Global shipbuilding giant, Samsung Heavy Industries (SHI) has committed over $400 million as tax revenue and investment in Nigeria’s oil and gas sector since the company was awarded the contract to build the Floating Production Storage Offloading (FPSO) unit for the 200,000 barrels of crude oil per day Egina deepwater field.
The company contributed $100 million of tax revenue so far, in addition to providing approximately $300 million of investment into SHI-MCI-FZE, and thousands of Nigerians with education, training and employment.
But an official of the company said the dispute between Samsung and Global Resource Management Free Zone Company (GRMFZC), LADOL’s free-zone management, which relates to GRMFZC’s refusal to renew SHI-MCI-FZE’s Operating Licence for the free-zone, is hampering foreign direct investment in Nigeria.
According to him, even federal government’s intervention does not seem to have worked.
The dispute, it was learnt, is just one of several legal cases between Samsung Heavy Industries (Nigeria) and LADOL, the resolution of which will have far-reaching consequences for the Nigerian economy and oil and gas industry.
“Without an Operating Licence, SHI-MCI-FZE is unable to operate in the free-zone as a subcontractor to SHI Nigeria on the Egina FPSO. This project has been vital for the Nigerian economy – the FPSO has recently commenced capacity delivery, operating at 200,000-barrels a day,” the official said
He warned that if the crisis is not nipped in the bud urgently, it could have major adverse implications in the quest to attract foreign investments into Nigeria.
“There is so much at stake in the dispute that the federal government has concluded that it must intervene to issue directives towards facilitating a resolution of the impasse.
“Intervention is indeed necessary to protect the jobs and livelihoods of over 1,000 Nigerians directly and indirectly employed by SHI-MCI-FZE, to protect the investments in the Nigerian oil and gas sector, which is the nation’s principle earner, and to send a message to Nigeria’s international partners that it remains an attractive place to invest and do business,” he explained.
A source told our correspondent that various Ministries and Agencies of the Federal Government of Nigeria have waded into the dispute.
“For instance, the Nigeria Export Processing Zone Authority (the primary agency responsible for the administration of free zone areas in Nigeria) has investigated and issued directives on the dispute.
Likewise, in November 2018, further to an independent investigation commissioned by the Honourable Minister of Industry, Trade and Investment, a report was sent to the Honourable Minister,” the source said.
The report added that SHI-MCI free-zone operating licence was unjustifiably denied by LADOL, adding that the licence is renewable for a term of no less than one year once conditions of the licence are fulfilled.
Other highlights of the report include: that GRMFZC/LADOL has no discretion over whether to renew the licence once conditions had been fulfilled; that GRMFZC/ LADOL had no valid grounds under applicable regulation to refuse the renewal of SHI-MCI’s operating licence; that GRMFZC/LADOLshould renew SHI-MCI-FZE’s operating licence with immediate effect; and that GRMFZC/LADOL’s actions against SHI-MCI-FZE constitute an invasion of property rights with a significant negative implication towards attraction of foreign investment.
Sequel to the recommendations of the report, the Minister instructed NEPZA, as the governing regulator for the LADOL free-zone and GRMFZC’s regulator, to direct that GRMFZC to immediately grant SHI-MCI-FZE its operating licence.
He further revealed that on January 2, 2019, NEPZA issued a directive to GRMFZC to issue the operating licence to SHI-MCI-FZC.
“However, almost one month after NEPZA issued the directive to GRMFZC, and after several repeated directions in writing seen by the writer, GRMFZC has still not issued the operating licence to SHI-MCI, apparently in clear disobedience of the order of the Minister and NEPZA,” the source added.
The intentions of the Federal Government was to help the parties reach a win-win resolution to the dispute that avoids any deleterious effect on the Nigerian oil and gas industry and the employment of thousands of Nigerians.