Abuja, July 7, 2023: The signing of memorandum of understanding resolving the LADOL/Samsung dispute that lingered for more than five years causing significant economic losses to Nigeria was done last year.
After the resolution of the five-year dispute on the lease, sublease and equity ownership development of the Egina Floating, production, storage and offloading (FPSO) project, the issue bordering on the short-changing of Nigerian government remains.
The short change emanates from the operational fees of all parties over a long period that was not paid to Federal government through the Free Zones authority.
The National Assembly called for a public hearing on the issue to ascertain if NEPZA had received the government share. The true position is still unknown.
It will be recalled that the crux of the matter is that TOTAL paid Samsung US$214 million for the upgrade of the facilities and that Samsung was seeking to retain the US$214 million paid by TOTAL and at the same time assert that it was operating as a contractor to TOTAL rather than as an investor in LADOL Free Zone.
Samsung not only hid these facts from LADOL, it sought to exclude LADOL from the project so as to own the facility upgraded. Consequently, Samsung procured the 1st June 2014 settlement agreement by fraud and misrepresentations, that no money was provided in the Egina FPSO contract for the upgrade of the LADOL fabrication and integration facilities. That it was rather through capital importation and equipment.
As a matter of fact, TOTAL’s contract with Samsung Heavy Industries Nigeria Limited (SHIN) is a lump sum contract for the engineering, procurement, supply, construction and commissioning of floating production, storage and offloading unit (FPSO).
Samsung has remained consistent in its assertion of ownership of the fabrication and integration facility on the basis that it had singlehandedly funded the construction of the facility, which it claims to be US$300 million.
Samsung therefore committed massive fraud in connection with the 2014 settlement agreement in order to induce LADOL to surrender its 80% equity ownership of SHI MCI FZE and the fabrication and integration facility.
There are three aspects to the dispute between Samsung and LADOL. The first is the ownership of SHI MCI FZE, which is a joint venture between LADOL and Samsung formed to perform the Egina FPSO EPC contract between Samsung and TOTAL Upstream Nigeria Limited (TOTAL).
The second aspect is SHI MCI FZE’s sublease agreement with a LADOL affiliate, Global Resources Management Limited (GRML). The third is SHI MCI’s operating license as a free zone enterprise within the LADOL free zone.
The dispute bordered on the land lease, sublease agreement, equity ownership development of the Egina Floating, production, storage and offloading (FPSO) project.
LADOL had accused Samsung of fraudulent practices and violation of Nigerian Local Content Laws which had resulted slowing economic activities in the zone as well as the locked up of investments worth over N7 billon and loss of about 3000 jobs.
According to the MD of NEPZA, prof Soji Adesugba, the settlement opened opportunities for $300 million FDI into Nigeria which generated up to 10,000 jobs in few months but did not mention what Nigeria gained in the controversial deal that is supposed to fetch Nigeria foreign exchange.
But he explained that NEPZA will continue to monitor SHI and LADOL to ensure that they measured up to what the MoU they signed, details of which Nigerians are not privy to.
Nigerians are eager to know the status of the contract money which is believed has not been shrouded in secrecy during the settlement which took NEPZA to South Korea.
The dispute was purportedly resolved on February 22, 2022 by the signing of a Memorandum of Understanding (MoU) after Nigeria had recorded economic losses.
No mention has been made of how much was paid to the federal government through NEPZA regarding the settlements and payments therein.
SHI is the operator of a fabrication and integration yard (SHI-MCI yard) in the zone, which was used to integrate the Egina Floating Production Storage Offloading (FPSO) vessel, which has sailed away to the 200,000 barrels per day Egina oilfield.
The SHI-MCI yard is a joint venture between LADOL and SHI, with SHI having 70 per cent stake and LADOL 30 per cent, obtained by the misrepresentation and fraud of 2014 judgement.
The yard is the only one of its kind in Africa, designed to make Nigeria a hub of FPSO fabrication in the continent.
Apart from the revenue loss of Federal government which has to be accounted for, NPA action of revoking the presidential 25 years lease approval to LADOL, replacing it with a direct lease in 2019 meanwhile, leasing part of the land to Samsung calls for questioning.
Another presidential directive was issued in 2020 to re-affirm the 2018 presidential approval of the land to LADOL. This is not good enough for the image of Free Zone operation in Nigeria and should be discouraged.
It may be recalled that similar incidences have happened in Calabar Free Trade Zone and Ogun Guangdong Free Zone. In that of Calabar, part of the land approved for the Zone was revoked for another purpose while Ogun Guangdong matter even went as far as international court for resolution.
Efforts to seek more details from LADOL and NEPZA have failed as the Chief Executives have failed to respond to our inquiries.