9 February 2017

Nigeria: Free Trade Zones Operators Kick As Senate Moves to Amend OGEFZA Act

Licensed operators of Free Trade Zones in the country are currently kicking against what they perceived as an attempt by the Senate to pass a bill inimical to their business interest.

They said the main target was to stifle trade, scuttle competition and confer dual roles of both operator and regulator on Intels/Orlean Invest, a rival licensee.

THISDAY investigation revealed that the issue is the current "Bill for an act to amend the Oil and Gas Free Trade Zone Authority (OGEFZA) Act Cap 05 laws of the Federal Republic of Nigeria with a view to providing for designation and establishment of oil and gas free zones and sub-zones in Nigeria and for related matters" sponsored by Senator Ibrahim Gobir.

According to the Supplement to Official Gazette Extraordinary No. 12, Vol. 63, March 29, 1996-Part A obtained by THISDAY, the current Act being amended by the Senate was enacted by the late General Sani Abacha's regime as the the Oil and Gas Export Free Zone Decree 8 of 1996 with the following provisions: 1.-(1) The Head of State, Commander-in-Chief of the Designation and Armed Forces hereby, designates the Onne/lkpokiri area of Rivers State establishment of the state as an export free zone, (in this Decree referred to as 'the Oil and Gas Export Export Free Zone'. Free Zone: (2) The Export Free Zone established pursuant to subsection (1) of this section, shall be operated and managed by the Oil and Gas Export Free Zone Authority established by section 2 of this Decree.

In the new amendment, the Senate is seeking to expand the current operational zone status of OGEFZA from its Onne/Ikpokiri geographical area of Rivers State to usurp those under the jurisdiction of another sister agency - Nigerian Export Processing Zones Authority (NEPZA).

According to the sponsors of the Bill, which is also dubbed 'The Intels bill' in the Senate, because it is believed to have been authored by Intels chief executives, "The Oil and Gas Export Free Zones Act Cap 05 LFN 20 II Amendment of Cap 05 LrN 2011 (referred to as "the Principal Act") is amended as set out in this Act. Section I of the Principal Act is amended by substituting a new Amendment of Section 1 section I as follows: "Designation and Establishment of the Oil and Gas free Zones and Sub-zones."

It is further seeking that "(I) The President, on the recommendation of the Authority, may by order: (a) designate any area within the Federal Republic of Nigeria as an Oil and Gas Free Zone and Sub-Zones (in this Act referred to as Free Zones I I and Sub-Zones); (b) designate any area within the Federal Republic of Nigeria as an Oil and Gas Sub-Zones (in this Act referred to as "Sub-Zones"); (c) amend, vary or add to the limit of any Oil and Gas Free Zones and Sub-Zones as the case may be."

At the moment, the Onne/Ikpokiri geographical area of Rivers State has been licenced and is being operated by Intels/ Orleans Invest; but majority of operators duly licenced by NEPZA are alleging that the Senate is unwittingly out to create a law that will be anti-competition, create monopoly and institutionalise a behemoth in a single operator who would now assume the roles of both an operator and regulator.

The free trade zone operators see the latest move by the Senate to use the bill as a ploy to unilaterally expand OGEFZA's mandate in furtherance of a desperate plot to entrench the Intels/Orlean Invest monopoly, arguing that it will further the expansionist agenda of Intels/Orlean Invest in a strategy to capture other Free Zone territories duly licensed and regulated by NEPZA and that the bill, if passed into law will now pave way for Intels/orlean Invest to acquire ownership; exercise jurisdiction over another (NEPZA) agency that manages over 30 separate free zones and to forcefully take over the administration of certain NEPZA licensed free zones.

Some operators accused the sponsors of the bill of over reaching their brief in a very clear matter because "the Act specifically designates the Onne/Ikpokiriarea of Rivers State as an Oil and Gas Export Free Zone. This is the only Oil and Gas Export Free Zone designated by the Act. The Act establishes an administrative body for the oversight and management of the designated known as the Oil & Gas Export Free Zone Authority (OGEFZA)."

They also argued that the Oil and Gas Export Free Zone Authority Act (OGEFZA) was enacted specifically to oversee the export of Oil and Gas in Onne/Ikpokiriarea of Rivers State as designated in Section 1 (1) of the OGEFZA Act. This however, is in direct conflict with the mandate of NEPZA and it usurps the functions of NEPZA as it relates to Onne/Ikpokiri.

There is palpable apprehension in the industry that if the bill is passed into law, "it would subject integrated multi-function free zones to the authority of a single purpose geographical area free zone; completely destroy investor's confidence both local and international; effectively remove competition not only in the handling of oil and gas export but provides for limitless empowerment over any business even remotely connected to the oil and gas industry and subjects investors, operators and clients to the mercy and exploitation of a single operator."

THISDAY investigation revealed that before now, three presidential committees were set up to review the free zone scheme in Nigeria, all of the three had the same exact findings and same exact recommendations which included that the existence of dual authorities is undermining the scheme and thus the broader Nigerian economy; the current environment includes the existence of a "monopoly" which is undermining competitiveness and the scheme in general; that there should be one unified Free Zone Authority in the country.

Determined to create a unified agency, the then leadership of the senate decided to draft a bill in 2006 to create a unified single authority implementing recommendations of the committees and stakeholders while incorporating the operational needs of both NEPZA and OGEFZA. Which is why operators are questioning that rather than introducing a new bill, industry operators believe the senate would have saved scarce resources by returning to the subsisting 2006 draft Bill which set out to harmonise both NEPZA and OGEFZA following recommendations by several committees set up by previous governments to create a single operational entity to replace the two to remove duplicity.

According to document available to THISDAY, in 1999, the Ahmed Joda Presidential Panel Report and White Paper on the Review, Harmonization and Rationalization of Federal Parastatals, Institutions and Agencies placed OGEFZA under NEPZA to have a single Free Zone Authority in Nigeria.

It was also gathered that the Federal Ministry of Justice in 2005 was instructed by the Government to prepare the instrument for the enactment of a single regulatory authority in the country, the Nigeria Free Zones Authority (NIFZA) Bill, to replace the Nigeria Export Processing Zones Authority strategy.

The following year, the Presidential decision was conveyed to Honourable Minister of Commerce for implementation, reference ECD/P/338/11/526 of17th October, 2006. Federal Ministry of Industry, Trade and Investment failed to implement the decision

That same year, the Federal Ministry of Transport constituted a Committee on INTELS activities in the oil and gas Sector of the Maritime Industry; the Committee indicted INTELS vide report letter reference T. 4318/ S.53/1/86 of 15th May, 2006, was referred to Presidency. Its recommendations were approved by President Olusegun Obasanjo who gave a clear directive that "importers of oil and gas related cargoes should be free to choose port of preference."

Infact, THISDAY gathered that Prince John OkechukwuEmeka, Minister of State for Transportation attracted the anger of the presidency and was sacked on this issue after the presidency directed him to publish Public Notice Ref. No. T. 4316/ST3/24 of 7th August, 2008, re confirming Presidential directive on choice of preferred port by importers of oil and gas related cargoes subsist.

One of the operators of a Free Trade Zone in Lagos, Snake Island Free Trade Zone (SIIFZ) who claimed the company was already being targeted by Intels told THISDAY that "there are no export of oil and gas activities free zones."

According to the group chairman of the company, Anwar Jarmakani,"since the inception of SIIFZ in 2005, private investments in the free zone have been on the upswing and currently valued in excess of US$550,000,000. The company has been involved in the development of necessary basic infrastructures to advanced industrial capabilities associated with the activities of the enterprises within the zone.

"SIIFZ has a proven infrastructure of jetties, quaysides, roadways, electrical power plant and power distribution, state-of-the-art telecommunications, water treatment and sewage management facilities, 24/7 emergency fire and medical response services including a fully fitted medical clinic along with ISPS certified security apparatus of more than 200 operatives," he boasted.

He however warned that the gains already recorded in the sector will be completely eroded and reversed if the new Bill is allowed to pass as it is; stating that "with the proposed designation of Warri, Onne and Calabar ports as destination ports for all goods coming into Nigeria, Lagos ports will be idle and we will be out of business except we will accept to be detected to by Intels/Orlean Invest.

"What is about to happen is a scenario where all goods coming into the country will be channeled to Onne, Warri or Calabar ports which are operated by Intels/Orleans. Once these goods are offloaded into their warehouses, if your goods are supposed to be in Lagos, Intels will now invoice you for its logistic services to release your goods for you to get collect in Lagos. Who pays for all these extra charges?" He asked.

Attempts to reach the management of Intels/Orleans Invest were unsuccessful at press time.

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