Investors await NEPZA’s intervention as LADOL, SHI dance naked

By Chris Ndibe

The Free Zone Scheme is taking a different turn with the drama between Lagos Deep Offshore Logistics
(LADOL) and one of its investors, Samsung Heavy Industries (SHI MCI FZE).

They are in the public place, dancing with nakedness.

LADOL, its subsidiary company, Global Resources Free Zone Management Company and SHI have been
in the media after the multi-million dollar fabrication and integration facilities built in the zone.

Several claims and counter claims have been on the air which resulted to filing of cases in courts
on the squabble which NEPZA is keeping mute on.

Counsel
to LADOL, Prof. Oditah, addressed newsmen in Lagos recently saying
LADOL is willing to
settle with Samsung Heavy Industries (SHI) over ownership of the $300
million integration and fabrication yard at the Lagos Free Trade Zone
(FTZ), only on its terms. “We are very happy to work with SHI, not on
its own terms but ours,” he said.

He noted the three aspects to the dispute: “The first is the ownership of SHI MCI FZE, which is
a joint venture between LADOL and Samsung formed to perform the Egina Floating Production Storage and Offloading (FPSO).

The second is the integration and fabrication facility known as SHI MCI FZE sub-lease agreement
with a LADOL affiliate, Global Resources Management Limited (GRML).

The third is SHI MCI’s operating licence as a free zone enterprise within the LADOL free zone.

SHI had already issued a notice of contempt proceedings against LADOL zone management, saying its
operating licence was not renewed and consequently it was unable to access the LADOL free zone.

The publication of the contempt proceedings followed a publication to the effect that the court
had restrained LADOL zone management from violating SHI MCI FZE’s operating licence.

But Oditah said there is no court order restraining the free zone management from doing anything.

The temporary restraining order granted by the court on July 31, 2018 was discharged by the court
on August 14, 2018.

He reiterated that even if there was a restraining order, LADOL zone management had not violated
SHI MCI FZE’s operating licence.

There has been wrangling over the claims that LADOL imposes charges outside on the contract of
the zone thereby making it unattractive to investors.

The Lagos deep offshore logistics (LADOL), which is logistic base, is a zone set up primarily to
provide offshore logistics, engineering and other support services for maritime and oil and gas industry.

The essential feature of free zones is that investors operating in the zones pay token as charges
for zone maintenance. Goods in the zones are treated by law as 
if they are not in Nigeria because 
they don’t pay levies, taxes and other charges that companies in Nigeria
pay. Disputes in the zone are supposed to be handled by the regulatory
agency, in the case, NEPZA.

Samsung is said to have bravely and persistently flouted Nigeria laws and breached contracts signed
with LADOL and its affiliate.

The managing director of LADOL, Ms Amy Jadesimi, alleged that Samsung was sponsoring the publication
of malicious and false information about Nigerian government and the business climate of Nigeria.

Aside persistent failure to comply with rules and regulations of the zone, LADOL’s Boss also accused
Samsung of demanding huge unconscionable variations from their clients, Total, NNPC Joint venture.

LADOL
maintained that Samsung is a contractor and not an investor. It said
that SHI did not satisfy
the condition of regulation 41 and had placed itself above the Nigeria
law and free zone regulation and is not entitled to a renewal of its
operating licence.

On 2nd July 2018 LADOL granted Samsung a two-month licence extension to enable Samsung
complete its work on Egina FPSO. With the sail away of the FPSO, SHI MCI FZE’s facility user licence automatically terminated. 

Stakeholders are asking where is Nigeria Export Processing Zones Authority (NEPZA) in exercising
their responsibilities as stated in section 4D of act 63 of 1992.

In
a case of this magnitude, the business community is looking at NEPZA in
the dispute settlement,
especially in this time when federal government is making every effort
to improve Nigeria’s ranking in the ‘global ease of doing business’.

From the above allegation, it can be concluded that all had not been well between LADOL and SHI
over a long period of time. Why would the arbiter, NEPZA, allow the rancour to linger?

Stakeholders in the free Zone Scheme are looking at NEPZA as not taking its rightful place in arbitration.

The three sides to the case of LADOL and Samsung is not beyond what NEPZA can dissect and bring
up their position to the court of public opinion, except there is more than meets the eye which the public has not been told.

A question that NEPZA needs to answer while looking into the case is the status of LADOL as a Zone,
‘being a country within a country’. Also what led to SHI MCI operating with FZE prefix, as a Contractor?

NEPZA owes it a responsibility to satisfy the investors on how the case is handled.

The case is still not a court case.