AMENDMENT OF THE OGFZA AND NEPZA ACT: IN WHO’S INTEREST?
BY [Uwem-Obong Ankak]
Recently, some ‘Concerned’ stakeholders in the oil and gas export free zone published advertorial in the national media wherein they opposed the current effort by the Senate Committee on Trade and Investment’s to review the bill for the proposed amendment of the Oil and Gas Export Free Zones Authority Act of 1996.
In the Advertorial, they reeled out several untruths, distortions and employed subtle blackmail to cow and disorientate the Honorable Senate from holistically and analytically look at the obsolete sections of the Act with a view to bringing them up to date with global best practices and in line with the modern operations of the export free zones, which have become the hub of Foreign Direct Investment(FDI), massive job creation in other clime, and very consistent with the present government policy of diversifying the Economy.
The unfortunate publication, according to the ‘patriotic’ stakeholders averred that if the proposed amendments are allowed to pass in its present form, it would undermine the integrity of the Senate, conflict with the existing laws and policies of the Federal Government and legitimized illegalities in the management of the Export Free Zones.
But, the most unfortunate of their argument is the point that amending the OGFZA Act would create a monopoly, drive away foreign investors, and collide or rather duplicate the functions and the operations of the Nigeria Export Processing Zone Authority (NEPZA). They even went banal by saying that no amendment should be made because OGFZA “add ‘s’ to Zone in its name so that they can operate and regulate beyond Onne Oil and Gas Free Zone in Rivers State.”
The above formed the crux of the disagreement which five stakeholders, among the many companies in the Oil and Gas Free Zones, found discomfiting in the proposed amendment of the Act currently before the Nigerian Senate. But, a cursory look at the grouse of the stakeholders revealed a few organizations who deliberately want to distort facts, garner some public sympathy and continued to profit from a government policy which supervising agency have allowed them unfettered leverage to do anything they want without recourse to lay down rules and regulations.
They equally showed a total disdain to a government agency that have chosen to up its operations by instituting reforms to strengthen and make it operations more functional to achieve the mandate in which it was set up. That the present management of OGFZA decided to push for constitutional amendment of the outdated laws which hampered its operations, and even held a public hearing in which the so-called stakeholders attended, makes the disparate voices of the stakeholders very suspicious.
First, how can the amendment of the Act of the Oil and Gas Free Zones create a monopoly for the OGFZA? How would it drive away foreign investors and how would it bring the two organizations into conflict? The truth of the matter is that the laws establishing the OGFZA is 21 years old and current realities in our Economy make the amendment of some of its sections imperative. One area in which the Bill seeks to strengthen is to create the required ambience and enabling environment to grow investors and investment, re-energize, inspire employees; ensures financial independence for investors and generally create an investment climate that will attract billions of dollars and the resultant positive impact on both direct and indirect jobs.
The Bill seeks to remove ambiguity and overlap between the OGFZA and NEPZA. Section5 (2) of the Act states “The Authority shall have the power to take over and perform such other functions being hitherto performed by the Nigerian Export Processing Zones as they relate to the export of oil and gas …” It should be noted that it is the ambiguity in the letters of the Act that the amendments seek to correct. That definitely does not amount to monopoly. It is simply the refinement of the laws of the two organizations that will define their space of operations.
How would an Act that seek to correct flaws in the operation of OGFZA drive away foreign investors? On the contrary, the opposite should be the case. Investors who have choices where to invest their money would rather deal with a country with clear and unambiguous laws that will protect their investment. And this is what this Bill seeks to achieve. The proposed amendment in the Act and the various reforms going on in the OGFZA are pointers to the fact that the era where the running of the Agency was merely seen as government patronage was gone.
The Umana Okon Umana-led management team, since it assumed office has instituted lots of reforms to encourage investors in the oil and gas sector to see Nigeria as a destination of choice. He has promised tariff cut for new investors, following complaints by licensed investors about high tariffs applicable in the free zones. He has promised to go into viable partnership with those who are interested in industrialization. His operational model is to adopt automation of service delivery process, as well as deploy on-line registration and interactive communication for both investors and staff. Above all, he is keying into the new government policy of ensuring that there is relative ease in doing business in Nigeria.
To manage this massive investment, The OGFZA is lawfully mandated and empowered, through section 5(1) of the Act to grant all requisite permit and licenses to conduct approved enterprises as well as approval of development plans, annual budgets in respect of infrastructure, administrative buildings, promotion of the Export Free Zones and provision and maintenance services and facilities. It is to supervise and co-ordinate the functions of related government agencies like Customs, Nigerian Ports Authority, Immigration, Nigerian Content Development and Monitoring Board, and of course private sector organizations operating within the Export Free Zones, and resolves any dispute which may arise within and among them.
On the allegation that the OGFZA changed from a singular ‘zone’ to a plural ‘zones’ is only begging the question. The simple fact is that the ‘Zones’ in the oil and gas authority is proclaimed in the government gazette establishing it. It can easily be looked up. Equally, the Act itself in Section 5(2) is very explicit too. The truth of the matter is that the Oil and Gas Free Zone Authority is empowered by law to perform functions in the free zones that relate to oil and gas. And that definitely cannot be in Onne, Rivers State alone! The truth of the matter is that while Onne represented the strategic hub and an ideal location to service the oil and gas (on-shore and off-shore) throughout sub-Saharan Africa, there was also the need to expand the operations of the oil and gas sector beyond Onne in Rivers State.
And that is why the Oil and Gas was established in Warri, Delta state in the 1980s with a one-stop-shop oil service centre covering the western Delta area to attract companies with cost effective benefits. It was declared a free zone in May 2011 and is currently undergoing expansion and enhancement of its capacity. There is also the Oil and gas Free Zone, Eko Support, Lagos, approved on April 17, 2014. It is a public –private partnership model with Eko Support Services Ltd, with a projected direct and indirect jobs for 1000 Nigerians within the first three years, and an investment portfolio estimated at $124million in infrastructure, equipment and other projects.
There is also the planned Brass Oil and Gas City in Brass Island in Bayelsa state which is positioned as Nigeria’s leading hub for the downstream Oil and Gas manufacturing and industrial activities in Africa. It is designed to evolve into one of the largest petrochemical, fertilizer, refinery and hydrocarbon processing plant hub in the world. So far, about $3,5 billion investment have been committed to the project. The OGFZA and Bayelsa State are in a partnership. It should also be known that already, a 2400 hectres of land has already been acquired for the Ibaka, Akwa Ibom State Oil and Gas Free Zone with a promise of massive investment portfolio in a Foreign Direct Investment and the concomitant direct and indirect jobs.
It is worthy to note that as at 2015, investment inflow into the Free Zones represented a 65.5% of total investment into Nigeria within the last 10 years. And these figures are bound to gallop with the roadmap being put together by the current management led by Obong Umana Okon Umana management team. Investors are not likely to abandon a business that promises them a tax-free, ensures 100% ownership and repatriation of profit and dividend. There are other incentives which are captured in the roadmap. There are waivers on pre-shipment inspection of goods, faster clearance of goods, round the clock operations, cargo handling and direct access to sea port and international airport, among many incentives.
It is important that every stakeholders should be interested in making the vision of the current management of the OGFZA come to fruition. It becomes even more pertinent when one considers the fact that every hand must be on deck to pull Nigeria out of the present Economic quagmire. Who knows, the Oil and Gas Free zones, with cooperation of the stakeholders may just be the elixir in getting Nigeria out of the woods. Bickering, pettiness and other self-centered business practices may not help in achieving the lofty goals which the new vigor in the OGFZA is bringing to the table.
Nigerians must support the Senate to hastily pass the Bill before it and appropriately amend the Act to allow the Authority carry the proposed reforms and re-energize the Free Zone to carry out its mandate. The promise of massive investment with capital injection in billions of dollars; the prospect of hundreds of thousands of jobs should also be a welcome development for those who desire to get our teeming unemployed youths out of the streets; and the fact that very few self-centered Nigerians who have profited from the hitherto lack-lustre OGFZA should be of interest to any forward looking Nigerian to see the need to own the Authority.
We are sincerely hoping that the Nigerian Senate will do the needful by passing the Bill before it into law without any delay. If we want to look further for the usefulness of an Oil and gas Free Zones, Malaysia, Singapore, China and The United Arab Emirate present a veritable model of success which can be replicated here and even surpass in terms of FDI, massive jobs and good Economic returns for the benefit of the generality of Nigerians.
Uwem-Obong Ankak is a Public Policy Analyst based in Lagos