Oman has outlined a plan for shipping companies to pay service fees to transit the Strait of Hormuz, pointing to the straits of Malacca and Singapore as a possible blueprint.
The straits of Malacca and Singapore are vital shipping lanes in Southeast Asia running between Malaysia, Singapore and the Indonesian island of Sumatra.
Users of the straits, including governments, institutions and companies, made voluntary financial contributions toward a fund established by Japan’s nonprofit Nippon Foundation in 2008. The payments help cover the cost of ensuring safe transits, such as outlays for maintaining buoys and lighthouses, as well as protection of the marine environment.
By July 2023, the fund had received contributions totaling only around $23 million, according to Singapore’s port authority, about a third of which came from the Nippon Foundation.
“I don’t know of anyone, beyond Japanese interests, that pay such a fee,” Peter Sand, chief analyst at freight intelligence firm Xeneta, told CNN. He said the same framework could not easily be applied to the Strait of Hormuz, “not least because there are no obvious navigational issues to solve.”
The Hormuz revenue would also be for purposes unrelated to the waterway itself, including rebuilding Iran, he noted.
Remember: Transit through international waterways, including the straits of Hormuz and Malacca, are protected by United Nations conventions. These waterways are distinct from the manmade Panama and Suez canals, where relevant authorities collect tolls to maintain infrastructure and provide other services.
Michelle Brouhard, head of policy at shipping intelligence firm Kpler, said there are other examples of natural straits that charge navigation and security fees, such as the Strait of Magellan in Chile. “I find it unlikely that Iran would agree to a voluntary fee unless they can arrange commitments from user states, like China,” she told CNN.