Operators oppose move to amend Oil and Gas Export Free Zones Act

Private terminal operators last week sent a petition to the Senate Committee on Trade and Investment in protest of a public hearing on an Act to amend the Oil & Gas Export Free Zone Authority Act Cap 05 Laws of the Federation of Nigeria 2011 to provide for the designation and establishment of oil and gas free zones and special investment areas In Nigeria and for related matters.

Secretary, Seaport Terminal Operators Association of Nigeria (STOAN), Barr. Uzamot Boye, who signed the letter dated September 23, 2014 and which was sighted by SHIPS & PORT DAILY; said the protest was first based on the fact that as stakeholders in the trade chain in Nigeria, the terminal operators were not informed nor invited to the public hearing which touched “on the essence of the concession programme of the Government of Nigeria”.

The letter stated: “A critical look at the proposed amendment, in particular the amendment of section 12, shows a clear violation of the existing extant laws and agreements on which the present port concessions are based.

“It is important to note that all the Terminals that were concessioned has its own separate and distinct subsisting agreements.

“In the circumstances therefore, we see these proposed amendments as illegal, biased and an attempt to serve a particular interest against the wish and will of Nigerians and against the spirit and letters of the 1999 constitution of the Federal Republic of Nigeria as amended which the Senators as lawmakers swore to uphold.”

The STOAN scribe stated in the letter that the amendment to the oil & gas export free zone Act CAP 05 LFN is premised on the consideration of the substantial investments made in Onne oil and gas free zone concession to Intels Nig. Ltd.

He said the proposed amendment also assumes “that only Intels Nig. Ltd has concessions in Onne, Warri and Calabar Ports among all concessionaires in the Eastern Port with General Cargo Terminals.

“That investors are free to choose Ports of discharge of their cargoes within the designated Terminals at Onne, Warri and Calabar Ports clearly violates the concession agreements of Terminal operators with general cargo terminals in the Eastern Port.

“That if the bill is passed into law, Intels Nig. Ltd with terminals in Onne, Warri and Calabar Ports will become a monopoly in handling oil & gas related cargoes in Nigeria contrary to the aims and objectives of the Federal government Ports Reforms, Modernization and concessions through Privatization and Commercialization programme. “He stated that if the proposed amendment bill is passed into law and all oil and gas related cargoes are diverted to Onne oil & gas free zones, it will open a flood gate of litigations because of breach of the lease agreements with general cargo terminals.

He said: “That the concessions were done under the NPA and Public Enterprises (Privatization & Commercialization) 1999 Act and not the oil & gas export free zone Act CAP 05 LFN 2011 with specific GMT – Guaranteed Minimum Tonnage targets base on the expected general cargoes inflow including oil & gas related.

“That the proposed amendment is a duplication of the roles of oil & gas free zones and Nigerian Ports Authority (NPA).

“That the Seaport Terminal Operators Association of Nigeria (STOAN) have taken a    position that there is nothing like oil and gas related designated Port which has been communicated to the Presidency, the BPE, the National Assembly through its Committees on Privatization & Marine, the NPA and the Federal Ministry of Transport,” he stated.

He said only recently, the Senate Committee on Privatization wrote a letter to the terminal operators to align with their position that consignees/investors should be free to choose their port of discharge.

The STOAN members therefore requested the Senate to back pedal on the amendments “as it will lead to an array of litigations which the Committee cannot contain.”

Solicitor to STOAN, Mr. Mike Igbokwe (SAN), while speaking in the same vein, said “In STOAN’s view, this proposed amendment is fraught with a lot of ambiguities that would lead to avoidable controversies and litigations and run contrary to international trade, maritime law and international law principles and if not reviewed and changed as will be suggested below, would become counter-productive and destroy the good intentions of the distinguished Senators when being implemented.

“The implications of stipulating that all Oil and Gas related cargoes must be handled only at approved Oil and Gas concessioned ports with freedom to investors in the Oil Gas Free Zone and Special Investment Areas to choose ports of discharge of their cargoes within the designated terminals at anne, Warri and Calabar port include that:

“(i) Calabar port which is an Eastern Zone port that is not one of the ports designated as an Oil and Gas Free Zone in either the OGEFZA or the proposed Act, is mentioned as one of the ports that the investors are free to choose as ports of discharge of all oil and gas related cargoes whereas the Eastern port of Port Harcourt and other ports are conspicuously omitted.

“(ii) Other terminals including Port Harcourt and Western zone ports not designated as oil and gas terminals can no longer handle and are totally shut out from handling all oil and gas related cargo even though they are ports concessioned by the FGN/BPE/NPA to investors and have massively invested in cargo (including oil and gas) handling equipment to handle such cargoes while these cargoes would now be diverted to only Onne, Warri and Calabar ports.

“(iii) In the recent past, one of our client’s members (Ports and Terminal Operators of Nigeria Limited (PTOL) that is the concessionaire of Terminal A, Port Harcourt port had to send a petition to the House Committee on Marine Transport dated 22nd April, 2013 that vessels carrying cargo wrongly termed ‘oil and gas cargo’ meant for its terminal were being diverted to Intels Nigeria Limited (“Intels”) at Onne and other Terminals by NPA on the wrong basis of a Resolution passed by the House of Representatives, the House Committee on Marine Transport had a Public Hearing of the Stakeholders on the matter on 30th April, 2013. At the Public Hearing, Intels, NPA and PTOL made presentations at the end of which the House Committee resolved inter alia that the Committee stood by the House Resolution of 2012 “That Operators should be free to choose ports of discharge of their cargoes within the designated ports of Onne, Calabar, Port Harcourt and Warri.”

Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.