Nigeria: Operators Ask Buhari to Reduce High Charges in LADOL Free Zone

6 August 2020

Stakeholders have called on President Muhammadu Buhari to reduce the high charges slammed on investors at the Tarqua Bay base of Lagos Deep Offshore Logistics (LADOL) to encourage inflow of investments.

The operators lamented that the exorbitant cost of land per square meter, and high cost of boat services charged by the free zone operator have scared potential investors who are willing to take advantage of the strategic location of the zone to bring in Foreign Direct Investments (FDIs).

The Nigerian Ports Authority (NPA) had reportedly said that the move by its Managing Director, Hadiza Bala Usman, to ensure the federal government gets full value for its land at Tarkwa Bay, Lagos, by sanctioning LADOL for allegedly violating the terms of the land leased to it in the area "is not personal but to protect investors' investments in Nigeria."

However, despite the sanction by the NPA, which is the landlord of the free zone, maritime operators have lamented the cost of land per square meter and the cost of boat services charged by LADOL are the highest compared to what investors pay in the other zones.

For instance, they alleged that the zone operator demands $15 free zone entry and exit fee per person per day; and annual passenger jetty service fee of $6,000,000 even when the value of the jetty itself is less than one million dollars.

According to the operators, each investor operating at the free zone is also required to pay $160,000 annual fee to station four armed guards in the free zone while the zone operator spends less than $10,000 on these guards.

They also argued that unlike other free zones in the country, LADOL base is under lease to a private zone operator, which compels potential investors to negotiate with the zone operator instead of the NPA.

This arrangement, they argued has led to investors paying exorbitant and suffocating charges to the zone operator, compared to the "pittance" the zone operator paid to the NPA for the lease.

The operators urged President Buhari to look into the high charges, which they said have led to gross underutilisation of the large expanse of land, despite its attractive strategic location.

Some of the operators pointed out that the high charges imposed on oil and gas industry stakeholders at the Lagos free zone are passed on to the Nigerian National Petroleum Corporation (NNPC) by the free zone operator and subsequently paid by the federal government.

Speaking on the issue, a maritime expert and Lagos-based lawyer, Mr. Kingsley Omose told THISDAY that for the federal government to reduce the cost of producing crude oil, it must check the high charges imposed on the operators doing jobs at the free zones.

"If the federal government and the NNPC want to slash production cost for a barrel of crude oil, they should look at the operations and charges of the likes of LADOL who are tenants of NPA but whose exorbitant charges are paid by federal government through NNPC's majority stakes in the joint venture oil operations of the international oil companies (IOCs). For the Production Sharing contracts the reason why federal government's take from offshore oil production is little or nonexistent is due to the high charges, which LADOL incorporated and which must be deducted by IOCs before sharing the balance oil with the federal government".

He said for a company to invest in the free zone, such a company would have to approach LADOL and will have to pay a premium.

"You can see that with the Samsung situation - where what they were charged by NPA is pittance compared to what they're paying LADOL. That is the story of Nigeria, where public officials constantly put the interest of others and themselves before the Nigerian state".

Despite the complaints by the investors, a statement signed by the Chairman of LADOL, Mr. Ladi Jadesimi, had stated that the company had received notification that the presidential approval issued in 2018 granting Global Resource Management Limited a 25-year lease covering the entire area of the free zone was still valid and subsisting.

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