Some concerned stakeholders in Nigeria’s maritime sector have bemoaned the inability of Lagos Deep Offshore Logistics (LADOL) to harness effectively the potential of the Lagos free zone for the benefit of the country.
They spoke against the backdrop of pledges by it’s Managing Director, Dr. Amy Jadesimi to ensure that the firm exceeded international standards as operator of LADOL free zone.
They alleged that rather than work assiduously with prospective investors to unlock the potential of the free zone, the company was sadly developing a reputation for hostility towards international businesses.
Akpan Peters, a content analyst, who spoke on behalf of the concerned stakeholders in Warri, Delta State, said Nigeria has continued to lose multi-billion dollar potential investments in the zone due to the operator’s unending threats to foreign investors.
Said Peters: “At the last count, the zone was characterized by no fewer than eight litigation in Nigeria and abroad, including arbitration in the United Kingdom. This has scared potential investors and stalled ongoing investments by foreign investors operating in the zone to make Nigeria a hub of oil and gas business in sub-Saharan Africa, while the Nigerian government has made all efforts to resolve the various issues.
“The implication is that while the zone managers have continued to lay claim to large expanse of underdeveloped land, there is a consensus of opinion among operators that they have demonstrated lack of ability to attract foreign investors to utilise the opportunities at the zone.”
Peters also spoke about the wider implication being that the Nigerian Ports Authority (NPA), which is the land owner, and indeed, the Federal Government has continued to lose revenues due to the inability of operators to attract the requisite investments.
He alleged that the Nigerian economy, which is the worst-affected, has also continued to lose opportunities to generate employment and grow the country’s Gross Domestic Product (GDP).
He said despite the intervention of the various government agencies, the operators reputation of non-tolerance for competition has continued to pit it against foreign investors, forcing a US company previously located in the zone to exit Nigeria.
He alleged the zone managers deploy lockouts, cancellation of operating licence, excessive charges and frivolous litigation as tools to frustrate investors out of the zone.
“Indeed, for more than 20 years of operating the free zone, only about six hectares of the underdeveloped land was able to host tangible investments out of 76 hectares, while the rest remains largely empty land. Other investments for which they have claimed to have spent millions of dollars are only visible on the pages of newspapers, and not at the free zone,” said Peters.
It was however learnt that regulators are probing the zone managers’ indigenous status claim following the allegation that the two foreign companies that allegedly own the 84 per cent stake in LADOL – Sable Offshore Investment Limited, and Alsba Ventures, were allegedly registered in the British Virgin Island.
This is against the held view that all over the world the British Virgin Island is considered a tax haven where companies do not pay tax while it earned revenue of over $100million through exclusive services in the Free zone during the development of the Egina project.
“The zone managers once claimed that the Nigerian Content Development and Monitoring Board (NCDMB) supported it with $25million from the Nigerian Content Fund, while the Central Bank of Nigeria (CBN) supported it with N6.09billion facility. It was not clear what the loans were meant for but it is very clear is that the opportunities and benefits LADOL have enjoyed are clearly meant for Nigerian companies,” Peters said.
Without doubt, many Local entities struggle to raise such loans to stimulate the Nigerian economy, which means LADOL was also privileged to be among the companies that used indigenous status to access the federal government’s Nigerian Content Intervention Fund.
Some stakeholders have complained that the company has refused to use the privileges it has enjoyed under the Nigerian Content Act to help create job opportunities for Nigerians by partnering foreign companies in a win-win situation.
Also, very recently, the zone managers went to town with the news that the federal government has granted them a fresh 25-year lease, a development, which oil and gas operators and maritime experts described as “rewarding failures.”
Said Peters: “The free zone managers, rather than build partnerships and alliances to attract investors, were said to have focused on signing memorandum of understanding (MoUs) with portfolio investors, while engaging reputable and credible investors in unnecessary fights and frivolous litigation.”
Apart from frustrating investors, the zone managers were also accused by the NPA of violating the terms of their lease and shortchanging the country to the tune of N16 billion, an allegation they however vehemently denied.
The federal government agencies were also said to be investigating the legality of the jetty, following an allegation that it was not dully licensed.
However, the alleged violation of the terms of the lease did not go unnoticed as the NPA wielded the big stick in 2019 by revoking its lease as widely reported in the media.
NPA, however, granted a fresh lease under new terms to the zone managers for 5.7574 hectares of developed land and 69, 2874 hectares of undeveloped land.
This fueled a dispute, which is currently a subject of litigation.
No investor will put its money in an environment characterized by unending crisis, litigation and negative publicity, which the zone has come to represent.
Even the few investors that kept faith with Nigeria were said to be facing excessive charges and other acts of hostility by the free zone managers
While other free zones nationwide are championing the struggle to woo investors, the operating environment at the zone is characterised by open hostility against investors.
To end this unending crisis, stakeholders in Nigeria’s maritime industry had reportedly stressed the need for the federal government to liberalise the LADOL Free Zone in Lagos by licensing many free zone operators to take charge of the zone so as to break the chain of monopoly that had hindered the development of the around 114.5 hectares of land in the zone.
They urged the federal government to split the zone into many free zones and license other managers to utilise the investment opportunities abundant at the zone.
Some of the stakeholders argued that the purpose of setting up the free zones (FZs) by the federal government was to attract foreign direct investment (FDI), generate employment, encourage transfer of technical skills to Nigerians and boost the country’s economy.
They lamented that rather than attract investments, the LADOL free zone has been enmeshed in controversies in recent years, adding that such controversies scare reputable investors.
They cited what they described as multiple litigation between the investors and the zone managers and NPA’s allegation as some of the challenges hindering investments at the zone.
They have also argued that the around 114.5 hectares of land is too big to be managed by the zone management company – Global Resource Management Free Zone Company (GRMFZC).
According to the analysts, the zone operators’ continued stranglehold on 114.5 hectares of land at Tarkwa Bay in Lagos has hampered the federal government’s efforts to attract investors to the Free Zone.
They noted that for over 20 years that LADOL has been managing the zone, a large chunk of the land has remained undeveloped because of the operators’ apparent lack of capacity to form alliances with local and foreign investors to boost developments at the free zone.
They also argued that the overlapping and conflicting roles of LADOL have resulted in exorbitant charges that scared away investors, thus defeating the government’s objective of making the FZ an investment hub.
A Warri-based oil and gas analyst, Mr. Nelson Okon had once pointed out that as the agent of regulator (NPA), LADOL also exercises governmental and regulatory powers over all free zone enterprises within the zone.
“It is evident that this monopolistic tendency has frustrated the free zone operators’ crucial role of attracting investors as they now focused on pursuing their pecuniary benefits at the detriment of the foreign and local investors in the zone and the Nigerian economy,” Okon said.