Maputo — Andrea Carollo, chief executive officer of the Nigerian logistics group Orlean Invest, boasts that the port of Onne in the south-east of the country is the largest dedicated oil and gas free zone in the world.
The port is owned by the Nigerian Ports Authority, but is leased to Orlean Invest for a period of up to 50 years. Onne has two terminals: the Federal Ocean Terminal has just over 2,000 metres of jetty and an access channel up to 11 metres deep. The Federal Lighter Terminal is much larger, with almost 4,000 metres of jetty and another 5,711 metres of quays under construction. Between them the two terminals have over five million square metres of quay, warehouse and office space.
The total area of the Free Zone is 35 square kilometres. Orlean leases space here to oil and gas operators, and prides itself on offering all the logistics that the hydrocarbon industry needs. Carollo says that Orlean Invest has over 150 clients.
The Free Zone is designed to attract foreign investors with generous tax breaks. In Onne companies pay no corporate taxes, no value added tax, no withholding taxes, and no import or export duties. They can repatriate 100 per cent of their capital and profits, and can employ as many expatriates as they like (although members of the Orlean group are quick to point out that they maximize employment of Nigerians, and hire only a small number of expatriates).
Carollo makes the standard business defence of tax exemptions: he claims that without them the foreign companies would not invest.
This argument is suspect - the major attraction is not the tax breaks, but the fact that there are vast oil and gas reserves in the Niger Delta. Would companies really abandon the Delta, if they had to pay more to the Nigerian government?
Carollo says that Onne does generate revenue for the Nigerian government. He estimates that revenue at 7.7 billion US dollars between 2006 and 2013. The forecast for the 2014-2020 period is 9.6 billion dollars.
Orlean Invest has now expanded into Angola, in partnership with the Angolan oil company, Sonangol, to establish the Angolan logistics company SONILS, which is setting up the same type of logistics base at Luanda as exists at Onne.
The newest expansion is into Mozambique. In partnership with Mozambique's National Hydrocarbon Company (ENH), Orlean Invest has set up ENHILS, which will run a logistics base at Pemba, capital of the northern province of Cabo Delgado. This will provide integrated facilities for companies that wish to take advantage of the enormous discoveries of natural gas in the Rovuma Basin.
Initially Pemba will be small scale compared with the operations either in Nigeria or Angola. Nigeria is still sinking 200 wells a year, and Angola 150: the figure for Mozambique is not expected to exceed 20 a year in the near future. The first phase of the Pemba logistics base will have 300 metres of quay, and ENH is optimistic that construction can start early next year.
But the Niger Delta is not just the shiny modernity of the Onne Free Zone. It also contains some serious warnings for Mozambique. The most obvious is security. “The Niger Delta is a very volatile area”, Carollo says delicately.
The Mozambican delegation visiting Onne last week was whisked from Port Harcourt airport to Onne under an armed police escort. No foreigner is allowed to leave the Free Zone unescorted. We are told that is written into insurance policies.
We are shown the security control centre. Dozens of screens on the walls make it possible to follow what is happening, in real time, anywhere in the port area, and detect any people who should not be there.
There has been unrest in the Niger Delta for the past two decades, and the people living there protest that they see little benefit from the region's oil wealth. Repression in the Delta hit international headlines in 1995, when the writer Ken Sarowiwa and eight other activists were executed on trumped-up charges.
Since then, Nigeria has returned to democracy, but armed insurgents have remained active in the Delta often targeting oil companies and their pipelines.
Orlean Invest says it inherited the problems in the Delta “from a period when the government was absent”, and claims that the Nigerian government is now trying to improve on its dismal track record of the past, and is taking legal measures to ensure that local people will benefit from the hydrocarbons under their feet. Orlean officials tell the Mozambican delegation “what the government is doing now is what it should have done 50 years ago”.
Company spokespersons claim that their own relations with local communities have always been a priority, and that Orlean Invest gives a high priority to training young Nigerians, in order “to correct the mistakes of the past”.
“The environment and the communities must be taken into account”, they insist, adding that Mozambique does not have to go down the same road, but can take measures now to ensure that communities are fully involved and benefit from hydrocarbon wealth.
One of the ironies of Nigeria is that sub-Saharan Africa's major oil producer is short of energy. There are frequent fuel shortages. The last one was in March, blamed on delays in the approval of import permits. A country which produces around two million barrels of crude oil a day imports its petrol.
Nigerian refineries exist but are working at less than 20 per cent of capacity. A refinery in one of the poorest countries on earth, Niger, is exporting petrol to parts of northern Nigeria.
Even worse are Nigeria's chronic power cuts. The power generating infrastructure is old and unreliable, as are the transmission lines.
So anyone who can afford it invests in generators. It is large diesel-fired generators, and not the national electricity grid, which keep Onne port running. That may be about to change. Gas fired power stations are the obvious way forward, and Orlean Invest has plans to run at least its own operations from gas.
Nigeria's fuel and electricity headaches have no single cause, but concentrating almost exclusively on exports, and ignoring the domestic market certainly contributes. This is a blunder that Mozambique could certainly learn from.