How LADOL’s Infraction against NPA Endangers Foreign Investments
As President Muhammadu Buhari shuttles around the world to woo foreign investments in his avowed determination to create employment opportunities and curb crimes, the media was awash last week with shocking reports on how Lagos Deep Offshore Logistics (LADOL) violated the land lease agreement signed with the Nigerian Ports Authority (NPA) by shortchanging the federal government and engaging in other acts capable of scaring foreign investors.
In an article entitled: “NPA Revokes LADOL’s Lease Agreement over Infraction,” published in the January 9, edition of THISDAY Newspaper, the paper chronicled how LADOL paid the NPA a paltry sum of $524,105 (N37.73million) as rent for 11, 2426 hectares of land in LADOL free zone and subleased the same portion to Samsung Heavy Industries Nigeria (SHIN) at a whopping sum of $45 million (N16.2billion).
Also entitled: “Why NPA Transferred LADOL’s Land to Samsung in Fresh Lease Agreement,” the February 13 edition of BusinessDay highlighted how LADOL requested NPA to approve the sublease to enable SHIN bring in over $270 million to build Africa’s first ever FPSO fabrication and integration yard in the free zone.
The Punch Newspaper of February 13, 2020, in a story entitled: “NPA, LADOL Tackle Each Other over Land Revocation,” reported that citing Clause 4.5 (a) of its agreement with LADOL, which stipulated that any contravention “shall result in the automatic cancellation of this lease,” NPA revoked the agreement with LADOL.
Vanguard, Tribune, The Cable and others also published this shocking revelation on how LADOL frustrated SHIN and an American company, Africoat by charging exorbitant rent thereby defeating the federal government’s desire of using the free zones to attract investments.
Indeed, NPA gave LADOL 121 hectares of land near the Light House Beach, Tarkwa Bay in Lagos to attract investors and not to sublease without recourse to the landlord, which is the NPA.
Investors operating in the zone are supposed to enjoy waivers and tax exemption offered to enterprises in free zones.
By offering these waivers and incentives, the federal government expects a return which will be in the form of industrialisation of the zones to create employment opportunities and boost the Nigerian economy.
LADOL, as the Lagos free zone manager or caretaker is supposed to partner other foreign companies to create jobs for Nigerians.
But apart from collecting outrageous rent, LADOL, which can only provide water and electricity to the free zone investors, renders these services at very exorbitant costs to scare away investors.
According to media reports, LADOL had in a letter dated November 22, 2013, applied to NPA to sublease 11.246 hectares out of its 121 hectares (nine per cent) to SHIN for the Korean giant to build the yard that would generate 55,000 jobs for Nigerians, 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, LADOL in the letter pleaded with the NPA to consider and approve the sublease expeditiously so that SHIN would not cancel the project and use its existing facility in Goje, South Korea for the entire oil and gas project.
The NPA was said to have obliged in a letter dated March 12, 2014, and conditional approval for the sublease was conveyed.
But to show that LADOL was more interested in profiteering than attracting investments, it failed to furnish NPA with the sublease agreement between it and SHIN throughout the tenor of the sublease, so as to conceal the actual amount it collected from SHIN.
LADOL, in order to impose the $45 million fee on SHIN, was alleged to have exerted political pressure backed by NNPC officials in 2013 to secure 30 per cent stake in SHI-MCI without paying a cent.
It also collected millions of dollars in exorbitant charges from Africoat and made the American company to lose business opportunities worth also several millions of dollars.
Today, despite its years of propaganda, LADOL has frustrated investors willing to create thousands of employment opportunities in the zone while its own employees are not more than 50.
Adeniyi, an investment advisor writes from Lagos
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