Seaports monopoly: The imminent economic crisis

A cascade of directives in the dying days of former president, Dr Goodluck Jonathan’s administration
created eerie feelings in many a department of the country’s life.

The maritime industry is one of the casualties of the former president’s agility at dusk. One of such alleged directives, gleefully carried out by the Nigerian Ports Authority (NPA) ordered LADOL Integrated Free Logistics Zone Enterprise to relocate its $500 million Egina FPSO currently going on in Apapa, Lagos, South-West Nigeria, to Bayelsa State in South-South Nigeria or to any convenient facility in the area.

Now, the only convenient facility that LADOL could possibly relocate its massive Egina Project to, is the Onne/Ikpokiri Free Zone which is exclusively controlled by INTELS.

What this directive connotes then is that LADOL, an INTELS’ competitor, should run its business from INTELS’ facility, under INTELS’ control.

The grave implication of this ominous directive is a tragic economic prognosis for LADOL. It will in lucid language put a tinge of distress for LADOL and its Egina FPSO facility projected to employ about 50,000 Nigerians in the next five years; a massive project hailed worldwide as a magnificent milestone in Nigeria’s Local Content drive. Therefore, any fracture or even strain of the economic hope held aglow by LADOL, the poster child of local content and other Free Zones, which will be the inevitable grim consequence of this monopoly inspired directive, will spell failure for Nigerian content Law, a revolutionary edict that has attracted over $5 billion investments into Nigeria’s petroleum industry since its signing in 2010, with a projection of another $10 Billion between 2015 and 2016.

But let us pause and look at the second arm of the directive. Here, the NPA says that all oil and gas cargoes must be handled at the designated terminals at Onne, Warri and Calabar Ports. Again these three ports are controlled exclusively by INTELS.

Before coming to the economic implications of this branch of the directive, let’s ask a vital question. And it is this, “what does NPA mean by ‘oil and gas cargo’?” This question becomes very critical because the term ‘oil and gas cargo’ was neither mentioned in the contract between the sea ports and terminal operators on the one hand and NPA and Bureau of Public Enterprises (BPE) on the other nor was it in the 2004 Oil and Gas Export Free Zone Act (OGEFZA). Indeed Section 1(1) of OGEFZA states, “The President hereby designates the Onne/Ikpokiri area of Rivers state as an Export Free Zone. (in this Act referred to as “The Export Free Zone”. There was no mention of ‘oil and gas’ anywhere.

This monopoly coated move to hand over oil and gas cargo to one organization was totally rejected by Jonathan’s predecessors, former Presidents, Olusegun Obasanjo and significantly, Umaru Musa Yar’dua whose family are shareholders in INTELS. And these rejections were based on the clear dire economic consequences a monopoly would have on the ports and the nation generally. Despite the patriotic stance taken by Obasanjo, late Yar’dua and the House of Representatives in 2012, the oil and gas cargo issue sizzled again in 2013. Precisely on April 22, 2013, Ports and Terminal Operators Nigeria Limited (PTOL) sent a petition to the House Committee on Marine Transport to the effect that vessels carrying cargoes to its terminal were being diverted to Onne terminal controlled by INTELS Nigeria Limited because such cargoes were wrongly and strangely tagged ‘oil and gas cargoes’, causing PTOL to lose millions of dollars and naira.

The House Committee held a Public Hearing of the Stakeholders on the matter on April 30, 2013 where INTELS, NPA and PTOL, all made presentations. At the end, the House Committee on Marine Transport upheld the House Resolution of 2012 – That operators should be free to choose ports of discharge of their cargoes within designated ports of Onne, Calabar, Port Harcourt and Warri”. By their pronouncement, they asked that the status quo prevailed while INTELS’ attempt to justify the ‘oil and gas cargo’ theory fell flat on its face.