The LADOL Group (including GRML) agrees with the headline ‘FG deserves full value from its land at Tarkwa Bay – Bala Usman’ and would like to add that contrary to the falsehood contained in the article written by Eugene Agha and published on page 17 of the Daily Trust Newspaper, indeed the federal government has been getting full value.
LADOL does not believe that the Managing Director of NPA granted such an interview, filled with untrue smears against LADOL while using falsehoods to advocate for a foreign contractor and castigating the Federal Government of Nigeria. Particularly since this same contractor recently took the NPA to court and is in an arbitration against LADOL in London, where such an article could be used to prejudice the proceedings against LADOL and FGN.
FGN concluded over 18 months ago that this contractor is not an investor. In fact, the accounts of this contractor show that they have taken over USD 3 billion out of Nigeria in the last five years in contract sum, while not investing a penny in the zone or Nigeria.
The matters raised in the article have already been addressed, and thoroughly debunked by FGN. This includes NPA’s purported unauthorised and unlawful attempt to tamper with GRML’s lease. FGN has reaffirmed that GRML’s current 25 years lease granted in 2018 is valid and subsisting. Various court cases are ongoing including the court action filed by Samsung Heavy Industries Nigeria against the Federal Ministry of Justice and NPA in June 2020 on these matters.
Firstly, LADOL Group is one of the largest private investors into NPA land and has not “short changed” the Federal Government of Nigeria in any way. In 2001, the founders of LADOL answered the call of the federal government for the private sector to develop infrastructure and facilities for Nigeria by leasing a disused swamp from NPA effective 2003. In over 19 years, the swamp was transformed into the Industrial Zone that is LADOL Free Zone.
Throughout most of its tenor, LADOL was not making any money and had no major contracts. Nonetheless development took place in the Zone every year from 2004 onwards – starting with the logistics base, then adding residential accommodation and offices, roads, and utilities. By 2014 when construction of the shipyard started, LADOL had been fully operational for eight years and had already broken records.
LADOL is a beacon that NPA has held up as an example to attract more private sector investment. This was highlighted on 10th August 2018 when His Excellency Vice-President Oluyemi Oluleke Osinbajo SAN, GCON toured LADOL Free Zone. He commended the stakeholders in LADOL and stressed the importance of continued private investment and local content to driving the economy.
The Managing Director of NPA, Hadiza Bala Usman was the chief host of the day and the guests in attendance included the DMD of Total and the MD of Shell. While speaking to stakeholders during His Excellency’s visit, the Managing Director, NPA, Hadiza Bala-Usman, said the successful berthing of Egina FPSO was as a result of operational efficiency and very robust synergy between the NPA, LADOL and other stakeholders; while the Managing Director of Shell confirmed that his company had gained 40% cost savings from working with LADOL. This will save Nigeria hundreds of millions of dollars and help to make Shell’s investments in Nigeria internationally competitive.
LADOL’s relationship with NPA is one of tenant and landlord – there is no profit-sharing agreement in place. LADOL is fully compliant and has paid its rent in full to NPA, an amount totalling N880.6 million for the last two years. Ironically, NPA’s purported lease to Samsung Heavy Industries Nigeria Limited (Samsung) exactly mirrored the terms of the LADOL lease and would have halved NPA’s income from the LADOL area to N230.3 million – the amount NPA purported to charge Samsung. Consider that, if, as the article falsely claimed, LADOL is “shortchanging government”, how could a purported lease to Samsung on the exact same terms be an acceptable solution – unless it is acceptable for Samsung to “short-change” the federal government?
Secondly, a purported attempt to irregularly tamper with LADOL’s lease cannot be justified on the pretext of investor protection because the contractor the article claims NPA acted on behalf of, that is, Samsung, has not invested in the shipyard, a view the FGN strongly holds and has expressed in its directives. Attempting to allocate the land on which the shipyard stands is tantamount to a gift to Samsung of a strategic asset belonging to the Nigerian Nation being a legacy of the multi-billion dollars national investment made into the Egina field development, while destroying the 19 years investment made by LADOL in converting a swamp to the asset that it is now.
The private investors that need protection are the LADOL stakeholders who have invested hundreds of millions building the Zone for 19 years and from whom Samsung collected an additional USD 40.5 million dollars as part payment for the construction of the Yard, which Samsung built as an EPC contractor for which FGN is ultimately liable in repayment. The FGN directives issued on 27th March 2019, based on a thorough investigation by the Federal Government, concluded that Samsung built the yard as a contractor to Total. The Total contract awarded to Samsung was for approximately USD 3.2 billion for the works needed for engineering, procurement, and construction of the Egina FPSO. The works in this contract included the construction of the Yard, with the sum of USD 214 million allocated for this. Samsung collected the USD 214 million as milestone payments while the Yard was constructed. This USD 214 million is in addition to the USD 40.5 million Samsung collected from LADOL to build the yard. As per the FGN report on this matter, Total’s payments to Samsung will be reimbursed by FGN, making FGN the primary investor in this Yard. The investors in the Yard are LADOL, its stakeholders and the FGN. Samsung was a Contractor and a tenant of LADOL, not an investor in the Yard. The Yard itself is an important local content legacy capacity development that is a key near-term benefit left in Nigeria from the Egina project.
Thirdly, though LADOL was entitled to collect the contracted income from that sublease, it did not and instead allowed Samsung to hold back 90% of the rent due. USD 40.5 million was used for the construction of the shipyard, thereby leaving LADOL with USD4.5m for five years, i.e. USD 900,000 per year, which is less than the current rent paid to NPA per year by LADOL.
Fourthly, the allegation that LADOL failed to obtain consent from NPA for the sublease granted to Samsung is false. This was a term of the Lease. LADOL made disclosure to NPA of the sublease. NPA approved the sublease in a letter dated 12th March 2014. Samsung tried to deal directly with NPA on several occasions, leading NPA to write to Samsung in a letter dated 16th November 2017 informing them that they must deal directly with their landlord, GRML.
NPA has, up until the recent misunderstandings, been a fair and just landlord, protecting the rights and investments of its tenant, LADOL. NPA has also played a significant role in levelling the playing field in the maritime, industrial and petroleum sectors – ensuring that all Nigerian companies can participate. It is therefore perplexing that the writer of this article claims that NPA would now undo all this good work by punishing LADOL for participating in the market and attempting to drive them out of business for the benefit of a foreign contractor that has taken billions of dollars out of Nigeria.
LADOL and its stakeholders are compliant, law abiding and committed to continuing their vision and mission – which will continue to benefit all its stakeholders including NPA and FGN.
LADOL Group
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