News: 20,000 Jobs Under Threat as NPA, INTEL Feud Deepens

The business disagreement between Nigerian Ports Authority (NPA) and an oil and gas logistics firm, Integrated Logistics Services Limited (INTELS), is threatening to send over 20,000 workers to the labour market.

NPA had instructed INTELS to comply with the Treasury Savings Account (TSA) in the project, which the logistics firm was handling for the agency. But this instruction did not go down well with the giant oil and gas firm as it argued that the method would affect the payment of its loan from the banks.

So, in a letter to the Managing Director of NPA, Ms Hadiza Bala Usman, the Chief Executive Officer of INTELS, Andrews Dawes, made it clear that the system will cause a run on the finances of the company.

“As you will understand, this will be unacceptable to the banks. The result of this will be a run on our finances,” he said.

However, NPA had insisted that all the revenues accruing from the transaction should be swept into the TSA as directed by President Muhammadu Buhari or the contract be terminated.

The altercation between the two heavyweights led to the cancellation of the project by NPA and the exhumation of other underlying issues leading to the Federal Government’s (through NPA) decision to break INTELS’ monopoly in the handling of oil and gas shipment in the country.

In a statement, INTELS said the step is not in the nation’s best interest and will result in huge revenue loss to the Federal Government.

In a witness on oath filed at the Federal High Court, Abuja, in a case instituted by the company against NPA and four others, a Senior Legal Manager of INTELS, Mr. Dominic Onwuchekwa, stated that the proposed de-categorisation of the terminals will not only jeopardise the prospect of the plaintiff recovering its investments under the concession agreement signed with the Federal Government, it will also undermine the commitments made to its lenders. 

“In addition, the de-categorisation will lead to a situation where all terminals will charge the lower fee of $1.2 per tonne (even for oil and gas cargoes for which $5.83 per tonne should be paid) in order to attract patronage from port users, but on the other hand short-changing the government itself and the people of Nigeria,” Onwuchekwa stated in the Witness Statement on Oath. 

He further averred that in discharging its obligations in accordance with the terms and conditions of the various Lease Agreements (including the concession) with the Federal Government, INTELS expended huge sums of money in upgrading port facilities and building infrastructure as well as developing specialised oil and gas designated terminals based on the need and requirements of the oil and gas industry worldwide.

“Conservatively, the plaintiff has, thus far, expended over $2 billion out of its own resources without amortisation in various projects and has budgeted additional $5 billion in phased port terminals’ development and infrastructural renewal,” he stated.

He said the huge investment by INTELS in five concessioned port terminals across the country were made in response to the Federal Government’s quest and demand for investment in port infrastructure development in Nigeria.

He said INTELS’ investment in the concessioned terminals was “based on the assurances and comforts from the 1st-5th defendants, especially the 3rd defendant’s (NPA) categorisation of ports and terminals, stating that the company “was persuaded into financing huge capital intensive projects for the benefits of the 1st- 5th defendants and the people of Nigeria.”

According to him, “this relationship was based on the understanding that the plaintiff shall re-coup its investments from its agreements with the defendants entered in respect of contracts at the oil and gas terminal services. The dredging and the reclamation of the 95 hectares swampy area at Federal Lighter Terminal, Onne, is one example out of several entered into between the 3rd defendant and Prodeco International Limited, which was financed by the plaintiff.”

Similarly, Justice A. R. Mohammed of the Federal High Court, Abuja, had last month, issued an interim order directing NPA and four others to maintain the status quo in a suit filed by INTELS on the de-categorisation of terminals at the nation’s seaports.

INTELS, which filed the suit number FHC/ABJ/CS/417/2017 at the Federal High Court, Abuja, is, among other reliefs, asking the court to issue an order stopping NPA and other defendants including their representatives, agents or privies from implementing a proposed policy review, which purports to cancel the designation of ports and terminals in Nigeria having led it into committing huge human, financial and material resources into developing five port terminals located in Calabar Terminal A, Warri Old Terminal A, Warri New Port Terminal B, Onne Port Federal Ocean Terminal A and Onne Port Federal Lighter Terminal B.

The defendants in the suit are the Federal Government of Nigeria, Attorney General of the Federation, NPA, Bureau of Public Enterprises (BPE) and the Federal Ministry of Transport.

INTELS also asked the court to make a declaration that the five Lease Agreements it entered into and executed between the plaintiff and the 3rd, 4th and 5th defendants (who executed same for and on behalf of the 1st and 2nd defendants) in respect of Warri New Terminal, Warri Old Terminal, Federal Lighter Terminal B, Calabar Terminal A and Federal Ocean Terminal A, all dated October 24, 2005 for 25 years renewable leasehold, are still subsisting.

Other reliefs sought by the company include a declaration that the defendants are duty-bound to honour, perform and fulfil their contractual obligations as stated in the five Lease Agreements all dated October 24, 2005 between the plaintiff and the 3rd, 4th and 5th defendants acting for and on behalf of the 1st and 2nd defendants; a declaration that the plaintiff has not in any way whatsoever and howsoever, breached, violated and or failed to perform any of its duties and obligations as stated in the five Lease Agreements entered into and executed between the plaintiff, and the 3rd, 4th and 5th defendants acting for and on behalf of the 1st and 2nd defendants.

While holding brief for the NPA, a Senior Advocate of Nigeria (SAN), Professor Fidelis Oditah, who is also a Queens Counsel (QC), noted that the fresh directive, which now accords stakeholders a level-playing ground, is in tandem with the current administration’s reform initiatives aimed at encouraging Foreign Direct Investments (FDIs) as well as boosting local participation in the oil and gas industry.

Recall that on May 10, 2017, the Federal Government, through the NPA, had conveyed its recent position in a letter titled: “Conveyance of Presidential Approval Re: Reports on Concessioned Terminals in the Ports”.

The letter signed by Executive Director, Engineering and Technical Services of NPA, Professor Idris Abubakar, had stated, among others, that: “FGN remains guided by the general global practice in the designation of terminal/port operations into three broad categorisation of bulk cargo, container cargo and multi-purpose cargo.

“Accordingly, the FGN rejects the categorisation of oil and gas multipurpose cargo terminal as this is alien to the relevant concession agreement and inconsistent with global shipping practices.”

The letter further added: “FGN reaffirms past presidential directives that all importers are free to choose any terminal or port for the discharge of their cargoes, subject to the presence of all requisite regulatory agencies at such ports as required by extant regulations and in line with its policy of promoting competition and value for money. Consequently, any policy that designates certain ports by cargo types is hereby cancelled.”

Describing the development as laudable, Oditah said the clarification is a  “reaffirmation of the FGN policy articulated by Presidents Obasanjo in 2006 and Umaru Musa Yar’Adua in 2008 that all importers are free to choose any terminal or port for the discharge of their cargoes.”

Enumerating the various benefits of the policy clarification, Oditah said: “This policy clarification fits into the reform initiatives of the FGN designed to reposition Nigeria, open it for business and welcome all investors, domestic and foreign, to do business in an open, competitive, transparent and rewarding business environment.

“This will no doubt increase private investment in building port infrastructure along our vast coastal belt, especially in investment in western ports and in oil and gas facilities in the West particularly Lagos, which would enhance job creation and GDP growth. The policy clarification will ensure the diversification of port infrastructure rather than the concentration of risk in the restive Niger Delta.”

He added that the essence of a market economy such as Nigeria’s is to create opportunities, facilitate competition and guarantee consumer choice, adding that, “these objectives will be promoted by the policy clarification.

“The policy clarification will result in a noticeable increase in private investment in port infrastructure, increase local economy, create hundreds of thousands of direct and indirect jobs, increase government revenue and boost our GDP. These are worthwhile benefits especially at a time that Nigeria is plagued by rampant unemployment, decaying infrastructure and an economy suffering the worst effects of a deep and resilient recession.”

Oditah who similarly evaluated the benefits of the policy for the International Oil Companies (IOCs), noted that, “the clarification means that they have a choice regarding the procurement of oil and gas logistics services especially for their deep offshore operations. He recalled that the policy clarification was necessitated by the confusion and uncertainty created by the directive of President Goodluck Jonathan in the twilight of his administration (April 20, 2015) that all oil and gas cargoes must go to three eastern ports of Onne, Calabar and Warri controlled by one concessionaire (INTELS) before being transported to their ultimate destination.

Oditah, who is legal counsel to the Lagos Deep Offshore Logistics (LADOL), a foremost indigenous establishment, which had kicked against the monopoly, disclosed that following the policy clarification, LADOL, which had obtained an injunction restraining President Goodluck Jonathan from implementing his policy directive of April 20, 2015, filed an application at the Federal High Court, Lagos, seeking to withdraw its proceedings against the FGN.

He said the withdrawal application is scheduled for argument at the Federal High Court in Lagos on June 6, 2017, stating that when the issue of withdrawal first came up in court, counsel to INTELS did not oppose the move but rather asked for the dismissal of the case and an award of N10 million cost to his client.

“Of course, their request was laughable as they were not joined in the originating suit, but rather wangled themselves in. We did not sue them; they asked to be joined and the court obliged them; so how then could we pay them any form of cost? On the contrary, they (INTELS) should be paying our costs because they were the direct beneficiary of the obnoxious monopoly in the nation’s oil and gas industry,” he said.

However, stakeholders had expressed concern over the lingering feud between the two giants, saying that it will push over 20,000 persons into the labour market.

NIIA President, Mr. Godwin Onyekazi, said it was unfortunate that a simple business disagreement, which could have been amicably resolved “at the coffee table” was allowed to degenerate to the point where more than 20,000 jobs are on the line.

“INTELS is a major operator in oil and gas, maritime and real estate industries. It is one of the largest employer of labour in the country and in the Niger Delta region. It should therefore concern any well-meaning Nigerian that NPA is unable to amicably resolve and manage its differences with such organisation.

“We do not think that companies operating in the country should be subjected to political persecution especially at this time when the Federal Government is pushing hard for peace to reign in the Niger Delta region,” Onyekazi said.

Source: The Sun