deaths of 50 whales and dolphins in the past week.

Japan on the defensive

The secret talks between Mauritius and Japan are taking place in the face of strong criticism of Japan’s response by international environmental NGOs.

"The Japanese government seems to be on the defensive, perhaps due to fears of damages claims," said Kanna Mitsuta, Executive Director of leading conservation organization, Friends of the Earth Japan, in an interview with Kyodo News on 19 August.

"[Japan] may not be legally responsible for the disaster as the freighter was Panamanian-flagged, but it is effectively a Japanese one as it was operated and owned by Japanese shipping companies," she said. "The government should get more involved as if it was its own problem."

This comes as Japan’s longest serving Prime Minister, Shinzo Abe, resigned on Saturday, citing poor health.

Human tragedy in Mauritius

In addition to the direct impact of the oil spill, Mauritius is still reeling last night from the human tragedy linked to the Wakashio oil spill cleanup operation.

One of Mauritius Port Authority’s four tug boats who had been involved in the Wakashio oil cleanup and salvage operation, the Sir Gaetan Duval tug boat sunk in the evening of Monday 31 August while returning back from the Wakashio. It was reported that at the time of the accident at 7.30pm, waves were over 5 meters high. An oil barge it was towing collided with the tugboat, flooding the engine room with water and leading to the sinking of the vessel within 90 minutes.

Three members of the crew have now been confirmed dead, one is missing and four had been rescued with non-life threatening injuries, in one of Mauritius’ worst maritime accidents that sparked an extensive air and sea search and rescue operation throughout the night and next day.

Third Japanese team sent to Mauritius

At the same time, it was also revealed on 1^st September that Japan would be sending a third relief team to Mauritius on Wednesday, focusing more on the environmental rehabilitation side according to Japanese media reports.

“The six-member team will help conduct detailed investigations of mangroves, coral reefs, wildlife and seawater quality to assess the impact of the oil leak,” the Environment Ministry said.

“The team includes Toyohiko Miyagi, an emeritus professor at Tohoku Gakuin University, Shuichi Fujiwara, technical counselor at the environment conservation consultancy firm Idea Consultants Inc., and officials from the Japan International Cooperation Agency,” the Ministry said.

The first relief team, consisting of officials from the Foreign Ministry, the Japan Coast Guard, and JICA was dispatched from August 10 to August 23 to engage in oil removal activities.

Transparency demanded on oil cleanup operation

The second team, sent on August 19, and is currently engaging in environmental assistance, the Japanese Foreign Ministry said.

It was reported that this team brought an oil absorbent sponge called sorbents.   There has not yet been a public statement by the Government of Mauritius about the various techniques that would be deployed to clean up the oil spill, amid fears of chemical dispersants being used.

In response to questions from Forbes on 1 September, only one of the international oil spill advisers on the ground in Mauritius, Polyeco, said that they would not be using chemical dispersants in the Mauritius cleanup operation. There have been no comment from the other international advisers on the ground, ITOPF, Le Floch Depollution of the G.

A spokesperson for Polyeco aid that, “No chemical dispersants were used by Polyeco during the oil spill response operation at sea, neither at the lagoon area nor at open sea. Furthermore, Polyeco will not use any chemical dispersants during the shoreline clean-up operations of the affected areas.”

These are the first public statements on the intention and direction of the oil spill cleanup operation, following heavy criticism that for the past 38 days, the containment, salvage and cleanup operations had been mired in secrecy, as Mauritians on the ground demanded transparency and basic facts to be made available.

First steps to understand full and complex economic impact of a major oil spill

The Government of Mauritius announced on 1 September, that local fishermen and tour boat operators would receive a one off grant of $250 for lost earnings in August due to the oil spill, in addition to a daily fee of $20 to assist with the beach cleanup operations.

Fishing restrictions were also extended through to Trou d’Eau Douce (near Ile aux Cerfs) on Monday 14 miles North of the crash site, an area first identified on 11 August as potentially containing risk of the toxic oil spill. This is part of a widening area of restricted zones in Mauritius that extended from Le Bouchon in the South through to Trou d’Eau Douce, a stretch of over 20 miles of coastline. There has not been any transparency on the science being used to form these opinions or set such boundaries.

The Mauritian Prime Minister had also revealed on Monday, that the vessel owner and SMIT Salvage Pte Ltd signed the Lloyds Standard Form of Salvage Agreement (LOF) on 26 July 2020.  Under this Salvage Agreement, the Salvage Team was responsible to salve the vessel and take the vessel to a place of safety.  The Prime Minister’s Office pointed out that the Salvage Team had the environmental obligation to use their best endeavors to prevent or minimize damage to the environment while performing the salvage services, in line with section 147 of Mauritius’ Merchant Shipping Act.

International economists of Mauritian origin had been prominently featured in local media, describing the moral obligation to protect Mauritius’ oceans, the legal and financial implications of doing so, and even suggesting strategic roadmaps for how countries should prepare themselves when they face a major oil spill.

"The negotiation for compensation effectively started the moment the ship rammed into the reef but there is no quick fix. This will be a long process and Mauritius needs to take a multi-pronged approach that includes (i) robust science and economics to document the damage in a systematic manner, (ii) top international legal advice to ensure all legal avenues are pursued, including reef damage, environmental damage, disposal of the wreck as leverage, and (iii) an international influencing effort to ensure that the ship owners and Japan face their moral and ethical obligations towards Mauritius and the world,” said Ashwin Roy, a Mauritian who has been in international private equity and Sovereign Wealth Fund investments for over 20 years.  

He went on to say "There is a critical need for maximum compensation to rehabilitate the environmental, historical-cultural, social and economic damage caused. Compensation can also help to set up a holistic and sustainable approach to monitoring and management of Mauritius’s massive Exclusive Economic Zone going forward. The issues raised by this catastrophe are not just the harm to the area impacted by the collision, but also the several days that the vessel had travelled through Mauritian waters on a wrong course and why was a part of the wreck dumped at sea in environmentally sensitive Mauritian waters.”'