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OIL& GAS MONOPOLY: How FG’s Fresh Position Will Grow Economy-Oditah

The recent Federal Government’s policy clarification on the ports industry aimed at eliminating monopoly has been described as one that would engender competition in the system with the ultimate goal of growing the nation’s economy.

The observation was made in Lagos, Thursday by Professor Fidelis Oditah, a Senior Advocate of Nigeria (SAN), in a chat with a section of the media.

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 (FDI) as well as boosting local participation in the oil and gas industry.

Recall that on May 10, 2017, the Federal government, through the Nigerian Ports Authority (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 Professor Idris Abubakar, Executive Director, Engineering and Technical Services of NPA, had stated amongst others, “FGN remains guided by the general global practice in the designation of Terminal/ Port operations into three broad categorization of bulk cargo, container cargo and multi-purpose cargo.

“Accordingly, the FGN rejects the categorization 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 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 and that there cannot be shoe-horned into direct –bidding one provider” as rampant with some government agencies in the past.
He recalled in retrospect that “the policy clarification was necessitated by the confusion and uncertainty created by the directive of President Jonathan in the twilight of his administration (20 April 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.
“That policy, which was inimical to the interests of Nigerians and is surprising for an elected President, created operational inefficiency, doubled handling charges and the cost of providing oil and gas products in other locations as it meant that the products had to be re-transported from those three ports to other ports such as Lagos. The result was to increase the amount of subsidy provided by the Federal Government, thereby wasting scare public resources.

“Besides, it created an unhealthy monopoly in favour of a concessionaire, stifled consumer choice and deprived consignees of oil and gas coming into Nigeria of the freedom to choose the port of discharge of their cargoes.
Odital who is legal cancel to the Lagos Deep Offshore Logistics base (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 Jonathan from implementing his policy directive of 20 April 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 6 June 2017.
He said when the issue of withdrawal first came up in court last week, 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 urged government to embody the new development in the legislation in order to avoid what he described as the unwarranted policy somersault the issue had attracted.



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