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Investors’ lament woes in Lagos Free Zone

By Ediri Ejoh

The challenges facing investors operating in the Lagos free zone appear to be persisting despite last week’s intervention by Vice President Yemi Osinbajo.

The Vice President visited the Lagos Offshore Logistics (LADOL) base to reassure investors operating in the Zone of the determination of the Buhari  administration to continue to provide enabling environment for investments to thrive there.

LADOL and its subsidiary company, Global Resources Free Zone Management Company (GRMFZC), have been accused of imposing illegal levies which many investors fear may force them to abandon their multi-million dollar investments.

Sunday Vanguard learnt that worst hit by the harsh operating environment in the Zone is the fabrication and integration facilities developed by Samsung Heavy Industry Nigeria (SHI) Limited’s majority owned subsidiary enterprise in the free zone – SHI-MCI FZE – among others.

The facilities are currently being used for the fabrication and integration of the $3.3 billion Egina Floating Production Storage Offloading (FPSO) unit built by SHI in Korea.

It was gathered that SHI had staked over $300 million in the zone to  build  the assets, which have created direct jobs in excess of 2, 500 for Nigerians. Being the first of its kind in Africa, the fabrication and integration yard has positioned Nigeria as the hub for fabrication and integration activities around the continent.

SHI  was said to have continued  to groan under prohibitive land charges and high cost of operations  in the Zone, even as sources claimed this may render the facilities uncompetitive and force oil and gas industry operators in the continent to go to Korea and Brazil for integration of FPSOs instead of Nigeria .

Meanwhile, investors  raised  the  alarm over the one per cent Free on Board (FOB) levy on the Egina FPSO after the non-renewal, which LADOL refuted in an advertorial saying the charge was statutory.

It was also gathered that a class piping company, which invested over $30 million in the Zone, has allegedly been denied access to its facilities in the zone and also had its operating licence withdrawn by LADOL because of alleged indebtedness to the management of the  Zone. This is against the Nigerian Export Processing Zone Authority (NEPZA) Act, and it’s directive to LADOL to renew SHI-MCI’s operating licence for the statutory one-year period as prescribed by the NEPZA Act, but LADOL’s subsidiary allegedly refused.

A  top official of an IOC told Sunday Vanguard: “Without the operating licence, which permits Samsung’s subsidiary to continue to do business in the Zone, it means Samsung cannot continue to carry on business in the Zone  even as the assets are fixed and immovable.

“It is quite worrisome that a developer would encourage foreign investment into the Zone at a high business cost and, after an investor had made decision to set up in consideration of the investments offered in the Zone and has sunk in significant/substantial/huge foreign investment, and developed it to a stage of self sustenance, it would be deprived of its investment.”

A source said SHI had  dragged LADOL to court on the issue of  non-renewal of  its licence.

But responding to the allegation of imposition of arbitrary charges which  investors  feared may force them to abandon their assets in the Zone, sources close to  LADOL, who pleaded anonymity, said  the matter had been taken to court by Samsung.

On his part, the Managing Director of LADOL, Dr. Amy Jadesimi, had, in a press conference, said companies must meet certain criteria to operate within a free zone, listing the criteria to  include compliance with Zone regulations on employment and working conditions, as well as obeying free zone rules and the laws of the Federal Republic of Nigeria.

“Free Zones in Nigeria offer investors a peaceful, safe, and cost-effective environment, with minimal bureaucracy. By design, the benefits foreign companies enjoy far outweigh the statutory charges levied by the Free Zone Management and Authority. The charges are known and required to maintain the Zones and the Free Zone Scheme,” she stated.

“We remain focused and undeterred as government and the Local Content Board acknowledge our achievements.”


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