The management of Lagos Deep Offshore Logistics (LADOL) has denied claims that its hostile policies at the Lagos Free Zone were frustrating investors doing business in the area.
Amy Jadesinmi, LADOL’s managing director, told journalists in Lagos, Tuesday, that reports that the operator introduced charges alien to the contract in the free zone thereby making it unattractive to investors were untrue.
“All charges are mandated by the federal government policy which on subsequent issues within a transparent frame work, no company operating in the LADOL free zone have been charged with charges not mandated by the government.”
According to media reports, LADOL had allegedly imposed a one per cent charge on the $3.3 billion Egina Floating Production Storage Offloading (FPSO) by Samsung Heavy Industries which the company claimed as not in the original contract documents.
The FPSO is being built for the 200,000 barrels per day Egina oil field operated by Total in partnership with CNOOC, Petrobras, and Sapetro.
LADOL is the Lagos free-zone operator and logistics provider for Egina while Samsung handles the fabrication and integration.
Ms Jadesinmi said it was wrong to calculate the value of the one per cent management fee in the contract when the project had not yet left the free zone.
“This is not a unilateral action by us, and to say otherwise is completely false and highly mischievous since we have been transparent at all times,” she said.
“The enterprises operating within the LADOL free zone and the related parties are aware of the charges and the rules and regulations in detail. The charges are known and required to maintain the zones and the free zone scheme.
“There is nothing that was not known at the start of the project, within the approved tariff, you have what is called the one per cent management fee as the statutory charge.
“The one per cent management fee is one per cent of the cost of the product when it leaves the free zone. Obviously you can’t calculate that till the end of the project so what is known is that there will be that calculation and that management fee is clearly stated on the tariff schedule and it’s not unique to this project and is not unique to Samsung.”
Ms Jadesinmi also said parties involved in the contract had been in “close discussions” over the management fee issue.
“The management fee was known, government had communicated to both Samsung and Total that the management fee needs to be paid and this is known and is being discussed and there is no inkling of truth to the idea that this was done without any of the stakeholders knowing.
“The whole process has been done in close consultation with all the stakeholders and discussions are still ongoing with government.
“No matter the pressure put on us, we are not going to allow government revenue to be lost on one hand.
“And on the other hand, as managers of the free zone we want it to be attractive so we would do everything we can to make sure that if you come to the free zone, whether you are a foreign or local company, you have ease of doing business because that is important.
“We have been investing in this since 2001 so it is very important to us that people find it a very attractive environment to do business so we have the dual role of making it an attractive place and also ensure that people follow the rules.”
Egina project ‘a huge success’
The Egina oil field, located 150 kilometres off the coast of Nigeria, is the third deep offshore development of Total in Nigeria.
It is situated at a water depth of up to 1,750 metres.
Ms Jadesinmi described the Egina FPSO as a huge success.
“What we at LADOL are focusing on is that from this point on, local content continue to increase and most of that increase will take place outside of LADOL.
“In other words, going forward, most of the fabrication and engineering works done will be outside of LADOL which is how it happens in other countries.
“Those pieces that are fabricated outside of LADOL will then be brought to LADOL to be integrated into the larger haul. What that means in essence is that for our business model to work, we need other zones and other fabricators in the country to increase their capacity and quality.
“Stories such as the false one being bandied around threatens future investment, it threatens our future as Nigeria to industrialise and the fact that the stories are baseless is even more disheartening.
“The EGINA project in terms of its local content has demonstrated to the entire world that the most complex industrial process in the world can be done in Nigeria and nothing should be allowed to overshadow that. Because that is the critical thing that will enable us move forward and do more in the future and that is what matters.”