A Review of the Nigerian Energy Industry

Terminal operators flays moves to amend oil and gas free zones act

03 October 2014, Lagos – Terminal operators in the country have opposed the moves to amend the provisions of the Oil and Gas Export Free Zone Authority Act Cap 05 Laws of the Federation of Nigeria 2011.

The terminal operators under the aegis of Seaport Terminal Operators Association of Nigeria (STOAN), said it was wrong for the National Assembly to make moves to amend the provisions of the Act without their inputs.

Tin Can Island port, Apapa

In a petition sent to the Senate Committee on Trade and Investment, the terminal operators, who took over the day-to-day running of the nation’s seaports following the economic reforms that led to the concession of the port, said it was not proper for members of the committee to seek amendments of the Act without taking cognisance of existing agreements in the running of the ports.

They also flayed the public hearing on an Act to amend the Oil and 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.

In the petition signed by STOAN Secretary, Mr. Uzamot Boye, the terminal operators said the protest was first based on the fact that as stakeholders in the trade chain in Nigeria, they were not informed nor invited to the public hearing which touched “on the essence of the concession programme of the Government of Nigeria”.

According to the petition which was dated September 23, 2014 and obtained by THISDAY, STOAN said: “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.”

STOAN argued that the amendment to the Oil and 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 Integrated Logistics Services Limited (INTELS).

The association maintained that the proposed amendment also assumes “that only INTELS has concessions in Onne, Warri and Calabar ports among all concessionaires in the Eastern ports with general cargo terminals.

According to STOAN, 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 Nigeria Limited with terminals in Onne, Warri and Calabar ports will become a monopoly in handling oil and 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.

The association argued that if the proposed amendment bill is passed into law and all oil and gas related cargoes are diverted to Onne Oil and Gas Free Zones, it will open a flood gate of litigations because of breach of the lease agreements with general cargo terminals.

On why the proposed amendments will not fly, STOAN said: “That the concessions were done under the NPA and Public Enterprises (Privatisation and Commercialization) 1999 Act and not the oil and 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 and gas related.

“That the proposed amendment is a duplication of the roles of oil & gas free zones and Nigerian Ports Authority (NPA). That the STOAN has taken a    position that there is nothing like oil and gas related designated port which has been communicated to the Presidency, the Bureau for Public Enterprises, the National Assembly through its Committees on Privatization and Marine, the NPA and the Federal Ministry of Transport”.

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

It called on the Senate to drop the amendments of the Act “as it will lead to what it called “an array of litigations” which the committee cannot contain.”

STOAN’s lawyer, Mr. Mike Igbokwe  also added his voice to the opposition to the amendments saying that 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 would become counter-productive and destroy the good intentions of the distinguished Senators when being implemented.

According to him, 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 Onne, Warri and Calabar port runs fouls of existing agreements.

– This Day



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