The Nigerian Ports Authority (NPA) has cancelled the agreement it signed with the Lagos Deep Offshore Logistics Base (LADOL) for concealing the actual amount it sublet part of its land to a third party. OLUWAKEMI DAUDA, who spoke to experts, writes that they urged President Muhammadu Buhari to direct the anti-graft agencies to investigate the actual amount collected by LADOL from Messrs SHI-MCI Fze (representing Samsung Heavy Industries Nigeria) and the amount paid to NPA by the firm.
The actual amount the Lagos Deep Offshore Logistics Base (LADOL) collected from Messrs SHI-MCI Fze (representing Samsung Heavy Industries Nigeria) and how the Nigerian Ports Authority (NPA) and other regulatory agencies would carry out their mandates without any hindrance from the service providers were the focus of experts and practitioners who spoke with The Nation at the weekend, over the revocation of the agreement NPA signed with LADOL.
LADOL Free Zone
LADOL free zone was leased to it by the Nigerian Ports Authority (NPA). It is a significant free zone in western Africa as it provides logistics, engineering and other support services to member companies of the free zone region.
LADOL free zone is short for Lagos Deep Offshore Logistic Base and is on an island in the Port of Apapa, Lagos.
Although it is deemed as a free zone, it is a privately owned logistics and engineering facility designed to provide support services such as logistics and supply chain to companies dealing in offshore oil and gas exploration and production in West Africa.
The ultimate aim of the formation of such a free zone is to provide an opportunity for the locals to increase their knowledge and help in the growth of the economy of the country.
Experts and stakeholders urged President Muhammadu Buhari and the Federal Executive Council (FEC) to support the efforts of NPA and other regulatory agencies in the maritime industry in sanitising the sector to boost the economy.
A senior official of the Federal Ministry of Transportation (FMoT), who spoke under the condition of anonymity underscored the importance of robust engagement between the regulators and the service providers to generate wealth and create value for the advancement of the economy and the welfare of the citizens
He said the Management of NPA revoked the agreement it signed with the LADOL, as part of efforts to to create new business models that will engineer the maritime market.
But a senior official of LADOL who does not want his name in print condemns NPA’s decision: He said the decision by NPA to revoke their agreement was illegal and wrong. He also described it as “unconstitutional and should be null and void.”
But the FMoT official described the LADOL Free Zone as holding vast untapped potential for growth and wealth creation if properly harnessed by the Federal Government through the NPA and other regulatory agencies.
“The Management of the Nigerian Ports Authority (NPA) revoked the land lease agreement signed with the Lagos Deep Offshore Logistics Base (LADOL) because LADOL shortchanged the Federal Government and also violated the terms of the land lease at Tarkwa Bay, near Light House Beach in Lagos.”
NPA, the senior official said, revoked the lease via a letter dated November 14, 2019 and addressed to the Managing Director of Messrs Global Resources Management Limited (GRML), the parent company of LADOL.
The letter, the FMoT official said, was signed by NPA’s General Manager in charge of Land and Asset Administration, Mr. Yusuf Ahmed and reminded LADOL that “Clause 4.5 (a) of the agreement prohibits the lessee (LADOL) from subletting any part of the premises without written approval of the Lessor (NPA) and stipulates that any contravention ‘shall result in the automatic cancellation of this lease.”
“But investigation conducted by the ministry through the NPA has shown that LADOL executed a sublease dated September 13, 2013 with Messrs SHI-MCI Fze (representing Samsung Heavy Industries Nigeria) without the required approval or recourse to the Lessor (NPA).
The November 14, 2019 and addressed by the NPA and sent  to the Managing Director of Messrs Global Resources Management Limited (GRML), the parent company of LADOL reads in part:
“Your actions in that regard led to the current impasse with resultant negative attention within and outside the country.
Consequently, the authority has reviewed the events and decided to exercise its rights under the lease and hereby revokes it with immediate effect.”
In justifying the action taken by the NPA, the he FNoT official alleged that LADOL also shortchanged the federal government by subleasing 11, 246 hectares of land out of the total 121 hectares leased to it at outrageous amount of money without recourse to NPA.
“Our investigation revealed that LADOL collected a whopping $45 million (N16.2billion) from Samsung Heavy Industries Nigeria Limited (SHIN) for the 11.246 hectares of land for which it paid only $524,105 (N37.73 million) to NPA.
“In a letter dated November 22, 2013, GRML applied to NPA to sublease the 11.246 hectares to MCI-SHI FZE for the “purpose of expanding facilities at LADOL Offshore Support Facility in readiness to handle the integration of the Egina FPSO onshore in Nigeria for the Nigerian National Petroleum Corporation (NNPC) and Total Upstream Nigeria.
“While the NPA obliged in March 12, 2014, the agency suspected foul play when GRML failed to furnish it with the sublease agreement between it and SHIN throughout the five-year tenor of the sublease, so as to conceal the actual amount it collected from SHIN.
“During a period of five years, LADOL through GRML, charged SHIN $9 million as rent per year for the portion of land which it was paying $104,821.95 annually to the NPA.
“Apart from profiting at the expense of the federal government by collecting outrageous amount from SHIN and paying far less to the NPA, documents also showed that LADOL, through GRML had also entered into another sublease agreement with an American company called Africoat Nigeria Limited, without any recourse to the NPA contrary to the provision of the lease agreement it had with NPA.
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“It was based on these infractions that made NPA to terminate the agreement with LADOL before leasing the 11.24 hectares to SHIN in a fresh agreement of $219, 230,700.00 per year to save SHIN’s fabrication and integration yard for which it borrowed $270 million to build.
“After allocating the 11.24 hectares to SHIN, NPA also granted a fresh lease under new terms to LADOL for 5.7574 hectares of developed land and 69,2874 hectares of undeveloped land for five years with effect from November 14, last year,” he said.
LADOL, the FMoT official said, was required to pay N112,269,300 per annum for the developed land and N57,177,000 per annum for the undeveloped land, in addition to VAT of N8,472,315.
Provision of logistical, engineering and other support services:
The Vice President, Association of Nigerian Licensed Customs Agents (ANLCA) Dr Kayode Farinto said the main purpose of the LADOL Free Zone is the provision of logistical, engineering and other support services for deep water offshore oil and gas exploration.
“After the concession of our ports to the terminal operators, NPA remains the landlord and has its core responsibility to perform. Part of it is the monitoring of the agreement it has with various service providers and it has mandatory obligation to ensure compliance.
If those that are saddled with the responsibility of making our ports attractive and competitive are violating the agreement they had with with the federal government through the NPA, President Muhammadu Buhari needs to direct the anti-graft agencies to carry out their statutory responsibility and in this fresh case between the NPA and LADOL, the President needs to do so.
“As a designated Free Zone, LADOL offers its clients numerous benefits, including:
Exemptions from federal, state and local government taxes. Therefore, if the allegation of concealment of the amount collected by the firm from SHIN is established, the federal government must impose the necessary sanctions to serve as deterrent to others,” Farinto said.
Also, a maritime lawyer and a university don Dr Dipo Alaka gave kudos to the Ministry of Transpirtation and NPA for carrying out the preliminary investigation before the anti-graft agencies would be asked to do their duty.
“LADOL Free Zone was authorised by the Nigerian Export and Process Zones Authority and established pursuant to the Nigeria Export Processing Zones Act (Act No.63 1992).
The Free Zone scheme, Alaka said,, envisions flying the nation’s economy away from oil, fast-tracking her industrialisation, stimulating export-oriented business enterprises and manufacturing, strengthening strategic national economic policies, streamlining administrative approval processes as well as providing a one-stop-shop service for businesses both within and outside the country.
An expert in the oil and gas industry, Mr Folagbade Adeyemo said LADOL zone is one of the largest port in Nigeria and has been constructed to help the companies dealing in offshore logistics.
He urged the company to protect its investment by resolving the crisis it has with the NPA amicably.
“No matter how powerful you may be, you cannot win the government when it comes to the violation of a subsisting agreement.
We want to believe that LADOL violated the agreement inadvertently and it must look for a way to resolve it  amicably, because the anti-graft agencies may be asked to investigate the amount collected by LADOL from SHIN and the amount it paid to NPA,” Adeyemo said.