Home Blog

Corruption in Nigeria’s Free Trade Zones as bad as Oil Theft

0

Nigeria, often characterized as a cesspool of corruption, has faced numerous challenges on its path to progress. Crude Oil theft escalated corruption from a criminal enterprise to an existential danger to its 200 million citizens. For six decades, Nigeria’s oil sector has been plagued by rampant corruption, with rogue politicians, military chiefs, government officials, and private sector actors looting the nation’s oil resources. While oil theft remains a grave concern, a new menace has emerged in recent times. It is called the Free Trade Zone (FTZ).

 FTZ is a policy scheme established to encourage foreign investment, economic diversification, and job creation. At the last count, Nigeria has 51 Free Trade Zones, some of them in questionable locations. The benefits for operators include zero tax from federal, state and local tax authorities; zero levies and rates (no corporate tax, withholding tax, value-added tax, and capital gain tax) and 100 percent foreign ownership.

Contrary to the success stories of FTZs in countries like China and the United Arab Emirates, Nigeria’s FTZs have become the breeding grounds for a wide range of illicit activities, threatening the nation’s economic stability. These zones have given rise to corruption, trade malpractices, illicit financial flows, organized crime activities, drug trafficking, document cloning, import duty evasion, license racketeering, counterfeiting, smuggling, and a plethora of criminal contraptions that undermine Nigeria’s potential for growth.

A peek into BUSINESS LEAKS’ upcoming investigative series shows that corruption in Nigeria’s FTZs is costing the country billions of dollars each year. The Onne Port Free Trade Zone is one of the largest FTZs in Nigeria. It is located in Rivers State and is home to over 200 businesses.

BUSINESS LEAKS, in many months of investigations so far in Lagos, Rivers and Kano States, uncovered a massive import duty evasion scam at the Onne Port Free Trade Zone amounting to over N600 billion in lost revenue. The fraud mostly involves regular business entities migrating to the FTZs to evade customs duties. This is often preceded by license racketeering, a scheme that sells to the highest bidders, operational licenses and permits to entities who have no business in the FTZ in the first place.

Some businesses in the FTZs are engaged in the smuggling and repackaging of contraband and counterfeit products. Goods are smuggled into and out of FTZs without paying the appropriate taxes and duties.

FTZs are designated areas where businesses can operate with minimal government interference and enjoy tax and customs breaks. They are often used to attract foreign investment and promote economic growth. FTZ operators in Nigeria enjoy eye-popping incentives never seen anywhere else in the world. However, for most of the privileged operators, the FTZ licence and permits are licences to impunities and illicit activities.

In 2021, the Nigerian Customs Service intercepted a container of drugs at the Onne Free Trade Zone. The drugs were estimated to be worth over $100 million. Investigations revealed that the drugs were being smuggled into Nigeria by a syndicate of corrupt Customs officials and businessmen. The syndicate was using the Onne Free Trade Zone as a transit point for the drugs. The same is true for the FTZs in Lagos and in Calabar.

The corruption taking place in Nigeria’s FTZs is having a devastating impact on the country’s economy. It is discouraging foreign investment in Nigeria’s FTZs; it is leading to the loss of government revenue just as it is harming legitimate businesses that are operating in Nigeria’s FTZs. Corruption is also creating an environment where organized crime and illicit activities can flourish.

OML-29 Saga – Knives out over $2.7 billion as 7 Nigerian banks battle in London court

0

By Gloria Augustine

The knives are out for seven Nigerian banks as what started as the largest-ever acquisition of an oil bloc in the history of the Nigerian oil industry has turned into an epic legal battle in a London court, leaving top bank executives and their opposite numbers in an international oil major with sleepless nights.

The banks are Ecobank Nigeria Limited, Fidelity Bank plc, First Bank of Nigeria Limited, Guaranty Trust Bank plc, Sterling Bank plc, Union Bank of Nigeria plc and Zenith Bank plc. Corralled by Royal Dutch Shell Plc, and another lender Africa Finance Corp, (AFC), the seven banks accused one of Nigeria’s largest oil producers of defaulting on loan repayments that stand at $2.4 billion and are locked in a fierce court battle to reclaim the money.

Aiteo Founder Benedict Peters

The indigenous oil and gas company, Aiteo Group, made history in 2014 when it acquired Oil Mining Licence (OML) 29, from Shell Petroleum Development Company (SPDC).

The oil lease, considered as one of the most endowed acreages, was acquired along with Nembe Creek Trunk line, an associated crude oil pipeline, after the Group’s $2.7 billion bid was approved by authorities.

While the actual cost of the acquisition of the oil block and Nembe pipeline was reported to be $2.562 billion, the balance was additional funds earmarked as working capital for the takeoff of the project.

A few years later, specifically in 2018, Aiteo was said to have approached its creditors for a renegotiation or restructuring of the debts after the declaration of incessant force majeure, a request the complainants turned down.

While about 75 percent of the loan to Aiteo came from AFC and the seven banks, the rest came from Shell in the form of vendor financing via an English-law governed agreement dubbed “the Offshore Facility Agreement”. Nigerian lenders loaned the company $1.5 billion to support the acquisition, while Shell – the seller of the assets – provided $504 million in financing.

The parties had been locked in a tangled legal dispute since October 2019 when the creditors notified Aiteo that it was in default. The banks claimed the debt owed climbed to $1.7 billion by the end of 2021, from less than $300 million in late 2019. The financiers said the increase in the loan amount was due to missed repayments, unpaid interest, and default penalties. The financiers had said this before an arbitration case against Aiteo in late 2020, when the amount stood at $910 million.

On October 23, 2019 the lenders’ Nigerian lawyers were said to have sent a letter demanding payment of the outstanding debt within seven days. But eight days later, Aiteo commenced proceedings against the lenders as well as four other parties in the Nigerian Federal High Court, asking the court to declare that it was not liable as alleged in the demand letter. The matter later dragged beyond the borders of Nigeria.

Two arbitration proceedings were instituted before the International Chamber of Commerce (ICC). The first proceeding was initiated by Shell Western Supply and Trading (SWST), a subsidiary of Shell which lent the $504 million to Aiteo for its acquisition of OML 29. The second was initiated by the institutions that provided the remaining $1.5 billion loans.

The banks and AFC – which administers the financial agreement between Aiteo and the bank creditors – obtained an injunction stopping Aiteo from challenging the debt claim in Nigerian courts and asking the Nigerian company to resolve any disputes before an arbitration tribunal in London.

In a separate suit in 2019 Aiteo went to court seeking $2.5 billion compensation from Shell Petroleum Development Company (SPDC) over the sale of OML 29. The oil firm told the Federal High Court in Abuja that Shell sold two Marginal Fields – Kugbo West and Okiori – to it, which it had already handed over to the Federal Government / Nigerian National Petroleum Corporation (NNPC).

Aiteo alleged in its statement of claim that shell, “knew or ought to have known” that it had handed over the wells to the NNPC for which it also “received valuable consideration in or about 2009 prior to the agreement for assignment.”

The plaintiff made the claims against Shell (the defendant) in the suit marked, FHC/ABJ/C8/738/2021, and filed by its counsel, Kemi Pinheiro, SAN. The $2.5 billion comprises a court order for Shell to refund to Aiteo $46.2 million as payment attributable to Kugbo West and Okiori oil wells being money it had received for a consideration which had failed.

Another $52 million being the interest that ought to have accrued on the sum paid on the two wells, $500,000 general damages, payment of $2.1 billion as the amount Aiteo would have derived from the sale of 32,000,000 barrels of crude oil and other petroleum products from the Kugbo West and 41,000,000 barrels of crude oil and other petroleum products from Okiori wells.

Aiteo averred that Shell breached a fundamental term of the agreement for assignment dated October 17, 2014, concerning the Kugbo West and Okiori oil wells.

SPDC was the legal and beneficial holder of a 30 percent undivided participating interest in OML 29, which is part of the undivided percentage interest held by the defendant in conjunction with TEPING, NAOC, and NNPC, amongst others. Prior to the assignment of the lease to Aiteo, Shell as the operator of OML 29 published an Information Memorandum in October 2013 wherein it invited bids from interested entities for the acquisition of their joint undivided 45 percent participating interest in OML 29.

The plaintiff claimed it did not only join others to bid for OML 29 but emerged successful. “As consideration for the agreement, the plaintiff made the following respective payments of; $220million as deposit pending the negotiation, completion and execution of the transaction documents and relevant agreements and the balance of 2,130,000,000 upon the execution of the transaction and acquisition documents and the agreement.”

Aiteo further averred that based on the agreement for assignment dated October 17, 2014, Shell in conjunction with TEPING and NOAC as assignors transferred to it their entire participating interest in OML 29 and in the process purportedly also transferred their participating interest in the wells, “when they knew or ought to have known that they had surrendered and given the wells to the NNPC/ the federal government about five years earlier for valuable consideration”.

While Aiteo claimed its bid for the acquisition of OML 29 was based upon a complete reliance on the representations in the electronic data room information, IM and the Agreement, particularly as they concern the wells contained within OML 29, it noted that issues came up in 2020 when it wanted to commence work on the assigned wells.

“The plaintiff found that the wells had been earlier, re-conveyed by the defendant to the NNPC on or about 2009,” Aiteo added.

Industry watchers, intrigued by the legal tussles in Nigeria and UK, observed many pitfalls outside the courtroom for Aiteo. Key among them the indigenous firm’s probable inability to meet up with the renewal fee of the prolific OML 29.

But it emerged that Aiteo had quietly completed payments of $82 million to the Department of Petroleum Resources (DPR) for the renewal of its operational lease on Oil Mining Lease (OML) 29.

Documents show that Aiteo on January 22, 2019 made the last and final payment of $18, 23,000.00 to the DPR bringing the total amount of payment for the renewal of the oil block for another 20 years to $82,006,468.23.

One of the documents contained the spread of the payment to the DPR in the ratio: $18,455,000.00 paid on January 22, 2018; $9,227,500.00 and $9,227,500.00 both paid on January 22, 2018 and November 6, 2018. Another sum of $20 million was also paid to the DPR by Aiteo on December 18, 2018 and $6,866,468.23 was paid on November 14, 2018, and then $18, 23,000.00 paid on January 22, 2019.

This investigation was carried out under the Collaborative Media Engagement for Development Inclusivity and Accountability Project of the WSCIJ, with funding from the MacArthur Foundation.

INVESTIGATION: Secret looting of the Cabotage Vessel Financing Fund

0

By Chioma Victory and Lateef Ahmed

Next to oil and gas, Nigeria’s maritime sector is the country’s second-largest cash cow. Every season the knives are out as politicians and bureaucrats jostle for plum positions against powerful oligarchs and their surrogates hell-bent on seizing or retaining sizable stakes in NIMASA (Nigerian Maritime Administration and Safety Agency), NPA (Nigerian Ports Authority), NCDMB (Nigerian Content Development & Monitoring Board), the Nigeria Customs Service, Maritime Academy of Nigeria Oron, the Apapa Port Terminal, Tin Can Island port, the Port Harcourt Seaport, Warri Port, Lilypond; about 24 other port terminals and a host of jetties.

 Indeed, the Nigerian maritime sector is not a turf for the faint-hearted. Erstwhile Minister of Transport, Rotimi Amaechi once confessed thus:

“Basically, our maritime sector has a lot of problems. First, there are people who make money from illegalities in the industry. Those people would never allow you to succeed. I am the first Minister that has fought battles with them without being removed. It is a sector that if you put your head in it, they would chop it off”.

Amaechi had gone further to say that “the maritime sector is too toxic and suspicious”, adding that some powerful stakeholders in the sector were so desperate they stalked him in the dead of the night.

A recent investigative check by the Economic and Financial Crimes Commission (EFCC) on the leadership of the Nigeria Ports Authority (NPA), is summarized as “acts of abuse of office, misappropriation of public funds, fraud and money laundering.”

BUSINESS LEAKS has since found out that one burning issue that should be on the EFCC checklist is the whereabouts of the hundreds of millions of dollars meant for the Cabotage Vessel Financing Fund (CVFF). The fund administration is so shrouded in secrecy that nobody is sure of the actual figure – a two percent accrual running almost 20 years – just as nobody has come forward to say where the fund is being warehoused.

The Ministry of Finance, the Central Bank of Nigeria (CBN) and the Office of the Auditor General of the Federation have all maintained a convenient silence even in the face of discrepancies in figures indiscriminately dished out by successive Director-Generals of NIMASA, the supervisory agency for CVFF.

The CVFF was established under the Cabotage and Inland Shipping (Cabotage) Act 2003 to promote indigenous shipping through ship acquisition. Essentially, the fund is to help indigenous ship-owners to purchase new ships and grow their fleet so as to compete with their foreign counterparts. The CVFF is also meant to provide support to Nigerian operators in domestic and coastal shipping whose existence is daily threatened by a tribe of foreign vessels illegitimately doing business along Nigeria’s 853-kilometre domestic routes.  

To achieve this national objective, a two percent levy is charged ship owners on any vessel engaged in coastal trading. In addition, revenues flowing from tariffs, fines and waivers under the Cabotage Act are also paid into the CVFF.

Documents available to BUSINESS LEAKS show that there are a little over 25,000 foreign vessels illegally doing business in Nigeria’s vast exclusive economic zone. These foreign vessels are individually hijacking economic opportunities in oil and gas, fishing and logistics statutorily reserved for citizens of Nigeria. Not only are these economic opportunities harvested by foreigners with all the financial gains exported overseas, but hundreds of thousands of employment opportunities in Nigeria are surrendered to the Chinese, Brazilians, Japanese, Europeans, Russians, Taiwanese, and nationals of Thailand, Vietnamese, South Africa and elsewhere. Because these foreigners operate in far-off territorial waters, the average Nigerian in coastal villages and capital cities have no idea of their presence and therefore hardly are able to connect their illegalities to the economic woes facing the nation.

It was in the effort to reverse the fortunes of Nigerians in the maritime sector that the CVFF was established. Vessel owners operating in Nigeria’s territorial waters pay two percent of contract sums, denominated in dollars, to the CVFF in the custody of NIMASA and which is to be disbursed to indigenous ship owners to increase the number of vessels in the local fleet.

Investigations reveal that since the two percent regime commenced in 2003 not one kobo has been disbursed to any Nigerian operator just as not even a canoe or tug boat has been added to the indigenous fleet by support of the CVFF. From the beginning, the CVFF contributions – something like the education tax – was going into the coffers of NIMASA warehoused in commercial banks. The CVFF Act stipulates the disbursement process to be coordinated jointly by NIMASA, Minister of Transport and the National Assembly. While NIMASA is to prepare the disbursement guidelines, the Transport Minister is to give approval of select beneficiaries while the signoff is to come from the National Assembly. In the 19 years of its existence, NIMASA, the fund custodian, is yet to complete the paperwork for disbursement.

USD 3.24 billion in private pockets

The CVFF is the successor scheme to another interventionist programme, the Ship Acquisition and Ship Building Fund (SASBF). Under the SASBF, administered by the then National Maritime Authority (NMA) – now called NIMASA – indigenous operators were able to purchase vessels to boost the local fleet using funds provided under the SASBF. Among the beneficiaries were Bamanga Tukur, General Theophilus Danjuma, Hassan Adamu and Captain Emmanuel Iheanacho. The CVFF in 19 years is yet to produce a single beneficiary.

Buying ships ostensibly was the last thing on the mind of CVFF managers. Successive Director-Generals of NIMASA were more concerned with forex trading, fixed-deposit schemes and sundry wheeling and dealings with commercial banks where they maintained multiple accounts. That multi-billion-naira racket subsisted until the Treasury Single Account (TSA) was introduced.

Meanwhile it was voodoo accounting at NIMASA with no one ever able to say how much the different commercial banks engaged in the scheme had collected in the name of CVFF. In 2014, NIMASA announced the status of the CVFF fund to be $124 million. The figure drew the ire of members of the Nigerian Shipowners Association (NISA), some of whom began to buy into an old suspicion that the fund was being plundered.

In 2018, NIMASA under a new Director-General, Dakuku Peterside, told anxious indigenous operators that the CVFF coffer had a total of $124 million – the exact amount bandied four years earlier. It was an unintended confirmation that the fund was being plundered.  Not even the Director-General had an answer to the whereabouts of the accruals between 2014 and 2018. The declaration from Dakuku heightened suspicion that even the $124 million officially stated in 2014 was only a fraction of what was accumulated in 11 years.

Findings by BUSINESS LEAKS show that there are a little above 2,500 foreign vessels illegally carrying out coastal services designated for indigenous operators. The 2 percent CVFF contributions are largely made by these foreign operators trading in Nigerian waters illegally. The foreign vessels are fraudulently issued waivers by the Transport Ministry to enable them to operate on domestic waterways. In collusion with international oil companies (IOCs) with an aversion to patronizing indigenous shipowners, NNPC Limited, in gross violation of Nigerian laws gives local jobs to foreign vessels have no problems paying to obtain waivers with permits to fly Nigerian flags. They also have no problem paying the two percent CVFF levy to NIMASA.

All over Nigerian waters, these foreign ships are seen receiving imported petroleum products from mother vessels and transporting same to depots and tank farms for local distribution.

Investigations further showed that as of 2018 each of these vessels was making over $18,000 daily on chatter services. Two percent of $18,000 is 360 dollars.

The maths show that 2,500 vessels paying a paltry $360 a day to NIMASA would amount to $900,000 daily accrual to CVFF. In a month, the figure would be $27 million; and in 12 months the CVFF grosses USD 324 million. This hefty sum is literally carved up by a hound of vested interests operating in quasi-official capacity in Nigeria’s lawless territorial waters. In 10 years, a minimum of $3.2 billion have been funneled into private pockets.

BUSINESS LEAKS further gathered that powerful political figures, families of oligarchs to whom the maritime sector has been bequeathed to for decades, and elements within the military appoint their own collection agents to man strategic points along Nigeria’s 853-kilometer coastline. To NIMASA and the self-appointed collection agents, the CVFF has been reduced to a war booty to be channeled into private pockets. Ship acquisition for indigenous operators, for which the CVFF was created, is never in the bargain.

As the influx of illegal foreign vessels guarantees an endless flow of forex to the leadership of NIMASA, the Transport Ministry, and cronies elsewhere, there is no incentive for officialdom to escalate processes to make the CVFF achieve its sole objective of expanding the indigenous fleet. Evidence abounds that the fewer local ships and the more foreign vessels, the more easy money for the CVFF administrators.

CVFF fund used to purchase properties in Banana Island

From forex trading to fixed deposit transactions, the CVFF so far has been utilized only in the breach. Aside from the direct benefits flowing from brazen transactions with commercial banks pre-TSA, successive leadership of NIMASA had learned to divert the fund to other projects from where it would be easier to misappropriate.

In 2016 it was revealed that an executive director at NIMASA used part of the interest gain on the CVFF to purchase N400 million property in Banana Island Lagos.

During the tenure of Patrick Akpobolokemi as Director-General of NIMASA, a huge part of the CVFF was diverted to send over 2500 cadets overseas for the National Seafarers Development Programme (NSDP). Another part of the fund was also used for capacity development in some schools. The misadventure extended to construction of shipyards and technical colleges; ending in N17 billion paid for two hectares of land for the temporary site of the Nigerian Maritime University (NMU) in Kurutie, Delta State.

In the heat of the moment, while in office, Akpobolokemi confessed to extreme political pressure on the CVFF; saying he was being inundated with requests from politicians who viewed the fund as another national cake.

While the fund was depleting, Patrick Akpobolokemi officially announced dates for CVFF disbursement to beneficiaries. It turned out a phantom. Transport Ministers and DGs of NIMASA before him used the same trick. Those after him resorted to the same red herring.

In 2009 after six years of building the fund, the first disbursement was announced by Transport Minister, Ibrahim Isa Bio who disclosed that over N14 billion had been generated. It never happened. The DG of NIMASA at the time was Temisan Omatseye. By June 2010 the fund had grown from $48 million to over $66 million. By September 2012, the fund had exceeded $100 million.

Between Dakuku Peterside as Director General of NIMASA and Rotimi Amaechi as minister of Transportation, the veil of secrecy thickened around the CVFF. On several occasions, Dakuku promised to disburse the funds. Amaechi on the other hand pointedly told stakeholders that no funds would be disbursed for as long as he remained the minister. He said he had found out that.  Nigerian shipowners had no ships. He went further to describe them as unserious. Not many people were amused given that it was corruption in government that had made many indigenous players crash out of business after almost two decades of waiting for fund disbursement. Some of the fund contributors are known to have died while waiting for the CVFF.

Records obtained by BUSINESS LEAKS showed that indigenous shipping companies had at at 2017 contributed sizable sums to the CVFF. Among them are Starz group, $1.25 million; C&I Leasing, $1.8 million; Slok, $1 million and Seabulk, $1.3 million.

The red herring reached a climax in 2019 when Rotimi Amaechi announced he had secured the President’s approval to disburse funds. After two years of waiting, the Minister in 2021 announced a withdrawal of the so-called presidential approval.  It was at this point that many indigenous stakeholders became convinced there was nothing left in the CVFF coffer to be disbursed.

Though the current Minister of Transport, Mu’azu Sambo, and the current DG of NIMASA, Dr Bashir Jamoh have between them coughed out new promises, the beleaguered indigenous shipowners are unwilling to join another merry-go-round.

Nigeria not ready for AfCFTA

One of the disasters looming from the official sabotage of the CVFF is that it puts Nigeria on a weak footing harnessing the gains of the Africa Continental Free Trade Agreement (AfCFTA). With a supply chain infrastructure deficit, there is no way Nigeria can compete will fellow African countries under AfCFTA despite its huge market size.

According to Aderonke Alex-Adedipe Nigeria contributes an estimated 76% of total trading volume in the ECOWAS region. This is made possible because of the ECOWAS treaty which provides for the free movement of people and goods throughout 15 West African countries. The AfCFTA increases that volume by granting Nigeria access to 54 countries with a population of 1.2 billion and a market worth a combined $2.6 trillion in GDP.

Producers and retailers expanding their operations to other markets would depend on a distribution network that can efficiently deliver goods to their intended markets. This would give rise to increased investments in the distribution and logistics supply chain to ensure the infrastructure needed for transportation of goods is available. The winners would be countries that invest in the logistics and transportation space to cater for the large volume of goods that would be involved in cross-border trade.

Mallam Aminu Umar, Former President, Nigerian Shipowners Association put it more succinctly in an interview with Ships and Ports.

“If we cannot buy more vessels to increase capacity, there will be problems. With AfCFTA, there will be more intra-African trade. There will be more cargo that will be moved from one African country to another. Without newer ships, we cannot participate in such trade. If we don’t have the money to invest in shipping, it will be very difficult for us to participate in AfCFTA. 

Don’t forget that we have Dangote Refinery coming up. We have Dangote Fertilizer coming up too. In Bonny, we have the LPG gas coming up. Some other African countries will need urea that will be produced by Dangote Fertilizer. Some African countries will need LPG gases. These are a lot of shipping activities. Are we going to stand by while foreigners cart away revenue that should accrue to Nigeria? 

If the CVFF is disbursed and indigenous shipowners renew their fleets, the country will rake in a lot of foreign exchange earnings from the expected shipping activities that will come with AfCFTA.”

This investigation was carried out under the Collaborative Media Engagement for Development Inclusivity and Accountability Project of the WSCIJ, with funding from the MacArthur Foundation.

How Defence products expanded Nigeria-Turkey trade volume

0

By Nehemiah Morris

Nigeria is Turkey’s top trading partner in Sub-Saharan Africa with a trading volume of $754 million in 2020. For many years, Nigeria’s main imports from Turkey currently were clothes, food, engine, automobile parts, pharmaceuticals, and others, while exports include sesame seeds, raw and semi-processed leather, and rubber. In succeeding years Nigeria worked at expanding her trade and business with Turkey in different sectors of the economy, including mining, textiles, oil, and foods, Turkey aimed at increasing its investment in Nigeria, particularly in energy and construction.

In 2020 Nigeria exported $1.22 billion to Turkey. The main products exported were crude oil ($824M), petroleum gas ($282M), and other oily seeds ($102M). During the last 25 years, the exports of Nigeria to Turkey have increased at an annual rate of 22.7%, from $7.35 million in 1995 to $1.22 billion in 2020.

In 2020 Turkey exported $723 million to Nigeria. The main products exported to Nigeria were refined petroleum ($153M), Gypsum ($34.4M), and iron structures (28.8M). During the last 25 years, the exports of Turkey to Nigeria have increased at an annual rate of 17.4%, from $13.1 million in 1995 to $723 million in 2020. Recently Turkey has added defense products to its list of export to Nigeria.

Turkish Dearsan Shipyard has now laid the keel of the first of two high-endurance offshore patrol vessels (HE OPV 76) for the Nigerian Navy at Dearsan’s facilities in Istanbul.

The ceremonial keel-laying of the first of two 76-meter patrol vessels being designed and built by Dearsan Shipyard for the needs of the Nigerian Navy took place in Tuzla, Istanbul, in the presence of distinguished guests.

Among them were Nigerian Defense Minister Bashir Salihi Magashi who was the chief guest at the event, Turkish Navy Commander Admiral Ercument Tatlioglu, Turkish Deputy Defense Minister Muhsin Dere, Nigerian Navy Commander Vice Admiral Awwal Zubairu GAMBO, and Dearsan Shipyard President.

Last year, Dearsan Shipyard signed a deal with Nigeria to build two offshore patrol vessels for the Nigerian Navy. The keel-laying ceremony marked the beginning of the construction of the vessels, which are expected to be delivered within 37 months, according to the previous statements of the company officials.

BUSINESS LEAKS gathered that procurement of the HE OPV 76s represents an important milestone in the Nigerian Navy’s fleet renewal push toward implementing its 2021-2030 Strategic Plan. According to the statements of the Chief of the Nigerian Navy in October 2021, these OPVs will be capable of carrying out maritime interdiction operations, surveillance, and Special Forces operations, as well as providing naval fire support to land forces, which will help to sustain the Nigerian Navy’s operational engagements on an upward trajectory.

The HE OPV -76 has an overall length of 76.90 meters, a beam of 11.90 meters and a displacement of 1,100 tons, according to the video released by the company. The vessel will be operated by 47 personnel and have a range of 2500 nautical miles at the economical speed. HE OPV 76 will be able to stay at sea for 16 days.

The ship has a flight deck that can house a single helicopter but no hangar. The main engines are four MAN 18VP185 diesel engines with a top speed of 28kt.

The main gun of the ship will be the 40-millimeter MARLIN gun of Leonardo and will be armed with the Aselsan’s 30-millimeter SMASH at the stern of the ship. The ship will also be equipped with two Aselsan 12.7 mm RWS STAMP.

The Turkish company HAVELSAN will supply the ADVENT combat management system for the new OPVs, and the operator consoles will be supplied by another Turkish company, YALTES. The sensor suit of the new OPVs consists of the 2D surface search radar from the Italian company GEM Elettronica and the fire control system EO. The HE OPV-76s will carry 2 RHIBs for relevant operations.

Last year Dearsan announced on its LinkedIn page that it was to build 2 OPVs for the Nigerian Navy. Dearsan had stated on the social media:

“Our Shipyard will build 2 units of 76 m OPV (76 meter Offshore Patrol Vessel) within the scope of the contract signed with the Nigerian Navy. The OPV’s, which have been configured in line with the Nigerian Navy requirements, will be designed and build entirely within our shipyard’s capabilities and equipped with indigenous systems.”

The vessels are scheduled to be delivered to the Nigerian Navy within 37 months.

The ships will be outfitted with indigenous sensors and systems, according to the agreement, but the details of the systems and subcontractors have not been disclosed by the signatories.

Speaking on the occasion of the event, the Chief of the Nigerian Navy, Admiral Awwal Gambo, stated that the contract signing ceremony was another milestone achievement by the Nigerian Navy in the fleet renewal effort towards realizing the 2021-2030 Strategic Plan.

Admiral Gambo recalled that Nigerian Navy has in the last couple of months brought to bear its dominant status in the region by sustaining an aggressive presence in the nation’s maritime environment, leading to drastic reduction in acts of criminality in the domain. This development he added has been acknowledged by the International Maritime Bureau (IMB) in its Global Piracy Report of 14 July 2021, indicating the lowest total of piracy and armed attacks against ships in 27 years.

The Admiral also emphasized the importance of these vessels to carry out maritime interdiction operations, surveillance and special forces operations as well as provide naval fire support to land forces, saying:

“The OPVs will also be capable of conducting search and rescue operations, anti-piracy, anti-smuggling and anti-drug trafficking operations and disaster relief operations among others.”

The Chief Executive Officer of Dearsan, Mr Murat Gordi, pointed out that this project will further strengthen ties between the Federal Republic of Nigeria and Turkey through the provision of added value in technological transfer and expertise.

DEARSAN Shipyard is regarded as one of the largest shipbuilders in Turkey. The company was established in 1980 and has been manufacturing naval boats since 2007. Dearsan delivered 16 Tuzla-class patrol boats to the Turkish Navy in a four-year period, as well as ten Serhet-class patrol boats to Turkmenistan, an improved version of the Tuzla-class.

INVESTIGATION: Waivers granted steel importers enough to rebuild Ajaokuta plant

0

By Kayode Taiwo

One foreign company alone, WEMPCO Steel Mills Company Limited, received a staggering $3 billion (N1.3 trillion) as import duty waiver from the Nigerian government. That was in 2007.

Contrary to subsisting directives that duty waivers, concessions, incentives and other exemptions be suspended, the federal government in 2007 had gone ahead to grant exclusive import waivers amounting to $3 billion to WEMPCO, a Chinese company that said it needed the waiver to establish a $250 million cold rolled steel plant in the country.  

The $3 billion was not the only waiver to be received by WEPMCO, a company owned by two Chinese brothers – Lewis Tung and Robert Tung. In the month of January 2013 alone, WEMPCO was granted duty exemptions of N12.9 billion for everything they imported, including tubes, for that month.

In the Nigeria steel sector, WEMPCO is known as a frontline beneficiary of duty waiver – a zero duty and VAT exemption concession granted for the importation of all plants and machinery as well as ancillary equipment, spare parts, tools, and accessories.

President Mohamadu Buhari

In June 2007, barely one month into the new government of President Umaru Yar’Adua, WEMPCO received approval reference, a letter from the Office of the Permanent Secretary, Federal Ministry of Finance, Abuja, for special incentive package for the establishment of a $250 million cold rolled steel plant in Warewa, along Lagos-Ibadan Expressway.

The approval, according to the letter, “is in line with the Federal Government drive for Foreign Direct Investment (FDI), especially in the steel sub-sector”. This letter of approval was revalidated in a letter signed by the director general of the Budget Office of the Federation on July 15, 2008, to exempt WEMPCO from a suspension on waivers that came up after WEMPCO got its 2007 approval.

Curiously, there was a litany of items on WEMPCO’s list covered by zero duty and VAT exemption which could have been sourced locally. They include, among others, lamps and lamp holders, cables; fuses, relays, plugs and sockets; various electric lamps; electric wire and cable. The fuses, relays, lamp holders, plugs and sockets; various electric lamps; electric wire and cable were one million; one million and two million pieces, respectively.

Other names of beneficiaries of duty waivers and VAT exemptions that feature prominently in import documents obtained by BUSINESS LEAKS are Saba Steel Limited, Verod Steel Limited, African Foundries Limited, KAM Industries Nigeria Limited, African Wire and Allied Industries Ltd, NFE Industries Limited, Knight Metal Manufacturing Company Ltd, Yokohama Construction Ltd, COMAG Steel and Construction Company, Jeason Steel Company Ltd, and Haano Industries Ltd.

Monaplex Industries Limited applied for $120 million zero duty waiver and levy on November 19, 2012, for the establishment of cold rolling steel complex of 200,000 metric tons per annum capacity; Zarcon Manufacturing Limited applied also for zero duty waiver and levy on November 15, 2012, to establish a cold steel rolling mill complex valued at $100 million, with a 200,000 metric tons capacity.

Saba Steel requested for and received $10 million (N4.5 billion) in import waiver. In its waiver request, Saba Steel further stated that “at the moment, the company has plan to expand and went ahead to acquire land from Lagos State government and paid all relevant fees to kick start the project. The stage of works is now 20% completion. This gigantic project is planned to be in two phases. Phase 1 will have a production line that will enable us to be producing Nail, Pipes, Motor Vehicles body parts, galvanizes roofing sheets etc.”

Verod Steel sought N12.6 billion waiver but ended up receiving N20.6 billion from the government. A trading company and major importer of iron rods, Verod Steel Limited, was granted the fabulous amount in waivers to import iron rods. In applying for the waiver, the only reason given by this company, owned by a Lebanese businessman, was “compassionate grounds”.

In a letter to the Presidency seeking the waiver, Verod Steel Limited said it was concerned about the dearth of iron rods in Nigeria which was an essential component in the building industry and that the scarcity had been responsible for the avoidable collapse of buildings in recent times. “To forestall this unpleasant development, some measures have to be put in place to abort these misgivings, so as to enable you to concentrate on good governance.”

A breakdown of the waivers granted in 2019 showed that exemptions on import charges stood at N127.7bn; surcharge, which consists of seven percent import duty was N8.6bn; and common external tariff levy, N4.6bn; Comprehensive Import Supervision Scheme, N2.6bn; while exemptions under the ECOWAS Trade Liberalization Scheme was N4.8bn.

Other customs exemptions recorded within the year are Iron Levy, N393.2m; National Automotive Council Levy N233.6m and import Value Added Tax which stood at N64.4bn.

For the 2020 fiscal period, reliefs granted were estimated at N780bn, comprising N600bn from waivers of import duties and N180bn from VAT on Import duties.

In 2020, waivers on import duty rose to N305.6bn; surcharge was N21.3bn; CET levy stood at N223 billion; CISS, N28.9 billion; ECOWAS Trade Liberalization Scheme, N19.3 billion; Iron levy, 113.8m while relief on NAC Levy jumped to N1.1 billion.

Nigerian stakeholders in the manufacturing sector have reasons to believe the sustained issuance of waivers to foreign companies with no accruable benefit to the economy is reckless support to Asians bent on de-industrializing Nigeria.

Checks by BUSINESS LEAKS failed to find one success story of the waiver policy in Nigeria in 30 years. WEMPCO, the biggest waiver beneficiary is a study in corrupt collusion, racketeering, trade malpractices, tax dodging and possible state capture.

WEMPCO produces roofing sheets, galvanized pipes, wire nails, plywood, ceramic tiles, and sanitary wares. In 2015 the federal government of Nigeria classified WEMPCO, Midland and Kam wire as upstream manufacturers of cold-rolled steel. They were to produce for the downstream manufacturers of cold rolled steel. The downstream segment would then use the cold-rolled steel for further production.

WEMPCO and the other two companies were granted import waivers that would allow them to import any shortfall in cold-rolled steel demanded in Nigeria to complement what they would produce locally to meet the demands of the downstream segment.

Downstream manufacturers wishing to import the cold-rolled steel coils were mandated to pay 20% import duty while WEMPCO, Midland and Kam Wire enjoyed 0% duty and VAT. Mindless importation became the companies’ major activity in Nigeria. At a point WEMPCO began to canvass for 45% import tariff for downstream players effectively creating a monopoly in Nigeria’s steel sector. Then WEMPCO led the other two privileged 0% importers to raise prices of cold-rolled steel. WEMPCO’s thick cold-rolled of 0.22 mm was more expensive than the 0.8mm or 0.4 mm seen in the West African market.

Investigation further revealed that in addition to the over $3 billion waivers, WEMPCO and several other Chinese companies are operating in the Lekki Free Trade Zone where they are further suffused with dozens of tax-free incentives. But that has proved not enough for WEMPCO to pay tax on its company’s profits outside the Free Trade Zone.

Information from the Federal Inland Revenue Service (FIRS) showed that the WEMPCO had been in default of tax payments for more than six years, thereby forcing the federal government to place a lien on the company’s bank activities.

Some of the taxes on which the company had defaulted were company income tax, Value Added Tax and withholding tax.

Misplaced priority

Not a few local steelworkers are of the opinion that loading foreign steel companies in Nigeria with waiver incentives is a misplaced priority. Agboola Ebenezer, a member of the Steel and Engineering Workers’ Union of Nigeria (SEWUN), told BUSINESS LEAKS it was not too late for the federal government to end its obsession with import waiver.

“It is not too late to learn from our mistakes as a nation. The managers of the Nigerian economy should stop funding Asian business and instead use the waiver money to revive or indeed rebuild the Ajaokuta Steel Complex. By so doing the flat sheets imported by WEMPCO would be supplied to the same WEMPCO and everyone else by Ajaokuta.”

Explaining further, Agboola said there are two sectors in the steel industry – the primary and secondary sectors.

 “Ajaokuta operates in the primary space whilst WEMPCO, African Steel Mills Limited, African Foundries Limited, Verod Steel Limited and the steel rolling mills in Oshogbo, Jos and Kaduna operate in the secondary space. Ajaokuta, the primary sector, whose raw material is iron ore, should be the source of raw material for industries in the secondary sector. The money pumped into WEMPCO in the name of waiver can bring Ajaokuta back to life.

Nigeria’s rich deposits of iron ore, much of it in Kogi state, the region where Ajaokuta Steel Plant is located, makes steel a viable target for government’s revenue campaign, and also offers the scope to develop other industries.

The plant has a 68-kilometer road network and is meant to accommodate 24 housing estates, a seaport, and a 110mw power generation plant. If operational, it could provide nearly a million jobs.

Construction of the Ajaokuta steel complex, which was supposed to produce as much as 5 million metric tons of steel a year, began in 1979. Thousands of Russian engineers descended on Nigeria in the years that followed. However, work stalled due to government’s failure to pay the builders, Russia’s Tyazhpromexport, on schedule.

By 2004, when it was taken over by India’s Ispat Industries Ltd., the plant was yet to produce any steel. Ispat’s concession was revoked in 2008 and it took Nigeria eight years to come up with a renegotiated concession agreement. Many steelworkers believe that getting Ajaokuta running would be one of the fastest ways of attracting foreign direct investment to Nigeria.

The plan to develop the Iron and Steel Sector began with the Yakubu Gowon Regime with the formation of National Steel Development Authority (NSDA) in 1971

The mandate of the Authority was essentially to develop the steel sector. What followed was the formation of various steel companies during the General Muritala Mohammed/Obasanjo Regime. These companies started realizing their potentials during the Shagari Regime. The companies include Ajaokuta Steel Company, Kogi State; National Iron Ore Mining Company Itakpe, Kogi State; Delta Steel Company Ovwian Aladja, Delta Steel; Jos Steel Rolling Company, Jos Plateau State; Katsina Steel Rolling Company, Katsina State; Oshogbo Steel Rolling Company, Osun State;

National Steel Raw Materials Exploration Agency, Kaduna State; National Metallurgical Development Center, Jos Plateau State; and Metallurgical Training Institute Onitsha, Anambra State.

Ajaokuta steel plant project and the adjoining steel rolling mills are thus stalled today. Ajaokuta has gone through many hands – The Ajaokuta plant was 90 percent built by Russia’s Tyazyproexport and designed to use local ore and imported coal. Nigeria signed a concession agreement with Ispat unit Global Infrastructure Holding Ltd. To revive the uncompleted 1.3 million tonnes-per-year mill after the collapse of an earlier $3.6 billion 10-year deal with UK-registered Solgas Energy Limited. What we witnessed thereafter was asset stripping of the plant. 

This investigation was carried out under the Collaborative Media Engagement for Development Inclusivity and Accountability Project of the WSCIJ, with funding from the MacArthur Foundation.

Foreign vessels fly Nigerian flag, corner 10-billion-dollar maritime contracts under false pretexts

0

By Abiodun Abegunde

Large foreign vessels sailing into the Niger Delta to steal crude oil are certainly not the only way Nigeria loses millions of dollars every day in the oil and gas sector. In a brazen violation of the Nigerian Cabotage and Local Content Act, smaller foreign vessels have infiltrated the country’s coastal and inland waterways, having first obtained questionable local registration and documentation that enable them to fly the Nigerian flag as if they were indigenous vessels.

Lamenting the practice, an industry insider, whose identity is masked for her safety, told BUSINESS LEAKS it is a decade-long malpractice supported by corrupt regulatory officials and big oil and gas companies who prefer to play dumb.

“The best way to explain it to ordinary Nigerians is to imagine a scenario where Turkish Airlines or South Africa Airways or British Airways, instead of restricting themselves to international routes as stipulated by law, decide to paint their aircraft in Nigerian colour and begin to operate local flights from Abuja to Owerri,” the female insider explained.

The Cabotage Act comes with the primary objective to reserve the commercial transportation of goods and services within Nigerian coastal and inland waters to vessels flying the Nigerian flag and owned by persons of Nigerian citizenship.

The Coastal and Inland Shipping (Cabotage) Act No 5 of 2003 Laws of the Federation of Nigeria Act is “to restrict the use of Foreign Vessels in Domestic Coastal Trade”; “to promote the development of Indigenous Tonnage”; and “to establish a Cabotage Vessel Financing Fund and for Related Matters”.

Specifically, the law governs transportation activities within Nigeria’s over 800-kilometres coastline. It covers the carriage of goods and services from one coastal point to another point in Nigeria; the carriage of goods and passengers in the exploration, exploitation or transportation of mineral or non-natural resources; and the operation of a vessel or any other marine activity of a commercial nature – including towage, salvage and dredging – in Nigerian waters in accordance with the Nigerian Maritime Safety and Administration Agency’s (NIMASA) guidelines on its implementation.

Warri Refinery case

BUSINESS LEAKS gathered that in August 2015 an incident was recorded at the Warri Refinery which precipitated a shutdown for three weeks. Vitol, one of the big oil traders operating in Nigeria was a frequent receiver of LPFO allocation from the then PPMC (Pipeline and Product Marketing Company) of the NNPC. LPFO (Low Pour Fuel Oil) is one of the byproducts of crude refining and Vitol had just been allocated 50KT LPFO.

While the Cabotage law requires oil traders to engage local shuttle vessels in evacuating their products, the indigenous vessels are systematically shunned. Explaining further, the female insider said that in addition to building indigenous capacity in the maritime trade, expanding job opportunities and stemming capital flights, the Cabotage law was written with practical purposes in mind.

“Take the LPFO for example, the big vessels that would take the product to final destinations in Europe, Asia or elsewhere cannot get beyond certain points because coastal waters are not deep enough for big ships. And where the water is deep enough, safety rules forbid vessels heavier than 150MTS to sit on LPFO loading berth. So it is local shuttle vessels of 150MTS with maximum LOA (length overall) of 150 metres; sometimes exceptions are made for 158 metres,”she said.

Investigations revealed that rather than charter Nigerian vessels, foreign oil trading companies devise ways to circumvent the law; in the process undermining the Nigerian economy and national interests.

To fulfill all righteousness, agents of the foreign companies would engage Nigerian shuttle vessels but only on paper to secure loading slot; after which they call in a foreign vessel from another country.

For its LPFO, Vitol chartered, two vessels by names MT Leon Herc and M/T Tapti (IMO 91180560) from South America which AIS shipping position at the time was Forteleza in Brazil. Because it took the vessel a long time to get to Nigeria, the Warri Refinery had to shut down and stop production because there was no space left in NNPC storage facility to accommodate new refined products.

The official reason given for the shutdown was routine maintenance. For over three weeks while the shutdown lasted, Nigeria lost hundreds of millions of dollars which would have been avoided had local shuttle vessels been engaged.

BUSINESS LEAKS further gathered that the foreign vessel MT Tapti, was longer than the specified 150 metres LOA. In fact, the LOA of MT Tapti was 183 metres; making it noncompliant with NNPC safety rules and restrictions for LPFO loading berth. MT Tapti was larger and longer and unsuitable for coastal operations. A vessel with higher tonnage specification could cause damage to loading arms.

While loading the LPFO, MT Apati suffered a complete blackout and became grounded for days causing an almost complete blockade of the loading channel which made it difficult for other vessels to manoeuvre. A tugboat finally towed it to a place called Bennet Island.

A 10 billion dollar local market

Renowned maritime lawyer, Emeka Akabogu of Akabogu & Associates estimates the size of Nigeria’s cabotage economy or maritime charter market at USD 10 billion annually. This makes the Nigerian coastal market irresistible to foreign interests; some from as far as Asia and the Middle East.

Akabogu delineated this market to include “an active coastal shipping environment, in which imported petroleum products must be transshipped daily from mother vessels to daughter vessels and moved from offshore locations to Nigerian jetties and terminals; and a robust fleet of offshore support vessels that anchor offshore operations in oil exploration and production.”

Undeterred by the Cabotage law clearly restricting coastal business to vessels wholly owned by Nigerian citizens; vessels wholly manned by Nigerian citizens; vessels registered by Nigerian citizens; and vessels built by Nigerian shipbuilders, foreign operators continue to practice cabotage trade on the nation’s territorial waters, a trade reserved for indigenous operators.

In March this year the Ship Owners Association of Nigeria (SOAN) sent a protest letter to NIMASA, NNPC, and the Nigerian Content Management Development Board (NCMDB) over the activities of foreign-flagged vessels operated by Messrs Unibros/Orion Marine to participate in the domestic shipping of petroleum products solely reserved for Nigerians.

A company called Topaz Energy and Marine Dubai

Aside Messrs Unibros/Orion Marine, inducing the anger of local ship owners, BUSINESS LEAKS uncovered another foreign company by the name Topaz Energy and Marine Dubai.

Topaz is an Emirati company registered in Bemuda, a notorious tax haven, but domiciled in Dubai at Sheikh Zayed Road, Dubai, United Arab Emirates (UAE).

In a bid to operate in Nigeria’s 10-billion-dollar coastal market, Topaz Energy and Marine Dubai registered in Nigeria a company called Team Offshore Nigeria Limited with the address as Atlantic House, 121 Louis Solomon Close, Victoria Island, Lagos. To convince regulators that Team Offshore is an indigenous company, it was registered with two Nigerians, Felicia Mosuro and Ifeyinwa Mogekwu, as directors.

Documents obtained by BUSINESS LEAKS show that soon after registration, the ownership of the supposedly indigenous company, Team Offshore Nigeria changed hands. The two Nigerian directors, Felicia Mosuro and Ifeyinwa Mogekwu on 11th August 2017 relinquished their stakes in the company to two foreigners, Tom Knudsen and Jay Kumar Daga.

Documents from the Corporate Affairs Commission, Form CAC 7A dated 11 August 2017 listed the two foreigners, Tom Knudsen and Jay Kumar Daga , as the only directors of Team Offshore Nigeria Limited.

Tom Knudsen’s residential address was given as Level 58, Almas Tower, Jumeirah Lake Towers, Dubai, United Arab Emirates. Jay Kumar Daga’s residential address was also given as Level 58, Almas Tower, Jumeirah Lake Towers, Dubai, United Arab Emirates. It was not a coincidence that Knudsen and Kumar share the same residential address. Both men at the time were senior employees of Topaz Marine and Energy Dubai, a clear confirmation that Team Offshore is not owned by Nigerians. Jay Kumar Daga holds an Indian nationality. While Knudsen was Director Africa, Jay Daga was the company’s Chief Financial Officer.

At registration, the original directors of Team Offshore Nigeria Limited, the two Nigerians Ifeyinwa Mogekwu and Felicia Mosuro were allotted 3,250,000 and 3,249,999 ordinary shares respectively. Documents show that on 28 September 2017 both women relinquished their shares by transferring same to foreign directors through ADCAX investments Limited. Following the transfer, the shareholding structure of Team Offshore Nigeria Limited became as follows: 6,499,999 (Six million, Four Hundred and Ninety-Nine Thousand, Nine Hundred and Ninety-Nine) ordinary shares to ADCAX Investments Limited and 1 (one) ordinary shares to Felicia Mosuro. It is believed that the Nigerians who acted as proxy directors for the registration were employees of a law firm in Lagos.

Thereafter, about 13 foreign vessels owned by Topaz Marine Dubai were redeployed to Nigerian waters, stripped of their foreign flags and adorned with Nigerian flag. The vessels in Topaz fleet are mostly Platform Support Vessels (PSVs) and anchor handlers.  Among them are Topaz Seema, Topaz Faye, Topaz Amani, Topaz Sophie, Topaz Xara, Topaz Jurong, Topaz Captain, Topaz Energy, Topaz Resolve, and Caspian Breeze. These Topaz vessels are known to have been engaged by multinational oil companies such as Mobil, Total and Agip.

Records obtained by BUSINESS LEAKS show that Topaz vessels have been engaged by oil majors in long-term contracts, almost on a daily basis; providing services in Yoho oil field, Agbara Field, Akpo Field and also chartered by oil companies for offshore survey operation. They are: Topaz Sophie (Yoho Field – Mobil), Topaz Captain (Yoho Field – Mobil), Topaz Amani (Yoho Field – Mobil), Topaz Xara (Yoho Field – Mobil), Topaz Endurance (Agbara Field – Agip), Topaz Energy (Akpo Field – Total) and others. The vessels have also been attached to other offshore clients yet to be ascertained.

Indigenous ship owners say each of these vessels make over $18,000 daily on chatter services. The forex are almost entirely repatriated out of the country. Meanwhile local operators who have borrowed money to acquire vessels but cannot find jobs have found their businesses on cliff hangers.

More vessels owned by Topaz Marine Dubai have been found to be operating in Nigeria’s coastal market in similarly subterranean arrangements. The vessel Topaz Amani is listed under CNS Marine Nigeria Limited; Topaz Isra is under Cepsadeen Nigeria Limited while Topaz Seema is listed under Godef West Africa Limited.

The Ship Owners Association of Nigeria (SOAN) say many of its members are under debt burden because the coastal business has been infiltrated by foreign operators that include Indians, Pakistanis, Syrians, Lebanese, and Europeans.

Maritime operator, Iyke Osuagwu, told BUSINESS LEAKS that in addition to suffocating indigenous ship owners, the activities of foreign vessel operators has left in a lurch many Nigerian seafarers, including those trained overseas by NIMASA and their compatriots trained at the Maritime Academy Oron. Local vessels meant to give them employment are themselves gasping for breath.

At an event to mark the 2022 World Seafarers Day in Lagos, a ship captain, Afred Oniye, revealed that over 70 percent of Nigerian seafarers have no jobs. Oniye blamed the situation on corruption and abuse of the Cabotage Act; adding that should regulatory agencies enforce the law, 50 percent of Nigerian seafarers would gain employment.

“So, we are saying, enforce that law that any vessels on Nigerian waters should be Nigerian and not foreign. We have the Cabotage Act that says the ship must be built in Nigeria, manned by Nigerians and crewed by Nigerians. Even if the ship was not built in Nigeria, at least it must be manned by Nigerians,” Captain Oniye said.

The agencies to enforce the Cabotage Act are NIMASA and NCDMB. By extension, the 10-billion-dollar coastal sub-sector is further protected by the Nigerian Oil and Gas Industry Content Development (NOGIC) Act. The aim of the latter is to increase Nigerians’ participation in the oil and gas industry.

Local industry operators dispute NIMASA’s claim that the agency had facilitated the employment of 800 Nigerian seafarers. BUSINESS LEAKS contacted NIMASA but there was no response to our media enquiry demanding the names of the 800 seafarers and the shipping companies they work with.

BUSINESS LEAKS obtained a written response from Topaz sent to the National Assembly defending its activities in Nigeria. Topaz described its relationship with Team Offshore as “strictly contractual in nature”, adding there was “no shareholding interest or joint venture between the parties.”

The Emirati company further added that its relationship with Team Offshore is “governed by a Management and Technical Services Agreement under which Topaz provides certain services to Team Offshore.”

“Team Offshore bareboat charters in vessels from Topaz to conduct its business in Nigeria. To emphasize, Team Offshore is a wholly 100% Nigerian-owned indigenous company and Topaz has no shareholding interest in the company.”

The 17-page response from Topaz was silent on the beneficial ownership of Team Offshore; just as it is silent on all the contentious issues; including accusation of rental of two Nigerians for the purpose of registration to qualify to fly the Nigerian flag; the dispossession of the two Nigerians of their shareholdings as documented with the Corporate Affairs Commission; and the transfers of the same shares to two foreigners who were senior employees of Topaz in Dubai, thus making Team Offshore a 100% foreign company, flying the Nigerian flag under false pretenses.

This investigation was carried out under the Collaborative Media Engagement for Development Inclusivity and Accountability Project of the WSCIJ, with funding from the MacArthur Foundation.

Gilbert Chagoury: The secret comeback of Abacha’s billionaire bagman

0

-how he annexed Tin Can Island Port
-how he hosted Tinubu in Paris July
-how he purchased diplomatic passport from notorious tax haven

By Jude Kwayidagami

When he set up his first company in Nigeria during the military era, state capture was the obvious business plan of Lebanese business mogul, Gilbert Ramez Chagoury. He walked the labyrinth of Nigeria’s power corridor through successive military regimes, striking gold under the late military strongman, General Sani Abacha, to whom he was a personal economic advisor.

Dizzying accounts of mind-boggling looting, including using trucks to transport foreign currencies out of the vaults of the Central Bank of Nigeria (CBN), were some of the improbable tales that turned out to be true following the sudden death of General Abacha.

Two years after the death of Abacha, a court in Switzerland convicted Chagoury for his involvement in what was globally seen as epic treasury looting and money laundering. The Lebanese agreed to pay a $600,000 fine and return $66 million to the Nigerian government. He received hostilities from the President Olusegun Obasanjo government culminating in a 2004 sting operation by Nuhu Ribadu, Chairman of the Economic and Financial Crimes Commission (EFCC) to arrest him and seize his private jet as Chagoury attempted a secret entry into Nigeria – a country he had been forced to flee in the wake of Abacha’s death.

Ribadu would with regrets tell a foreign interviewer how Chagoury slipped through his fingers apparently on a tip-off. The private jet wasted no time in taking off as soon as it had landed. Ribadu described Chagoury as the lynchpin in the corruption that smeared the Abacha’s regime.

Though the Lebanese billionaire went to live far away from Nigeria, he was never really far away from his corporate centre of gravity. With a legion of political and business stooges, cronies and proxies working for him, he is able to conduct his affairs largely out of public glare while making several dress rehearsals to once again get his grip on the Nigerian presidency.

What is state capture?

Wikipedia describes state capture as “a type of systemic political corruption in which private interests significantly influence a state’s decision-making processes to their own advantage.” Many businesses in Nigeria have thrived on this principle. Gilbert Chagoury however; elevated it to an art. He aims high, targeting resource-rich or vulnerable third-world countries, and then finds a way of attaching a puppet string to the neck of that country’s president.

Not only did he give business advice to General Sani Abacha, Chagoury gave advice too to the then president of Benin Republic, Mathieu Kérékou – a military ruler turned politician – who ruled his country for a total of 29 years. During the Kérékou era, the Beninese economy was dominated by Lebanese businessmen who controlled the import trade from textiles to second-hand automobiles, grains to toothpaste. For his service to the President, Kérékou awarded Chagoury with a national honour – the Ordre National du Benin with the rank of Commander. Kérékou’s successor Boni Yayi in 2006 told Gilbert Chagoury to also advice him. The Lebanese also exported his service to yet another African country; this time Chad and its President Idriss Deby who in 2005 bestowed on the businessman a national honour – the Ordre National du Tchad with the rank of Commander.

Not amused in Nigeria, all that President Olusegun Obasanjo wanted to do at this time was to arrest Chagoury who cleverly avoided Nigeria like a plague. Nuhu Ribadu believed that it was powerful businessmen like Chagoury that forced his removal from the EFCC after Obasanjo’s exit. Chagoury wooed and ensnared Presidents Umaru Yar’Adua and Goodluck Jonathan. He almost made it completely out of hibernation under Jonathan but ran into troubled waters again by funding Jonathan’s re-election campaigns in 2014 against the winner President Muhammadu Buhari. He returned to hibernation for backing the wrong horse but recently began to stage a comeback hosting in Paris last July, the presidential candidate of the All Progressive Congress (APC), Bola Ahmed Tinubu.

The Chagoury business empire

Gilbert Chagoury may be ensconced in his luxury home on Rue d’lena, a few meters away from the Élysée Palace, the official residence of the French President, but his shadow looms large in many political and boardroom meetings in Nigeria. Between him and his younger brother Ronald Chagoury, is the conglomerate, the Chagoury Group which owns close to a hundred businesses spanning construction, hospitality, energy, healthcare, industry, telecommunications, real estate and entertainment.

The Chagoury owns C&C Construction Company Limited, ITB Construction, South Energyx Nigeria Limited, Hitech Construction, Shoreline Protection, Eko Atlantic City Project which they won without tender and will own for 78 years.

Eko Atlantic City

Others are Eko Hotel and Suites Lagos, Hotel Presidential Port Harcourt, Courdeau Catering, Convention Centre, Ideal Flour Mills Kaduna, Niger Delta Flour Mills, Grands Moulins Du Benin and Nigerian Eagle Flour Mills whose products include Semolina; popularly called Semo.

Yet others are Silhouette Furniture, Fleetwood Transportation, Glassforce, Ragolis Waters, Hyperia Internet, CKD Industries and Ideal Eagle Hospital which caters mostly to expatriate workers, including those of Royal Dutch Shell.

The Chagoury has a huge stake in Tin Can Island which was built by C&C Construction, an arm of the Chagoury Group, to service the growing demands of its flour mills. The Chagoury Group’s Tin Can Island Grain Receiving Facility and associated Storage Silos is one of the principal gateways for commodities arriving in Nigeria and services wheat deliveries to both Ideal Flour Mills in Kaduna and Nigerian Eagle Flour Mills in Ibadan.

From the port, the grain is transported by Fleetwood Transportation, another Chagoury Group company that operates like the Dangote Truck. The terminal handles wheat, maize and malt used for the brewing process. Industry watchers say that Tin Can practically belongs to the Chagoury family.

Some of the big contracts given to the Chagoury Group in Nigeria include the State Security Headquarters the State Security Headquarters Building in Abuja, Nigeria; he Nigerian Defence Academy; Ocean Parade Towers, a luxury residential development on Banana Island Lagos;  the National Assembly Complex in Abuja; 800 units staff housing complex for ALSCON’s Aluminium Smelter Plant; a housing, school and leisure complex for Elf Petroleum Nigeria Limited; a foreshore development project on Osborne Road Ikoyi; a 13-floor residential development project on Victoria Island; 19-floor Intercontinental Hotel on Victoria Island; a new headquarter for Magnum Trust Bank; and the new headquarters and office complex for TOTAL oil company in Port Harcourt.

Other clients are the Federal Ministry of Works; Abia State Government, the Nigerian Breweries; Bayelsa State Government and the Lagos State government.

The Tinubu factor

BUSINESS LEAKS gathered that Gilbert Chagoury began to court Tinubu from his early days as governor of Lagos State. It is said that both men share a lot in common in terms of big ambition, temperament, power and money. Chagoury’s companies were awarded contracts for the construction of the Lekki-Epe road, the Murtala- Mohammed International Airport road and the Eko Atlantic City mega project. It was also Tinubu that got governors of his then Action Congress of Nigeria (ACN) to award contracts to Chagouri’s subsidiaries in states like Ekiti, Osun and Edo.

When Chagoury’s younger brother Ronald got married in 2007, Tinubu flew to Monaco for the wedding. The Chagoury returned the favour when Tinubu’s son Seyi had his own wedding. Seyi and Ronald Chagouri are close business partners. Both men are on the board of the multi-billion Loatsad Promomedia Communications Consultancy.

In July this year when Tinubu had to visit Paris for undisclosed reasons, it was Chagoury that helped organized his trip. When General Abacha was struggling with ill-health, Chagoury had flown foreign doctors and equipment to Aso Rock.

Besides Tinubu’s rumoured medical trip to Paris, it is believed that Chagouri used the occasion to sell Tinubu’s candidacy to the French. For years Chagoury had facilitated oil business deals in Nigeria for the French oil company TotalEnergies. Most notable among them is the lucrative deepwater Akpo gas field, OML 130.

BUSINESS LEAKS gathered that even though Gilbert Chagoury broke the bank for Jonathan’s campaign, he also gave donations to the APC leading to Tinubu arranging a meeting between Chagoury and Buhari before the election. When Buhari won, Tinubu arranged a second meeting where Chagoury met Buhari as president-elect but met a different man who gave him the cold shoulder.

It was further gathered that Chagoury’s sole purpose was to secure an assurance that the EFCC would not look into his business dealings under Goodluck Jonathan. Fearing the worst after the second meeting, he left never to return.

Earlier in 2010, the multi-billionaire was pulled off his private jet in New Jersey, USA and detained for several hours after FBI agents discovered his name on a recently updated no-fly list.

It was such fear of the unknown that made Gilbert Chagoury pay a little fortune to acquire a diplomatic passport with the attendant immunity from the Caribbean Island of St Lucia which happened to be a notorious tax haven. He was St. Lucia’s ambassador to UNESCO and the Vatican until 2017.

SPECIAL REPORT: Nigeria’s seaports of oligarchs and monopoly czars

0

By Jude Kwayindagami

Beginning in the military era, Nigeria’s seaports are de facto run by oligarchs and monopoly czars who emasculate technocrats and regulatory officials in the fullest expression of political capture.

From one successive government to another, the ports like golden geese are ceded from an old landlord to a new one; each of who came with the rent-seeking mentality to take out as much as possible from the system without plowing back – before the next landlord takes over.

The domino effect is that while Nigeria’s contemporaries in the 1970s – Brazil, Indonesia, Malaysia and South Africa – have turned their seaports into economic superstructures, Nigeria is still operating on obsolescent structures and systems unfit to support any grand national development plan or industrialization agenda.

Port congestion, political interference, corruption, resistance to system automation, demurrages, bad road networks, a collapsed railway system and infamous rankings in global Ease of  Doing Business have killed many business ventures; sometimes their owners.

The expansion and modernization that Nigeria failed to do, was what Bénin Republic carefully implemented in its own national development goals, turning its seaport into a sub-regional attraction.

Meanwhile service delivery remains take-it-or-leave-it at Lagos ports.  The opposite is the case at Cotonou port just 108 kilometres away. Bénin wooed Nigerian importers with low rates and good port facilities. Legion of these importers and customs brokers voted with their feet, with Cotonou port witnessing an annual freight volume of over 11 million tonnes.

To attract even more Nigerian freight, Bénin in 2018 began a new phase of expansion and modernization of its deep water port. Brimming with confidence the port authorities said this:

“Our ambition is to make the Port of Cotonou an innovative, secure and reliable logistics platform for international trade and ensure efficient management for sustainable socio-economic development in Bénin and the sub-region,”

Rice cargoes remain the game changer for Cotonou – a port which has witnesses a fivefold increase in transit traffic over the past 10 years. Since 2013, Nigeria is only allowing in foreign rice through its ports, imposing a tax of 70%. The move was intended to curb import, save scarce foreign exchange and encourage local rice production.

A year after Nigeria increased tariff on rice import to 70%, Bénin Republic lowered its tariffs on rice imports from 35% to 7%. This made it even cheaper for the Indian cartels to import rice – a staple in every household in Nigeria – through Bénin. Though Bénin will never want to be seen as giving state support to organized crime groups, it needs the revenues that come with it.

Data from the Thai Rice Exporters Association shows that in 2017 for example, rice import from Thailand to Cotonou port jumped to 1.85 million metric tonnes from 1.4 million metric tonnes in 2016. The same data shows that rice imports from Thailand to Lagos port dropped from 1.1 million metric tonnes in 2012 to barely 95,000 metric tonnes in 2017. Thailand is the world’s second-largest producer of rice.

If all the rice from Thailand was meant for Bénin people, then each of Bénin’s 11.5 million citizens – including babies – would have had to consume at least 150kg of rice; the equivalent of six 25kg bags of rice per person a year. Something else further shows that all the Thailand rice imported to Cotonou port have Nigeria as the final destination. Thailand rice is parboiled rice. And Nigeria is the only country in West Africa that eats parboiled rice. French-speaking West African countries do not eat parboiled rice.

Bénin Republic is not the only country preying on Nigerian freight. Inspired by Bénin’s obvious resourcefulness, next-door neighbor Togo has also been transshipping cargoes – mostly used automobiles, footwear and textiles – to Nigeria. Togo which also transships to landlocked Niger Republic, Burkina Faso and Mali is forever in fierce competition with Bénin for a market share of the lucrative Nigerian freight. However, proximity to Nigeria gives the Cotonou port a natural advantage.

Unwillingly to trail behind any longer, Togo – a country of eight million people – pulled off a modernization reform that made its Lomé port the only deep-water port on the West African coast that can accommodate 3rd generation ships. Beginning 2017 when West Africa returned to economic growth, shipping lines scaled up with larger vessels to meet the corresponding freight volumes as foreign goods demand increased. Ports in West African now needed to adapt to handle these larger vessels.

With a depth of 16.60 meters, the Port of Lomé – with its attraction of 3rd generation ships – becomes West Africa’s leading port with a capacity of 1.1 million TEU. TEU stands for Twenty-Foot Equivalent Unit which can be used to measure a ship’s cargo-carrying capacity.

According to the most recent port ranking for West Africa – published by Netherlands’ leading consulting firm, Dynamar – the Lomé port is now the most important transshipment hub in West Africa, displacing Nigeria, the region’s leading economic power.

Nigeria was the highest-ranked West Africa country in 2015 but is now down to fifth in terms of liner connectivity. Without deep-sea berths for large vessels, Nigeria is steadily losing its relevance in the sub-region. Over a dozen West African ports so far can receive vessels larger than 10,000 TEU. Nigeria is not one of them. The biggest ships that can berth in Lagos port are of 4,600 TEU.

Over the past decade, growth in the volume of West Africa’s container trade has exceeded that of any other global region – doubling to almost 5 million TEUs. This expansion, fueled by rising incomes in the region, is also contributing to increased congestion at most ports which require a few deep-water ships to handle than too many smaller ones crowding the berths. This is what Togo’s port is pioneering. But only 15 percent of cargoes coming into Port of Lomé are for domestic. A large part of 85 percent is destined for the Nigerian market, according to the Dynamar report.

Slow in taking critical decisions to transform the fortunes of its seaports, Nigeria has found itself mercilessly exploited, first by Bénin and then Togo. A third country, the landlocked Niger Republic, has joined the sub-regional racket of what is basically: selling snow to an Eskimo.

Despite having no ocean or deep draft river ports, Niger Republic operates a ports authority. For its uranium concentrates exports and other overseas trades, Niger relies on the port of Cotonou and to a lesser degree Togo.

Lately, however, Niger began to receive imports far exceeding its domestic needs. What’s more, many of the goods flooding Niger are even alien to its local consumption. The excess cargoes, about 85 percent of the goods received from Bénin and Togo, are then re-exported or transshipped to Nigeria with the owners of the goods paying customs charges and tax to the Niger Republic.

Industrial raw materials, textiles, cosmetics, household items, tobacco, spirits, beverages, and other containerized and breakbulk cargoes are trucked a long distance from Cotonou or Lomé port to Nigeriene towns of Konni and Maradi, close to the Nigerian border. These are goods that should have arrived Lagos seaports, buoying customs revenue as oil prices slump.

From cotonou, the trucks travel about 700 km on the RNIE2 Road to Malanville, the last Beninoise town. About 10 minutes across a bridge and the truck is in Gaya in Niger Republic.

Malanville in Bénin and Gaya in Niger are 10 kilometers apart and separated by the Niger River.

Every day, hundreds of trucks ply the 700-kilometre RNIE2 Road. In the last five years, many of these trucks are laden with items on Nigeria’s import prohibition list.

They include furniture, foot wears, bags and suitcases, carpets, used tyres, soaps and detergents in retail packs, banned pharmaceuticals, fruit juice in retail packs, vegetable oils and second-hand clothes. Some trucks are transporting goods ineligible for Foreign Exchange – and thus are import restricted in Nigeria.

In this category are items such as rice, margarine, canned fish, roofing sheets, enamelware, wire mesh, steel nails, wooden doors, toothpicks, kitchen utensils, textiles, woven fabrics, clothes and cellophane wrappers. Gaya, a town bordering three countries – Bénin, Niger and Nigeria – is a magnet for second-hand clothing trade mainly for re-exports to Nigeria.

Both Gaya and Malanville are replete with large warehouses and Nigerian importers wanting to transport large stocks of clothing originating from the US and Europe. This trade is dominated by about 20 big traders from Niger, the Igbo from Nigeria and a small number of Tunisians and Lebanese, some of whom had come to Gaya from Cotonou, Lomé or Burkina Faso. The Igbo merchants who re-export secondhand clothing to Nigeria, to a lesser extent also re-export to Burkina Faso, Cameroon, Chad and Mali.

The second most visible import item at Gaya is used automobile. Second-hand vehicles cross the border at Malanville-Gaya at a rate of 200-300 per day, or an average of 1,000 vehicles a week.

With the exception of vehicles destined for Niger, which are issued with transit documentation called “carnet de tire”, all vehicles coming into Gaya are subject to formal re-export procedures.

The taxes levied by Niger on such movements account for the major portion of customs revenues for this landlocked country.

But here in Gaya, official and smuggling activities run parallel. Daredevil transporters choose convoluted back roads to convey cargoes like rice and automobiles from Gaya to Kamba, a town in Nigeria’s Kebbi state and on to Birnin Kebbi, Zamfara, Ilorin and God-knows-where-else.

The vast majority however follow the official route from Gaya, 162 kilometres to Dosso, a junction town that leads left to the capital Niamey. The trucks turn right to Dogondoutchi, and on to Konni, the last Nigeriene town on that route. Like Gaya, there are large warehouses at Konni. Just across the border is Illela in Sokoto State.

Most of the trucks from Bénin or Togo do not terminate at Konni.They turn right at Konni and proceed to Maradi, towards Jibiya in Katsina State. Maradi, a dusty and once sleepy town is today one of the busiest transit hubs in the Sahel region. Maradi is to Niger what Seme is to Bénin Republic.

Transshipment to Nigeria has created tertiary sector jobs such as banking services, transport services, communication services, restaurants, nightlife and warehousing and storage. It takes seven days for a truck to journey from Cotonou to Maradi. Every day, about 400 trucks are stationed in Maradi as workers offload containerized goods into warehouses or load them, layer by layer, in waiting trucks until they have created a spectacle so high it is nicknamed “2-storey”.

All kinds of things pass through Maradi. And all the trucks, laden to high heaven, are going to Kano. A host of banned and legit goods keep the trucks groaning. But the tobacco, building materials and brand new textiles from China belong to one man – a billionaire tycoon from Katsina who also owns an airline in both Nigeria and Niger Republic.

He hobnobs with Presidents – including those of Bénin and Niger. His pact with the Chinese in large-scale smuggling of textiles is responsible for the death of the textile mills in Kano, Kaduna and Lagos. The Big Man’s trucks travel in convoys, mostly at night. And sometimes under military escort –depending on the nature of cargoes.

 His convoy, sometimes a stretch of over 60 trucks, is waved on at the Jibiya border control without any checks or customs duties. Asian factory owners and the Lebanese community in Kano rely on him to bring in their imports from Cotonou instead of facing the horrors of Lagos port.

This investigation was carried out under the Collaborative Media Engagement for Development Inclusivity and Accountability Project of the WSCIJ, with funding from the MacArthur Foundation

SPECIAL REPORT: Nigeria’s deep-sea paradox

0

By Musa Haruna, Declan Essien, Gift Awah, Jude Kawyindagami

Access to sea is a deep national asset. It confers on lucky countries comparative economic powers and strategic geopolitical advantages. It also can and has made certain countries highly sought after even by bigger nations in need of allies.

At the turn of the millennium, a good number of nations had attained economic success primarily by building their maritime economy – also called the blue economy. The BRICS economic bloc of Brazil, Russia, India, China and lately South Africa could never have become emerging global powers without paying premium attention to the seas.

Other nations have followed suit – Singapore, Vietnam, Malta, Oman, Morocco, Panama, Saudi Arabia, UAE, Qatar, Sri Lanka, Indonesia, Thailand, South Korea, Malaysia, The Philippines, Ukraine and Iran.

Each of these countries deliberately combined smart thinking with access to sea for economic reengineering, recovery and rebound.

Nigeria, with its vast sea and inland water resources, should be counted in this league of maritime powers. But it is not.

Nigeria’s position in Africa – for long been displaced by South Africa, Egypt and Morocco – slides even further down the rung, and is made so by the tiny West African neighbours of Benin Republic and Togo.

Until a little over two decades ago, looking for Benin Republic on the African continental economic map would have been akin to looking for a pin in a haystack. Without crude oil, manufacturing or tech industry, Benin was a poor country whose citizens survived on subsistence fishing and agriculture.

With cotton as its export, Benin’s senior civil servants spent years in the queue jostling to obtain motorcycle loans. All that began to change the day Benin paused to take a second look at its eastern neighbour, Nigeria.

Seeing vast but under-utilized maritime potentials worth billions of dollars annually, the tiny republic quickly re-sized its modest seaport, determined to get a piece of the action from Nigeria. Soon Benin was building flyovers, bridges, hi-rise buildings, multiple-lane highways and other ambitious infrastructure.

Civil servants began to quit their posts to join other compatriots in the long chain of a lucrative transshipment enterprise to Nigeria. In less than a decade, the colour and character of the commercial capital, Cotonou, had been altered by a wide range of posh automobiles – particularly SUVs – enchanting architecture. Grand Marché de Dantokpa (a sprawling international market), glitzy bars, restaurants and fast-food outlets as transshipment trade to Nigeria spun a boisterous middle class.

At the expense of its giant neighbor, Benin Republic emerged from the economic wilderness. According to the World Bank, Benin’s economy is heavily dependent on the informal re-export and transit trade with Nigeria, which accounts for about 20% of its GDP.

The World Bank also said that about 80% of imports into Benin are destined for Nigeria. Ironically, Benin has only one seaport. Ordinarily, it should have no business transshipping cargoes to Nigeria, a country with eight ports – virtually all of them underdeveloped.

The ports are Apapa in Lagos, Tin Can Island port in Lagos, Warri port in Delta State, Calabar port in Cross River State, Port Harcourt port in Rivers State, Onne port in Rivers State and Koko port in Delta State.

Built in 1965, the Cotonou port was a French colonial inspiration designed to serve the landlocked Francophone countries of Niger Republic, Burkina Faso and Mali; each providing agro and industrial raw materials for export to France.

The most valuable of the exports was, and still is, Uranium – the critical radioactive material for nuclear power stations. Niger Republic is one of the few countries in the world with Uranium dedeposits.

Uranium from French mines in Arlit – a desert town in northern Niger – travel through the Cotonou port to France and other parts of the world. Today, the Cotonou port covers 400 thousand square meters. Its commercial quay contains four 155-meter berths, two 180-meter berths, one 220-meter berth for container vessels, and one berth for roll-on/roll-off cargoes.

Warehouses cover 57 thousand square meters and include a 65-thousand square meter container depot.

Notably, all the expansions witnessed in Cotonou Port are aimed at accommodating Nigeria’s ever-expansive import appetite.

One of West Africa’s leading shipping lines, the OT Africa Line (OTAL), has a terminal dedicated to handling containerized cargo. The terminal contains 7 thousand square meters of container space and container-handling equipment. A 2007 World Trade Indicators report recognized the Cotonou Port as third leading exporter in the West African region.

Curiously, Benin Republic has only two major export commodities – cotton and kapok. The latter is used for making fluffy pillows. The combined tonnage of these two cash crops can hardly make Benin the third leading exporter in West Africa.

So what is the mystery item that has added to cotton and kapok to push this tiny country up the export table? The answer is Nigeria.

The same 2007 World Trade Indicators report identifies “growing re-exports to Nigeria” passing through the Port of Cotonou as the country’s trade secret. Unwilling to show openly how much milk it is getting from the cow, Benin – as a routine – grossly underreports transit cargoes bound for Nigeria.

However, what Benin Republic seeks to conceal are actually open secrets; made so by shipping declarations provided in their home countries by European, American and Asian exporters doing business with the Cotonou Port.

Measured from mirror import data reported by these overseas exporters, it was discovered that between 2000 and 2005 for instance, the flow of goods entering the customs territory of Benin had been significantly higher than what Benin reports for imports. The volume of goods entering Benin, a country of 11.5 million people, was 219 percent compared to a ratio of 94 percent for Nigeria – a country of over 200 million people.

Official figures from the Cotonou Port suggest some spooky economics. It suggests that Nigeria – a country of over 20 times in size and population than Benin and with about the same proportion higher in the disposable income of their respective citizens – was consuming far less goods than its tiny neighbour.

Nigeria is about two-third of the 349 million-population of the 15 ECOWAS countries. In commerce, setting up shop in Nigeria, is equivalent to setting up shop in ten ECOWAS countries. Adding disposable income – a key factor that sees an average Nigerian owning three mobile phones with the inevitable urge to buy another before year end – setting up shop in Nigeria alone could as well translate to setting up shop in 14 ECOWAS countries.

Whilst there exists official re-exports to Nigeria from Benin, unofficial channels consists of smuggled re-exports of imports that pay ECOWAS common external tariffs (CET) and/or Benin’s tariffs to the Benin’s treasury.

The World Bank study cited earlier also mentioned that the greatest unofficial trade from Benin to Nigeria is in used cars, rice, clothing and textiles, as well as general consumer goods. The Big Four Commodities are second-hand automobiles imports controlled by Lebanese cartels, rice by Indian cartels, textiles by Chinese cartels and frozen food from Brazil and elsewhere. All are aimed at Nigeria.

Cashing in on Nigerians’ craze for cars, Benin determinedly made its port an automotive center especially for European brand cars. As a result there is well established overseas car shipping services to Benin from the United States and Europe.

Automobiles are the number one import to Cotonou from the United States. The vehicles take less than 20 days to reach Benin. Luxembourg-based shipping company BIM e-solutions says an average of 10,000 cars arrive at the Cotonou port from Europe monthly. According to the Nigeria Customs Service, many are smuggled across the border into Nigeria. Logistics to facilitate such cross-border illegalities receive apparent state approval and support from Benin – several times accused by the Nigerian government of allowing into its port items on Nigeria’s Import Prohibition List.

Like Nigeria, South Africa also has eight ports. Unlike Nigeria however, all of the ports are commercially developed and positioned to play an important role in the South African economy and in the economies of landlocked members of the regional Southern African Development Community (SADC).

The Durban Harbour welcomes about 4,500 vessels yearly and about 83,000 containers per month. This South African port alone conducts trade worth over $45 billion annually. It is the largest and busiest shipping terminal in sub-Saharan Africa. And that is coming from a country barely one-fifth of the population of Nigeria.

The Durban Harbour, as it is popularly called, is the second largest container port in Africa. The first is the Port Said in Egypt. Durban is the fourth largest container port in Southern Hemisphere. First is Jakarta in Indonesia, second is Surabaya in Indonesia, and third is Port Santos in Brazil.

The distance around the Durban Harbour is 21 kilometres. The port has 58 berths which are operated by more than 20 terminal operators. South Africa takes special pride in its seaports every time it tells the world it is ready for business.

It is not clear if Nigeria is listening to the business language of South Africa, its arch political and economic rival on the continent. South Africa dominates and leads the 16-member regional economic bloc, Southern African Development Community (SADC) that includes Angola, Botswana, Comoros, DR Congo, Lesotho, Malawi, Mauritius, Mozambique, Madagascar, Namibia, Seychelles, Swaziland, Tanzania, Zambia and Zimbabwe.

Maritime power is one of the economic tools South Africa uses to lead. Nigeria should be doing same in the ECOWAS economic bloc.

But if there is any national strategy to make Nigeria the maritime hub of the sub-region, Benin Republic and Togo already have bad news for Nigeria. The tiny Francophone countries understand that in the battle of the deep water, it is swim or sink.

A third Francophone country, Niger Republic, has joined to make Nigeria a deep-sea paradox. This landlocked country has joined the maritime trade; achieving the impossible by transshipping cargoes to Nigeria – a country with eight seaports.

This investigation was carried out under the Collaborative Media Engagement for Development Inclusivity and Accountability Project of the WSCIJ, with funding from the MacArthur Foundation.

Dolphin Drilling wins $96 million contract in Nigeria.

By Chizoba Doris

Dolphin Drilling announced it has secured a 12-month contract with Nigeria-based General Hydrocarbons Limited (GHL) at a value of $96 million.

The contract for the Blackford Dolphin will commence during Q4 this year. The rig recently completed work in the Gulf of Mexico for PEMEX and will mobilize to Las Palmas for its special periodic survey prior to commencing operations in Nigeria.

Bjørnar Iversen, CEO at Dolphin Drilling, said: “We are proud to announce the final award of the Blackford Dolphin contract, proving our position in the niche moored semisubmersible market. Dolphin Drilling has attractive assets, a strong team and a solid platform to leverage on the favorable market development with improved rates. The contract for Blackford Dolphin underlines the potential of the company and its assets, and we believe Dolphin Drilling will capitalize on the continued expected tight rig market for the rest of the fleet.”

The company recently announced its activation on the Euronext N-OTC list and expects to be listed on Euronext Growth in late October. Dolphin Drilling’s fleet comprises three fourth- and fifth-generation drilling rigs – the Borgland Dolphin, Blackford Dolphin and Bideford Dolphin.

The Offshore drilling contractor announced the formal contract award, where the rig will begin 12-month operations during the fourth quarter of 2022 with a total contract value of approximately $96 million. GHL has the right to shorten the contract by up to 6 months.

Just last September Norway-based Dolphin Drilling raised $45 million through a private placement to take advantage of increased day rates in the offshore drilling market, which will enable it to cover mobilisation costs for one of its semi-submersible drilling rigs along with the reactivation of another rig in its fleet.

In a bid to capitalise on the increasing day rate environment, Dolphin Drilling undertook this equity issue, raising gross proceeds of $45 million – increased from $40 million at launch – as the private placement “attracted strong interest from high-quality institutional investors.”

The Norwegian drilling contractor owns three harsh environment semi-submersibles which have been rebuilt with 5th/6th generation topsides. Recently, the company received a letter of award (LoA) for the Blackford Dolphin rig in Nigeria at $232,500 per day plus a mobilisation fee of $12 million, starting in late 2022. The Blackford Dolphin is a semi-submersible drilling rig of an Enhanced Aker H-3 design built in 1974.

The Blackford Dolphin recently completed work in the Gulf of Mexico for Pemex, the rig will mobilize to Las Palmas for its special periodic survey prior to starting operations in Nigeria. The contract with Pemex was worth $83 million and it started in December 2020.