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OGFZA and NEPZA bills: Matters arising

By Kayode Adebiyi   |   27 February 2017   |   3:40 am


The ongoing efforts by the National Assembly (NASS) to amend the principal Acts that established both the Oil & Gas Free Zones Authority (OGFZA) and the Nigerian Export Processing Authority (NEPZA) have expectedly attracted a lot of public debate. Sadly though, a good deal of the commentary is based on fantasy, deliberate distortion, half-truths and downright falsehood.

There is therefore a crying need to separate facts and fiction in the matters of the NEPZA and OGFZA amendment bills as well as the broader issue of the existence of the two agencies of government, OGFZA and NEPZA, with responsibilities for regulating oil-related and non-oil-related free zones.

As pointed out earlier, the trajectory and tenor of public discourse on the issue, particularly since public hearings were held on the amendment bills, have pointed to so much ignorance and deliberate mischief. We think the facts should be outlined.


Need for amendment
The two laws, NEPZA Act of 1992 and OGFZA Act of 1996 are both creations of the NASS. Both laws have been in existence for 25 and 21 years respectively, during which they have been found to be overdue for review in order to get rid of areas of imperfections with regard to ambiguity, overlap, and inadequacy in the face of new realities not anticipated at the time the laws were drafted. These are some of the reasons these two laws are put up for amendment.

There is nothing peculiar that these two laws stand in need of review. No law is perfect. That is why national constitutions that are centuries old are still subjected to amendments to bring them in line with new realities.

Besides, the NASS ought to be commended, not vilified, for proposing the amendments to strengthen the two agencies, OGFZA and NEPZA, for better performance in the overall interest of the nation. We see the move by the NASS to amend the laws as a step in good faith that is consistent with government policy of diversification and drive for foreign direct investment, additional windows for foreign exchange and job creation. That is why it is hard to understand why an investor like Nigerdock would go to court to stop the NASS from exercising its powers of lawmaking under the Constitution. Whose interest are Nigerdock and their ilk serving? No investor of any hue should be allowed to dictate to Nigeria on the regulation of businesses within its borders.

Naysayers
What is remarkable about the public debate, as indicated earlier, is the paucity of argument intended to improve the legislative process on the way to the desired amendment. Rather, what is noticed is blind opposition to the OGFZA bill, with the most unfortunate argument that amending the OGFZA law would create a monopoly, drive away foreign investors, undo NEPZA (the zero sum game argument, that your gain is my loss). There is also a related but equally puerile argument that the OGFZA law should not be amended “because OGFZA resorted to self-help by adding ‘s’ to the ‘zone’ in its name to read Oil and Gas Free Zones Authority, and that OGFZA was created to regulate the Onne Oil and Gas Free Zone only.

It is important to address these contrarian positions. The change from singular ‘zone’ to the plural ‘zones’ in OGFZA’s name was a gazetted proclamation of government. In any case, taking the law in its entirety, it becomes clear that the obsession with its title is obviously indulging in air splitting, given the provision of section 5(2) of the Act which states: “The Authority shall have the power to take over and perform such other functions being hitherto performed by the Nigeria Export Processing Zones Authority as they relate to the export of oil and gas from any of the Nigeria Export Processing Zones established by the Nigeria Export Processing Zone Authority Act.” It is clear from section 5(2) of the Act that the intention of the drafters of the law was not to limit OGFZA to one free zone.

There is a problem too in NEPZA’s name. In the NEPZA Act, the ‘zone’ in the title of the agency is in the singular, yet NEPZA regulates more than one free zone. Besides, NEPZA is not involved in regulating export business, yet it is supposed to be a regulator of an export processing zone.

The untidiness in the letter of the two laws is one of the imperfections that the amendments intend to correct. So it is mischievous to oppose such a move; and much more so when the opposition is only to the OGFZA bill, without any reasonable ground.

The position of those opposed to the amendment of the OGFZA Act and the very existence of the agency is actually absurd. They insist that OGFZA and what it does are not tenable because its principal Act has flaws.

Then the NASS takes steps to amend the law and remove the flaws, but they oppose that too. So what do they want? In whose interest are they posturing?

The monopoly argument is actually an egregious insult to the intelligence of Nigerians. Those who push it have not explained how amendment that strengthens a regulatory agency would create a monopoly.

As said earlier, both OGFZA and NEPZA are creations of the law. None is superior to the other, yet the NEPZA amendment bill seeks to abolish OGFZA. It is curious that the naysayers are not raising the red flag there. Why would one agency of government seek to abolish another, especially when there is a Government White Paper that affirms the autonomy of OGFZA against the recommendation of the Orasanye Commission to merge OGFZA and NEPZA?

The argument that allowing the amendment of the OGFZA Act would turn away foreign investors who are negotiating entry into the Nigerian market through NEPZA or who have been licensed by NEPZA is at best sophomoric. The structures of government change all the time without impairing existing contractual obligations or those under negotiation. The argument about threat to FDI is akin to saying that contracts that were entered into by the former ministry of mines and power have been invalidated because the ministry has been reconfigured and is now under the Federal Ministry of Power, Works and Housing. Some freshman thesis!

Without doubt, there were legitimate concerns with some provisions in the bill. Specifying in the bill the terminals where cargoes could be loaded and discharged and the listing of oil and gas free zones in the Act were wrong-headed. Such provisions, if allowed, could lead to restriction of trade and run counter to the policy on the ease of doing business. With credit to OGFZA, its memo to the NASS, presented by its managing director, Mr Umana Okon Umana, at the public hearing on the bill on 26 January 2017, is that the issue of the location of terminals and number of free zones should be left open to be dealt with administratively. The sponsor of the bill, Sen. Abubakar Gobir, agreed. So no one is in support of those restrictive provisions and they cannot become part of the new law.

Opposition to the OGFZA bill also worries that it is not clear what constitutes oil and gas activity. In response to that question of ambiguity, a technical committee is already at work to address the matter.

Specificity
OGFZA was created to address specific needs of the oil and gas sector, which an omnibus agency was ill-suited to tackle. Those who want OGFZA scrapped elect to live in denial of this reality. All over the world special vehicles are designed to address specific problems. That is why there are specialised free zones in the UAE, Ireland, China, etc. And as Dr Chris Asoluka, former chair of OGFZA board said in a recent TV interview, even in Nigeria the EFCC had to be created to replace the E-Branch of the Nigeria Police to meet the specific need of fighting financial and economic crimes which the Police Force as a whole wasn’t well adapted enough to tackle.


Unfounded fear
If anything, the imperative for a specialised agency to address the specific needs of the oil sector is truly, truly urgent now that NEPZA is going to be saddled with the management of six Special Economic Zones soon to be established as provided for in the 2017 budget. That is a huge responsibility, and NEPZA would be wise to gird its loins for the herculean task ahead, instead of dissipating energy on unfounded fears.

Indeed, the fear that if OGFZA is allowed to exercise its mandate according to law investors in other free zones would be subjected to the dictates of Intels, which is just another investor, is fallacious. Intels, like other free zone businesses, is subject to the regulatory control of OGFZA, not otherwise.

Thus all things considered, the campaign of disinformation and calumny by paid agents of vested interests against the NASS for doing its work, and against OGFZA for seeking to achieve its mandate within the law is misplaced and unpatriotic. It should stop. NASS should not be intimidated. Agents of inertia that have paralysed the Calabar and Kano Free Zones should not be allowed to halt the nation’s match to economic prosperity.

Adebiyi is a Lagos-based public commentator


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