Free zone monopoly: LADOL makes case for level playing environment
While receiving the Comptroller General of the Nigeria Customs Services, NCS, retired Col. Hameed Ali, who recently visited the Snake Island Integrated Free Zone (SIIFZ) in April, the company’s chairman Anwar Jarmakani, in his remarks, decried monopolistic practices in Nigeria’s oil & gas logistics and supply service, noting that it costs the government revenue losses in excess of $1.5billion annually.
Jarmakani, who noted that the monopoly had forced the logistics, oil & gas industry and the nation into capitulation, called on the Federal Government to arrest the trend, adding that Nigeria has become the most expensive in the world because of its entrenched monopoly.
“They have driven away investments from Nigeria and have seriously damaged the International reputation of Nigeria,” he said.
The issue of monopoly, which gives undue advantage to a particular company in the sector, has been on the front burner of discourse at the Free Zone fora. Other contentious concerns include, legislative provisions pertaining to taxes, levies, duties and foreign exchange, which border on the viability of the free zones.
But the end seems to be in sight, as the Senate has reiterated its commitment to remove any form of monopoly that can impede the development of private and public Free Zones in Nigeria.
Speaking after inspecting facilities at the Lagos Deep Offshore Logistics (LADOL), members of the Senate Committee on Trade and Investment, led by its chairperson, Fatimat Raji-Rasaki, said the fact-finding tour would enable the Senate gather needful information to aid its review of existing laws.
Raji-Rasaki, who was accompanied by Senators Effiong Nelson and Yusuf Abubakar Yusuf, assured the Senate is committed to ensure it created a conducive environment that would move the economy of the nation forward, by strengthening the laws that govern operation of Free Zones for better out put.
The Committee, according to Senator Effiong Nelson, had already commissioned a team of consultants to work with it in looking at 45 laws that would, among other things look at the issue of monopoly and waivers from an all-inclusive view.
The Chairman of LADOL, Mr. Ladi Jadesimi, who received the team, pleaded with the legislators to ensure a conducive business environment, devoid of policy somersault that could send wrong signal to investors.
Meanwhile, President Muhammadu Buhari had commended the unique contribution of the Lagos Deep offshore Logistics base (LADOL), as one of the strategic investments in the country that currently drives the nation’s economy. Buhari made the statement when he opened proceedings at the sixth African Petroleum Congress and Exhibition (CAPE VI), in Abuja, organised by the African Petroleum Producers Association (APPA).
Represented at the event by Vice President Yemi Osinbajo (SAN), Mr President identified LADOL, which has invested over $600million in private investment, as one of the companies that is currently adding the most value to the Nigerian economy through their ingenious investments. He similarly gave accolades to Samsung Heavy Industries (SHI), which is currently building one of the world’s largest oil platforms at the LADOL base in Tarkwa Bay, Lagos.
Commonly referred to as Egina Floating Production Storage and Offloading (FPSO) platform, the LADOL/SHI project is valued at $3.8billion and is said to be first of its kind to be built in the sub-Saharan Africa.
According to the President, African countries should develop ingenious ways of promoting value addition and investments through sustainable policies in local content.
On the significance of the committee’s visit to the facility, Jadesimi explained that LADOL is a Free Zone under NEPZA, the authority that is empowered by the ministry of Trade and Investment to manage all the Free Zones in the country, apart from one.
“Because the committee that came today is responsible for Free Zones, they are right now embarking on a sensitisation tour so that they can better understand how Free Zones contribute to our economy and therefore, how they can strengthen the laws that need to be strengthened. Like the two of the senators said, they want to ensure that there’s a level playing field and competition through their role as lawmakers.”
While discouraging any form of monopoly in the sector, Jadesimi said, “as far as we are concerned, there’s been so much private investment, an estimated $4billion since the passage of the local content act in 2010. We believe that the monopoly in Nigeria is in the past; the future is one where we are going to have a level playing field, where we are going to have billions of dollars private investments particularly by Nigerians,” she said.
She noted that, for Nigeria and the investors to make the return on project such as LADOL, there’s need for more of such investments in the country.
“Right now, the market in Nigeria is being kept small because jobs cannot be completed here. So, at LADOL, we’ve increased the fabrication capacity in Nigeria maybe by 30 or 40 per cent on one part of the zone. On the other part of the zone, our logistics activities have halved the cost of drilling and production support. So, we’ve brought down cost and we have dramatically increased the capacity to do fabrication, but that’s not enough.”
However, that, according to the MD, is not enough to make Nigeria a hub.
“What we’ve done at LADOL, is trigger a level of interest; we’ve demonstrated a level of Nigerian capability that now needs to be fully realised by more facilities, by more investments and more capacity development. We’ve proven that Nigeria can be the hub for West Africa in maritime and oil & gas. But for us to actually be the hub, we need more investments; we need more activities”