Free Trade Zones Operators Kick as Senate Moves to Amend OGEFZA Act

Say new law will promote anti-trade and competition, entrench monopoly

Licensed operators of Free Trade Zones in the country are currently kicking against what they perceived as an attempt by the Senate to pass a bill inimical to their business interest.

They said the main target was to stifle trade, scuttle competition and confer dual roles of both operator and regulator on Intels/ Orlean Invest, a rival licensee.

THISDAY investigation revealed that the issue is the current “Bill for an act to amend the Oil and Gas Free Trade Zone Authority (OGEFZA) Act Cap 05 laws of the Federal Republic of Nigeria with a view to providing for designation and establishment of oil and gas free zones and sub-zones in Nigeria and for related matters” sponsored by Senator Ibrahim Gobir.

According to the Supplement to Official Gazette Extraordinary No. 12, Vol. 63, March 29, 1996Part A obtained by THISDAY, the current Act being amended by the Senate was enacted by the late General Sani Abacha’s regime as the the Oil and Gas Export Free Zone Decree 8 of 1996 with the following provisions: 1.-(1) The Head of State, Commanderin-Chief of the Designation and Armed Forces hereby, designates the Onne/lkpokiri area of Rivers State establishment of the state as an export free zone, (in this Decree referred to as ‘the Oil and Gas Export Export Free Zone’. Free Zone: (2) The Export Free Zone established pursuant to subsection (1) of this section, shall be operated and managed by the Oil and Gas Export Free Zone Authority established by section 2 of this Decree.

In the new amendment, the Senate is seeking to expand the current operational zone status of OGEFZA from its Onne/ Ikpokiri geographical area of Rivers State to usurp those under the jurisdiction of another sister agency – Nigerian Export Processing Zones Authority (NEPZA).

According to the sponsors of the Bill, which is also dubbed ‘The Intels bill’ in the Senate, because it is believed to have been authored by Intels chief executives, “The Oil and Gas Export Free Zones Act Cap 05 LFN 20 II Amendment of Cap 05 LrN 2011 (referred to as “the Principal Act”) is amended as set out in this Act. Section I of the Principal Act is amended by substituting a new Amendment of Section 1 section I as follows: “Designation and Establishment of the Oil and Gas free Zones and Sub-zones.”

It is further seeking that “(I) The President, on the recommendation of the Authority, may by order: (a) designate any area within the Federal Republic of Nigeria as an Oil and Gas Free Zone and Sub-Zones (in this Act referred to as Free Zones I I and Sub-Zones); (b) designate any area within the Federal Republic of Nigeria as an Oil and Gas Sub-Zones (in this Act referred to as “Sub-Zones”); (c) amend, vary or add to the limit of any Oil and Gas Free Zones and Sub-Zones as the case may be.”

At the moment, the Onne/ Ikpokiri geographical area of Rivers State has been licenced and is being operated by Intels/ Orleans Invest; but majority of operators duly licenced by NEPZA are alleging that the Senate is unwittingly out to create a law that will be anticompetition, create monopoly and institutionalise a behemoth in a single operator who would now assume the roles of both an operator and regulator.

The free trade zone operators see the latest move by the Senate to use the bill as a ploy to unilaterally expand OGEFZA’s mandate in furtherance of a desperate plot to entrench the Intels/Orlean Invest monopoly, arguing that it will further the expansionist agenda of Intels/ Orlean Invest in a strategy to capture other Free Zone territories duly licensed and regulated by NEPZA and that the bill, if passed into law will now pave way for Intels/orlean Invest to acquire ownership; exercise jurisdiction over another (NEPZA) agency that manages over 30 separate free zones and to forcefully take over the administration of certain NEPZA licensed free zones.

Some operators accused the sponsors of the bill of over reaching their brief in a very clear matter because “the Act specifically designates the Onne/ Ikpokiriarea of Rivers State as an Oil and Gas Export Free Zone. This is the only Oil and Gas Export Free Zone designated by the Act. The Act establishes an administrative body for the oversight and management of the designated known as the Oil & Gas Export Free Zone Authority (OGEFZA).”

They also argued that the Oil and Gas Export Free Zone Authority Act (OGEFZA) was enacted specifically to oversee the export of Oil and Gas in Onne/Ikpokiriarea of Rivers State as designated in Section 1 (1) of the OGEFZA Act. This however, is in direct conflict with the mandate of NEPZA and it usurps the functions of NEPZA as it relates to Onne/Ikpokiri.

There is palpable apprehension in the industry that if the bill is passed into law, “it would subject integrated multi-function free zones to the authority of a single purpose geographical area free zone; completely destroy investor’s confidence both local and international; effectively remove competition not only in the handling of oil and gas export but provides for limitless empowerment over any business even remotely connected to the oil and gas industry and subjects investors, operators and clients to the mercy and exploitation of a single operator.”

THISDAY investigation revealed that before now, three presidential committees were set up to review the free zone scheme in Nigeria, all of the three had the same exact findings and same exact recommendations which included that the existence of dual authorities is undermining the scheme and thus the broader Nigerian economy; the current environment includes the existence of a “monopoly” which is undermining competitiveness and the scheme in general; that there should be one unified Free Zone Authority in the country.

Determined to create a unified agency, the then leadership of the senate decided to draft a bill in 2006 to create a unified single authority implementing recommendations of the committees and stakeholders while incorporating the operational needs of both NEPZA and OGEFZA. Which is why operators are questioning that rather than introducing a new bill, industry operators believe the senate would have saved scarce resources by returning to the subsisting 2006 draft Bill which set out to harmonise both NEPZA and OGEFZA following recommendations by several committees set up by previous governments to create a single operational entity to replace the two to remove duplicity.