Nigerians may not notice, but, some agencies of the Federal Government of Nigeria, are stealthily re-writing the essence of doing business, as practiced globally. Often times, government policies have forced international investors to leave the Nigerian shores, but the example recently shown by Ms. Hadiza B. Usman, Managing Director of the Nigeria Ports Authority, is very commendable.
Ms. Hadiza’s Masterstroke
By a letter dated November 14, 2019, entitled OFFER OF LEASE OF LAND AT TARKWA BAY NEAR LIGHTHOUSE, NPA, on behalf of the FGN, gave a direct lease to Samsung Heavy Industries, obviously from a fall-out of an earlier written letter by the international ship makers, asking for ‘’the protection of their investments’’.
So, SHI was given a direct lease of 11.2426 hectares, for 5 years beginning from November 15, 2019 with an instruction, never to sub-lease, ‘’as a way of resolving the matter in the interest of the parties involved and Nigeria as a destination’’, the offer stated.
What was the Misunderstanding About?
In early 2013, Total Upstream and partners, developing [OML] 130 in the Niger Delta region of Nigeria with the NNPC, awarded Samsung Heavy Industries of South Korea, the turnkey contract, which included design, procurement, construction, delivery and trial operation at the cost of about 3.6 billion dollars. As part of the Nigerian content laws, foreign companies engaged in oil and gas businesses must work with a local company to fulfil the requirements.
The demand brought LADOL, a Nigerian company, who had a 15- year lease on TARKWA BAY together with SHI.
With a special purpose vehicle to execute the business, SHI-MCI, a JV was born. The terms of the JV are what gave rise to a nagging problem that almost sent out wrong signals to international investors in Nigeria, until NPA under Ms. Usman intervened.
What were the Contentions?
LADOL got TARKWA BAY Island at N41m for 15 years. That would not pose a problem, but the Nigerian company sub-leased 11.2426 hectares at 45m dollars for 5 years to SHI, to erect the fabrication yard where the completion jobs on the EGINA FPSO built in South Korea will be sited.
SHI insisted it brought in 300m dollars from the parent company in South Korea to boost the SHI-MCI JV between it and LADOL, and that, LADOL never invested any money in the JV, up to the delivery of the EGINA FPSO project.
Ugly Scenario
In 2018, as the EGINA FPSO arrived from South Korea for the final journey to the Niger Delta, LADOL locked out SHI from accessing the TARKWA BAY facility, threatening to jeopardize and upset the timelines earlier set by the stakeholders involved.
This writer was at the reception event held on the behalf of Professor Yemi Osinbajo, Vice President of Nigeria, then Acting President.
The August visitor was to inspect the massive EGINA FPSO moored to the quay of TARKWA BAY. All stakeholders were present at the event, except representatives of the ship builders, SHI. Media colleagues asked the question about the absence of the major contractor, but LADOL, host of the event refused to answer. Intriguingly, the visitor, while making his opening speech, warned LADOL, not to walk the route of the case at Onne, where INTEL then was seen to be domineering over competitors a.k.a. monopoly.
What’s LADOL Angst?
LADOL had accused SHI of ‘’gross negligence and total disregard to Nigerian Content laws and other regulatory requirements’’.
But, a Nigerian executive of SHI laughed off the accusation, maintaining that, if the company had broken even one Nigerian Content law, NCDMB, charged with that responsibility, would have penalised them, knowing how stern NCDMB are in protecting the local content laws. The source added that, LADOL had requested for 1% FOB payment on EGINA FPSO to its sister company, GRML, a free-zone management company, rather than the TSA account of the FGN. SHI as expected, requested for an explanation, but LADOL insisted on the payment.
In order not to frustrate a fresh injection of over 200,000 barrels of crude oil into the Nigerian economy, expected from the deployment of the EGINA FPSO, TOTAL had to step in and mediated.
Legal Squabbles
SHI, scared of losing its multi-million dollar investments, and LADOL insisting that they have a case, both approached the courts of law, stakeholders brought both businesses to negotiating and peace making tables, yet, nothing positive was reached, until, Ms. Hadiza Usman, appointed by the President on July 11, 2016 as the CEO of NPA, wielded the big stick, as the owners of TARKWA BAY, and restored SHI to the ownership of their facility.
Last Line
Government functionaries should emulate the pain-staking path that Ms. Hadiza Usman followed, in order to encourage foreign direct investments into Nigeria.
Source: THISDAY
