Business

Foreign Investors Unhappy about Illegal Charges in Nigeria’s Oil and Gas

Foreign Investors Unhappy about Illegal Charges in Nigeria’s Oil and Gas

Nigeria’s ranking in the global Ease of Doing Business may nosedive as foreign investors doing business in the private oil and gas free zones are being subjected to illegal charges and cumbersome administrative procedures to frustrate their businesses and send them parking out of the country.

Investigations revealed that some of the foreign investors are groaning under these investor-unfriendly policies of some private free zones, who short-change both the investors and the federal government.

President Muhammadu Buhari’s administration has made deliberate efforts to improve Nigeria’s investment climate and this led to the improvement recorded under this administration in the country’s ranking in the global ease of doing business.

However, information gathered from sources within some of the international oil companies (IOCs) that some of the foreign investors in the private free zones are being frustrated after committing millions of dollars of investments.

“The worst case on the lips of everyone in Nigeria’s oil and gas industry at the moment is the attitude of LADOL against the investors integrating the Egina Floating Production and Storage Offloading (FPSO) unit. The whole thing now looks as if Samsung took a wrong investment decision by coming to Nigeria to invest over $300 million to build the integration facility,” said one of the officials of an IOC who pleaded anonymity because he wasn’t authorised to speak on the issue.

“The impression being created by LADOL management is that they want to force the Koreans out of the country to inherit their investment. Imagine how LADOL just woke up one morning and imposed a levy of one per cent on the $3.3 billion FPSO, amounting to $33 million and call it Free on Board (FOB) levy. If such levy is legal, NEPZA is the appropriate government agency to request for the money and not LADOL.

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“Secondly, the levy should have been captured during the contract bidding stage so that the contractor will know his obligations. The free zone is too hostile to foreign investors. The management of the free zone wants to inherit their investment by chasing them out of the country with an illegal levy.

“They are just waiting for them to finish Egina. That is too bad for Nigeria’s image and will cause irreparable damage to the Buhari’s efforts to attract investors because other investors will run. But surely, it will backfire against the free zone because all the IOCs are aware of these issues,” the source added.

When contacted to react to the allegation, the Managing Director of LADOL, Dr Amy Jadesimi, neither denied nor confirmed the allegation but directed reporters to contact NEPZA.

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