High Charges Worry Investors in Oil And Gas Free Zones
Investors have expressed concerns over what they describe as the ‘high charges’ in Nigeria’s oil and gas free zones, noting that the development endangers government’s foreign direct investment (FDI) drive into the sector as well as hampers the growth of the industry.
This comes in the wake of the move to improve Nigeria’s competitiveness in places where business could be done with less ease.
The World Bank had recently ranked the nation 145th of the 190 countries in the Ease of Doing Business index for 2018, indicating a slim growth rate of 24 points from the 169th position it got in 2017 ranking and the 170th placing in 2016.
It was gathered that rising charges as well as other ‘unfriendly polices of the managements of some of the private free zones’ were threatening the country’s stance in the Ease of Doing Business map.
The Guardian further learnt that some investors who staked millions of dollars in some of these free zones were currently displeased with developments in the sub-sector.
For instance, industry sources say the integration of the $3.3 billion Egina Floating Production Storage Offloading (FPSO) by Samsung Heavy Industries (SHI) of Korea at the LADOL free zone in Lagos was being threatened by the charge hike reportedly imposed on the Korean firm by the management of the zone.
LADOL was alleged to have imposed a one per cent charge amounting to $33 million on SHI, which they claimed, was not in the original contract documents.
“The FPSO is being constructed for the 200,000 barrels per day Egina oilfield currently developed for the French oil major, Total. SHI and LADOL formed SHI-MCI FZE as a joint venture to integrate the project with the Korean firm having 70 per cent stake while the offshore logistics provider has 30 per cent stake,” a source privy to the contract said.
Besides, it was also gathered that Shell had built a warehouse at LADOL base but, regrettably, no activity is happening at the facility owing to “the harsh operating environment in the zone.”
The source added: “The partnership between LADOL and SHI is falling apart because LADOL wants the Koreans to pay one per cent Free on Board (FOB) charge which was not in the original agreement.
The contract papers captured that the one per cent should be paid to the Nigerian Content Development and Monitoring Board (NCDMB) in accordance with the Nigerian Oil and Gas Industry Development Content Act (NOGIDC) Act of 2010. The provision is not covered by any law.”
Contacted, the Managing Director of LADOL, Dr. Amy Jadesimi, who described the allegation as false, however declined to comment further.
But a company source, who pleaded anonymity, said all the levies were statutory, dismissing the ignorance allegedly being feigned in certain quarters.
The source added: “We should be weary of the antics of some foreign companies operating in Nigeria.
When you are doing business in Nigeria and benefiting from multi-billion dollar (projects), you should not seek to avoid statutory charges or engage in the quest for special waivers.
To do this amounts to flouting the laws of the land which LADOL would not be part of.”
Source: The Guardian