THE fact that Foreign Direct Investment (FDI) in Nigeria, Africa’s top oil producer, dropped by 43 per cent to $2 billion last year could be a mandate for Usman’s insistence that stakeholders must comply to standards.
“FDI is long term and investors need to make decisions today for the future, so they will not commit funds to a country that is highly unpredictable and where policies are inconsistent,” said investment expert and Managing Director of Planet Capital, Chidi Agbapu.
This brings to the fore the contractual dispute between Samsung Heavy Industry Nigeria (SHIN), the Lagos Deep Offshore Logistics Base (LADOL) and the intervention by the Nigerian Ports Authority (NPA) to restore investor confidence. Apart from her intervention in the SHIN, LADOL imbroglio, the Managing Director of NPA, Hadiza Bala-Usman, took bold steps regarding the Calabar Channel dredging contract scam, INTELS Pilotage contract, and OMS Limited’s SAA fees amongst others. Not many heads of government agencies can muster the courage to do the right thing even at the risk of losing their jobs. Without any doubt, her intervention to protect SHI, who invested a whopping $270 million to build a fabrication yard, just to deliver the much talked about $16 billion Egina FPSO project, will go a long way to assure foreign investors that Nigeria adheres to the rule of law. Bala-Usman has always frowned at companies and contractors taking undue advantage of the federal government and foreigners. On assumption of office, she made it clear that investments by foreigners will be protected and the government must realise the needed revenue from those investments. Also, following an outcry by some players in the industry, chiefly among them, LADOL, over what they called monopoly by INTELS, her promise was that the sector will be fully liberalised and that was what happened.
The following are some of the landmark achievements by the NPA under Bala-Usman: Cancellation of INTELS’s monopoly on Oil and Gas Cargo, ensured that INTELS is fully compliant to Treasury Single Account (TSA) on Service Boat revenue collection, terminating the JV with Calabar Channel Management and Niger Global Ltd for non-compliance with due process and requesting refund of $15 million payment made to the company for lack of evidence of dredging claimed to have been done.
Others are “Confrontation with DAPMA over insisting that payment on harbour dues for vessels importing PMS are made in-line with guideline for rates of products sourced from West African Coast and those from outside the coast, a revenue of N13 billion was made in 2019, following the directive of full compliance, taking over management and board control of Agura Hotel through restoring NPA’s majority shareholding.
“Termination of BUA Terminal over non-adherence to development plan on reconstructing quays, which were to have been done 90 days following the concession in 2006, but was not done nine years later in 2016 at which point the concession was cancelled, cancelation of the Secure Anchorage Area. An anchorage managed by a private company providing security at a cost to vessels calling at the Lagos ports.”
Leading by example Not too long ago, the NPA sanctioned LADOL for violating the terms of the land lease at Tarkwa Bay, near Light House Beach in Lagos.
This, we learnt, was part of the efforts to boost accountability and ensure transparency, as well as boost the confidence of local and foreign investors in Nigeria’s operating environment.
LADOL, it was learnt, profited at the expense of the federal government by sub-leasing 11.2426 hectares of land out of the total 121 hectares leased to it at the outrageous amount of money without recourse to NPA.
The firm was alleged to have collected $45 million (N16.2 billion) from Samsung Heavy Industries Nigeria Limited (SHIN) for the 11.2426 hectares of land for which it paid only $524,105 (N37.73 million) to NPA.
Investigations revealed that whereas the NPA charged GRML a rent of $104,821.95 per year for five years on 11.2426 hectares for the head lessee, GRML charged the sub-lessee (SHI) $9 million per year for five years for the same portion of land, collecting a total of $45million.
LADOL, the NPA revealed, did not invest its own money in the fabrication yard that delivered Egina. “Contrary to what they made the public believe, LADOL used part of the $45 million paid to it as sub-lessee fee by Samsung, for which it paid the federal government a paltry $504,000 for five years to purchase 30 percent equity in the fabrication yard.
The documents showed that GRML was on January 1, 2003, initially granted a 21-year lease over 80 hectares of land at Tarkwa Bay by the NPA. Another lease of an adjoining 34 hectares was subsequently granted; bringing the lease area to 114 hectares. It further gathered that the total lease area is now 121 hectares.
In a letter dated November 22, 2013, GRML applied to NPA to sublease 11.246 hectares out of the 121 hectares (nine per cent) 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.
The letter also stated that expanding the facility would generate 55,000 jobs within and outside LADOL, save billions of dollars from being spent outside Nigeria and make the country the West Africa hub for oil and gas engineering.
In consideration of the huge investment that was to be made by SHIN, GRML, in the letter pleaded with the NPA to consider and approve the sub-lease expeditiously so that SHIN would not cancel the project and use its existing facility in Goje, South Korea for the entire Egina project.
The NPA obliged in a letter dated March 12, 2014, and conditional approval for the sub-lease was conveyed.Impeccable sources at NPA, said that agency suspected foul play when GRML failed to furnish it with the sub-lease agreement between it and SHIN throughout the tenor of the sub-lease, so as to conceal the actual amount it collected from SHIN.
Sources said that LADOL eventually furnished NPA with the sub-lease agreement only in August 2019, following a highly toned letter from the NPA, dated June 18, 2019.
It was gathered that another sub-lease agreement between the parties, which was dated September 13, 2013, was terminated because NPA’s approval was not sought as provided in the head lease agreement.
Apart from allegedly 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 sub-lease agreement with an American company called Africoat Nigeria Limited, without any recourse to the NPA contrary to the provision of the head lessee agreement with NPA.
A letter to the managing director of NPA by the General Manager, Land and Assets Administration, dated November 14, 2019, notified the NPA boss that there was evidence to show that GRML granted at least a sub-lease to SHI-MCI in September 13, 2013 without any recourse whatsoever to the NPA.
The letter, also stated that there was no justification whatsoever for GRML to charge the sub-lessee an astronomical $9 million per year over the sub-leased area for which it paid a rent of only $104,821.95 per year to the NPA, thus making huge profit at the expense of the federal government.
NPA’s action, it was gathered, was to save SHIN’s fabrication and integration yard for which it borrowed $270 million to build and restore investor confidence that had been badly shaken by the attempt to push it out of the facility it built after investing such a huge amount on the said facility.
Many have hailed the NPA for its bold decision, describing it as reassuring at a time investors were skipping the country for other destinations on the African continent.
Based on the alleged infractions committed by LADOL, the letter advised the NPA boss to terminate LADOL’s land lease at Tarkwa Bay, near Light House Beach, Lagos for violating the terms of the agreement.
It was learnt that following this recommendation, the NPA revoked the land lease agreement with GRML in a letter dated November 14, 2019 and granted it a fresh lease under new terms, which excludes the 11.2426 hectares that constitute the premises of the fabrication and integration yard.
Also, the NPA in a bid to restore investor confidence in the country leased the 11.2426 hectares that constitute the premises of the fabrication and integration yard to SHIN at $219,700.00 per year.
Calabar Channel scam revelation
On assumption of office, Bala-Usman discovered that dredging of waterways to ensure smooth flow of shipping traffic through the many water channels into the Nigerian seaports became a drain pipe for a few corrupt officials of the authority and its contractors. A case in point involves the dredging of three water channels for which the NPA spent a whopping $3 billion (N1.09 trillion) between 2006 and 2011, for questionable jobs allegedly done and invoiced.
Following the revelation, courts in Switzerland convicted a Swiss company over a $20 million dredging bribery scam, which named three top former officials of the NPA as being involved in the deal.
In addition, there was the payment of $13 million for the dredging of the Calabar Channel, which some petitioners alleged were questionable.
The contract for the maintenance of the Calabar Channel was eventually terminated by the NPA, following rifts over the questionable $13 million invoice and another $21 million invoice, which the Calabar Channels Management (CCM) had lodged for further payment
In the Swiss courts, the Swiss company was sentenced to a fine of one million Swiss Francs and asked to refund 36 million Swiss Francs being illegal profit after it was indicted for allegedly making illicit payments to a former managing director of NPA; former acting managing director and former executive director as well as a former executive assistant to ex-President Goodluck Jonathan’s Special Adviser on Technical Matters.
According to reports, former top officials of NPA, between 2006 and 2011 allegedly collectively received $2.6 million in kickbacks.
A status document on the contract presented by Hadiza Bala Usman showed that after failing to dredge the channel, Global Engineering was seeking payment of about $22 million as balance for the contract. The total contract sum was about N26 billion.
The NPA said the Joint Venture agreement with Global Engineering on the dredging of the Calabar Channel was wrong adding, “The consultant clearly advised against the establishment of a channel management company for the Calabar Navigation Channel at that time. This was because the volume of ship traffic was low and did not justify a joint venture agreement, which is normally funded from ship dues.”
The documents revealed that NPA had advertised the dredging for bidding, but the process was abandoned, while the contract worth over N26 billion was awarded to Niger Global Engineering Company through the joint venture agreement.
OMS’s SAA fees cancelled
Who will ever believe that a private company can carve out a portion of Nigeria’s territorial waters and name it, ‘Secure Anchorage Area’ and charge foreign shipping companies huge fees in dollars for protection? That and some other anomaly was the order of the day at the NPA before Bala-Usman came on board. That is now history as the NPA last year notified the Nigerian Navy of its decision to dismantle the Secure Anchorage Area, operated on behalf of the Navy by a private company, OMSL Limited.
The NPA said it was concerned by threat to national security and the cost of doing business at the country’s seaport.
A Secure Anchorage Area is an area outside the Lagos port that the Nigerian Navy, with a private company, has defined as a secure place where vessels can anchor safely from the threat of pirate attack.
Our investigation reveals that vessels are charged $2,500 for the first day at the anchorage and $1,500 for subsequent days.
It was also revealed that it takes between 28 and 30 days for a vessel to exit the anchorage. According to vessel traffic numbers obtained from the NPA, 1,666 vessels called at the Lagos ports alone in a quarter and a minimum of 55 per cent of vessels that call at the Lagos port stays at the SAA.
This means that OMSL Limited, owned by a prominent politician and member of the ruling party, APC, on behalf of the Nigerian Navy, collects, averagely, $133.28 million (N47.98 billion) annually. It has been collecting this fee since 2014.
Worried by this, the Minister of Transportation, Mr. Hon. Chibuike Amaechi, directed the NPA to write a letter to the Chief of Naval Staff to request that the Navy stopped the operation of the facility. The NPA, in the letter, stated that the revenue generated from the operation at a charge of $1,500 per vessel per day from 2014 to date was neither remitted to it nor the federal government.
NPA argued that the patrol boat, NNS Dorina P101, as mother vessel, and the interceptor vessels, NNS Agede P258 and NNS Torie P259, were all purchased by it for the Nigerian Navy to patrol the anchorage and not to be designated for use at a facility that has no relationship with it.
End of monopoly If there is any company that stakeholders believe was untouchable, that company was INTELS Nigeria Limited. All that changed when the reform-minded Bala-Usman came on board. However, after about two years of bickering, the NPA late last year, terminated its boats pilotage monitoring and supervision agreement with INTELS Nigeria Limited.
In a letter dated March 29, 2019, addressed to the MD of INTELS, NPA said the decision to revoke the contract was taken in line with Article 8 (C) of its agreement with INTELS, dated February 11, 2011.
The letter signed by NPA’s assistant general manager, Legal Services, read in part, “We refer to the agreement dated 11th February, 2011 and 24th August, 2018 between the NPA and INTELS Nigeria Limited for the monitoring and supervision of oil industry related activities in the compulsory pilotage districts of the authority (service boat operator).
In a letter dated March 27, 2019, addressed to the NPA MD, HadizaBala-Usman, NPA’s Executive Director, Finance and Administration, Mohammed Bello-Koko, had accused INTELS of non-compliance with the presidential directive and circular on implementation of Treasury Single Account (TSA) and Article 4.1 of the executed supplemental agreement by refusing to remit the sum of $145, 849,309.33 being outstanding service boat revenue generated from November 1, 2017 to October 31, 2018.
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