Underutilisation of LADOL Free Zone threatens NCDMB’s local content commitment
Since the completion of the integration work on the Floating Production Storage Offloading (FPSO) vessel and sail-away of the facility to the deep offshore Egina oil field, the entire LADOL free zone is currently underutilised.
This underutilisation not only threatens Nigerian jobs but also threatens local content provision and the commitment of the Nigeria Content Development and Monitoring Board (NCDMB) to increase local content provision from 28 per cent to 70 per cent by 2027.
LADOL zone is virtually empty and devoid of any tangible project development, except for the SHI-MCI fabrication and integration yard – a joint venture set up by Samsung Heavy Industries and LADOL to complete the fabrication and integration of the Egina FPSO top-sides.
But even the presence of Samsung in the yard remains in jeopardy because LADOL cancelled Samsung’s operating licence for the free-zone, leading to protracted legal battle ongoing at the Lagos State High Court.
Samsung worked closely with the NCDMB throughout the project to ensure that it met its local content requirements. SHI-MCI was a sub-contractor to Samsung in its execution of in-country fabrication and integration works on the ship, which was a crucial local content component of the Egina project.
The Egina FPSO is a success story for Nigerian local content delivery.
However, Samsung is not the only international business involved in a legal dispute with LADOL.
Africoat, an American-owned pipe-coating company, has alleged in legal documents that its staff and management have been barred from Africoat’s facility by LADOL and its Free Zone management company – Global Resources Management Free Zone Company (GRMFZC).
Although Africoat’s facility currently lies dormant, the American company is confident that it could be mobilised and become operational within a few weeks if consistently granted access to its facility.
The reasons why LADOL has attempted to block the operations of its largest tenants remains unclear. However, its disputes with foreign businesses have led to questions around the monopolistic control it holds over the free zone.
The protracted legal battles between LADOL and its major tenants may also be the reason for the current underutilisation of the free zone, and possibly other logistics facilities in Nigeria.
After all, foreign businesses do not want to invest money and expertise if the risks of interference to their operations outweigh the potential for returns.
Nigerian Content 10-year Strategic Roadmap
The transformational benefits of Nigerian Oil & Gas Industry Content Development (NOGICD) Act increased local content provision from almost nothing before the 2010 Act to 28 per cent today. At a press-conference earlier this month, the Executive Secretary of NCDMB, Mr. Simbi Wabote set out an ambitious Nigerian Content 10-year Strategic Roadmap to increase Nigerian content performance from 28 per cent to 70 per cent by 2027.
However, the lack of jobs and underutilisation at operational dockyards and logistics businesses such as LADOL threatens Wabote’s unprecedented efforts and Nigeria’s noble aim.
Local and international investors have expressed the fear that NCDMB’s 70 per cent commitment will remain under threat unless LADOL changes its stance and dealing with foreign businesses.
However, Wabote has publicly stated that the board is driving the reconciliation process between LADOL and Samsung and that he is confident for a resolution by this September.
Much is at stake for the NCDMB, including Nigeria’s reputation in the eyes of international investors.
Akpan-Etukudon, an investment advisor, writes from Warri
No comments yet