Don’t monopolise oil cargo-Odita

This is an issue that the Seaport Terminals Operators of Association of Nigerian, STOAN has openly objected to for some time, you represent, at least one of them, would you say, they are pacified now?

I do not know that there is a presidential directive that says monopoly should go. I think, the presidential directive said many things. First of all, that general practice is to categorise ports and terminals to bulk cargo and multi-purpose one. There is no such thing as categorization, according to cargo. If I say, this is the cocoa port or oil and gas port; that is what President Jonathan tried to do. I think he was misled by trying to designate, particular ports for oil and gas. By doing that you are trying to designate ports and terminals according to the cargoes that arrival there, which can only distort competition.

Apart from that, in 2006, the Federal Government entered into 25 concessions on the basis that some were going to be bulk terminals, others are going to be cargo terminals and there will be multi-purpose terminals. There was no provision for oil and gas or cocoa or Arabic gum or cashew nut; there was simply no categorization based on the type of cargo arriving. What that meant was that it enabled concessionaires to invest monies in developing infrastructure along their coastal belt. And also allowed them make projections as to what types of returns you get. It wasn’t based on a particular type of cargo. They signed agreements, which were binding, telling them they could receive cargoes. If you are a multi-purpose terminal, for example, you could receive every cargo.

For someone to turn round after signing in 2006; and then in 2015, someone turns round and says to you, all oil and gas cargo must go to Onne or Calabar or Warri. It creates many problems. First, it distorts competition. I suppose that is why people talk about monopoly.
The attempt to monoplise oil and gas cargo is wrong. It goes against all the principles underpinning procurement law. The whole essence of public procurement is that you procure your services on a competitive basis, transparent basis and promote competition on a level playing field. That is the only way that users of the facilities or services will get value for money. If you are a monopoly, you can charge whatever you like. That is the first problem.

The second problem is that while distorting competition in that way, it means that some of those who had invested and borrowed money to invest (because people don’t have all these monies sitting idle waiting to be deployed), will not be able to repay their loan and then they become insolvent just because of one person’s desire to monopolise the entire business, especially in an oil and gas dependent economy like this. If the economy were very diversified, perhaps people will not be too hung-on.

Thirdly, the attempt (to monopolise) also impacts on job creation. These terminal operators and concessionaires all have employees; and they generate direct and indirect employment. When you kill them off by concentrating all the business in one person, who you call a monopoly-oil and gas terminal, it simply means that the local economy suffers because people who were employed will be laid off. Whereas, by allowing free competition, people are able to plan. That is part of the problem in Nigeria and many developing countries-the inability to plan because, governments keep changing their policies. This is something that is capital intensive. You need to take a five-year view and you borrow money and invest on the basis of five to ten years.

Then when you are talking to government officials, it is like you are talking to a wall. They say, ‘I am directed to’. That is the language of the civil service. Nobody takes responsibility.

That is the background to it. That is why in 2015, we went to court to challenge President Jonathan, because we thought it couldn’t possibly be in the interest of Nigeria, as a country. How could it be in the interest of a nation for you to say only one person should monopolise oil and gas business, even if it is logistics or importation, why? How could anyone, who is a rational person, think that it would be beneficial to Nigeria to have just one person as opposed to having many people. If you have many people, there will be some competition. Imagine if I were the only landlord in the whole Victoria Island, Lagos, instead of people paying N5 million, N7 million or N10 million as rent, they will be paying N50 million, because you don’t have options; so, you must always deepen the market by encouraging competition. President Jonathan must have been compromised because, I cannot see how anyone, who is acting properly, can do that. He had directed every oil and gas cargo must go to oil and gas terminals.

Do you think there was any political undertone to that?

Whatever interest it tried to protect, he was very misguided because when you are president; you are president of the whole nation. You cannot be president of a section or a political party or for your region. For example, the fact that these ports are eastern ports-Onne, Warri and Calabar-and they are all controlled by the same company; when you say everyone must go there, you give room for political insinuations because, the ports are in the Niger Delta and he, being from that region, wants to do some kind of good service to that region.

But I would not really credit President Jonathan with the sufficient presence of mind to think like that. The simplest thing he would have done would have been the East-West Road, which he did not do and therefore he cannot even go to his village now. Why should he be concerned about the location of oil and gas terminals when he has not worried about the basic infrastructure, which is the road that he and everyone uses. It just shows how selfish they are. It wasn’t strategic. I believe that President Jonathan was entirely misguided’ and to do it in the twilight of his administration was terrible. Having lost the election on the 20th of April, he comes up with this crap called change of policy. He was behaving as if the country belonged to him.

How did that decision affect our economy?

Of course, that meant that there could not be further investment in the country. Why would go borrow money to invest in a sector, which is monopolized by one person? To make it worse, it led to double handling. It meant every person must go to these three ports first to pay your dues. Even for the consumer and the importer, it was increasing the operational cost unnecessarily. These costs are going to passed to the final consumer of the goods. You ask yourself, how could this happen in the interest of anybody? Consider the delivery time, because you are going up and down. You are increasing cost in every possible way; and then, you are killing competition because, you are saying to me I should come to you; imagine as lawyers, you say to me that I should file all my cases at Mr. Tarfa’s or Mr. Olanipekun’s office? I will go there to file the case before I then take it to where it is supposed to be. How could that possibly engender completion? It was just designed to benefit one person only. That is what has characterized politics in Nigeria-that people fail to rule for the benefit of the masses. They rule for the benefit of a few people. It is impossible to see how a rational person could possible think that it is in the interest of any Nigerian to create a monopoly in any sector.

You can see that we don’t have the framework for monopoly laws. Various monopolies have lobbied the government to ensure that the people continue to suffer.

What have you done with the matter you took to court?

We took President Jonathan to court, and it was interesting, because, he had four weeks to go, but since he had time to issue this policy directive; we also felt that we had time to quickly stop him in his tracks. The directive of Jonathan was conveyed in an NPA letter of 27th of April, 2015; so, went to the Federal High Court to get injunction against the implementation of the Jonathan directive.

We joined President Jonathan, the Attorney General, the Ministry of Transport and the National Assembly in the suit; because the National Assembly was also at that time trying to amend the law, so as to create the monopoly, which itself was sickening. Imagine the National Assembly trying to make laws that every cargo must go to a particular port. That is what happens when a country is in the grip of a certain interest that is trying to feather their own nest. We got the injunction, because we were trying to prosecute the case as quickly as possible, but then the people who are beneficiaries of the monopoly applied to join in our case. We didn’t sue them. Our dispute was with the government, but they applied to join and the court joined them.

The government was very interested in the case because the government was going to review what was happening, but this interested parties where the beneficiary of monopoly kept making submissions and filed all sorts of claims. Following the government’s new directive, we then took steps to discontinue litigation. One of the things that the government said to us was that we should withdraw the pending suit against the Federal Government; in order to ensure a litigation free environment in the maritime sector. We filed a notice to discontinue; and the government said they were happy with the application we filed, but these same interested characters said they don’t want us to discontinue. Why?

What interest would that serve?

I think for them, they probably think that by opposing the withdrawal of our case, they can then go back to the government and say that LADOL has not complied with one of the terms with which the government reversed the policy. That must be it.

But your willingness to discontinue the case is apparent?

We have filed. It is not a question of it being apparent. We have filed a notice of discontinuance, which is the normal process when you want to get out of a case, you file a piece of paper, giving notice that you want to discontinue your claim completely or you might file and say you want to withdraw against a particular individual. In this case, we are not withdrawing against an individual, we want to discontinue the whole case. When we were in court recently, they said the judge shouldn’t grant the order because they were going to file something. You can see the monopoly fighting back, just like corruption fights back. It is very shameful. We would thought that the policy which the government communicated recently would encourage investment and improve port infrastructure, create competition in the sector. And competition is always good for the consumers. It improves product quality, service quality and reduces cost.

If you were to anticipate their next legal move, what do you think it would be?

I don’t care about them. I believe we must always do something which is legitimate, proper. I do not see how one company can hold up the interest of an entire nation. While other concessionaires are borrowing money and investing their own capital, this monopoly is collecting government money without any accountability. They say, I expended N2 billion, I collected only half.

There is no proper audit to know whether the expenses which he claimed are legitimate; whether the monies which he said are correct or if it has collected more. It is just a drain pipe to waste public fund. The fact that there are Nigerians who are supporting it; who are pushing them because they are getting what? It is very easy to compromise people. You give money and people are behaving like headless chickens.

It is very disappointing. When you open up a sector, you encourage a lot of direct and indirect employment. People forget the impact of employment. It is not just that you have money to take home-you pay your bills, you pay your PAYE, you pay your pension. It means that in a system like this where we don’t have social security, you now become the provider for a whole lot of people.

Apart from that you contribute to the local economy. If there are shops around here, you are able to go to those shops to buy goods and services and then they are able to employ people. That is why you are able to talk about direct and indirect employment. That is really how every economy grows. You cannot want to do it alone; so that everybody eats from your palm.

I do not see how you want to kill local businesses for the benefit of foreign investors who have brought no money; who are using our money to make their own investment; using our own money to collect and repay without any form of audit. That is why they call us a Banana-Mickey Mouse republic. If we were proper people, how can you allow that-you don’t know how much they collect, you don’t know how much they spend. They just tell you what they like and then you are falling all over yourself.

What are the legal issues behind their trying to stop you from discontinuing the case?

I don’t know the basis. You have to understand this. When I went to court, I went on several premises. First, my client was granted a lease of land by the NPA. Under the lease, you have certain rights. Just like the landlord of this property has given me a lease; so the idea that having granted me the lease, you turn round to say I cannot carry on my business doesn’t make sense. One of the things they said in that letter was that they should re-locate the Ladol facility from there to Bayelsa, which is silly.

If you want to create a fabrication and integration facility for your people of Niger Delta, you should go and build one for them, not to tell a private person to carry his business and go to your place. It just tells you the impunity and the abuse of power in the system.

Two, Ladol itself is part of Apapa Port. It doesn’t need any further designation. The government gave its approval to carry on the business of deep offshore logistics. Looking at it, why do you want to concentrate all your logistics business in the eastern ports as opposed to encouraging western ports? There are many deep offshore oil fields that are closer to Lagos than to Port Harcourt or Onne.

Why would increase their operating cost by saying they must all go back to that area? The Niger Delta area itself is restive and you are asking us to concentrate the entire oil and gas logistics to that region so that they can hold the entire nation to ransom. Does it make common sense for you to try and reduce the risk by opening up competition and encouraging facilities along the coastal belt rather than concentrate in an area that you know is very unstable, very restive and has capacity for disruptiveness. It is very difficult to see anything positive deed in what Jonathan did.

The legal issues are clear. We have got a lease. We have got government approvals. As a Nigerian company, you are free to carry on any business provided it is not prohibited like arms and ammunitions and so. And it is not for government to say that we allow only one company to do it. That violates so many laws.

It even violates the African Charter of Human Rights. It violates Chapter 2 of the Constitution, which says that the government should encourage and give equal opportunity to its people to carry on business. When you try to shut a business down or try to increase their cost uneconomically beyond the point where they cannot survive, you are violating all those laws, in addition to violating their legal rights under the lease agreement and the various extant government approvals.

What do you think made government to take the step of issuing this new policy directive to reverse the monopoly?

I think the government reaction is a response to a number of pressures. It is not just Ladol. There is also the STOAN. There is Snake Island. There is Julius Berger-a number of stakeholders who were ostracized by the Jonathan. When we got the injunction, one of the calls I got was from Shell. They were very happy because that you are subjecting everyone to use just one company in the procurement of particular logistic services seems to be wrong. There were lots of pressure. And lots of petition were written by everyone.

There were several meetings by stakeholders held by the Minister of Transport in February last year in Lagos. In March last year in Abuja. We sent someone from my chambers to attend both meetings. Following that the Minister of |Transport advised the government, but also NPA sent its own letter to the government explaining its own position.

Then the government took its own internal steps in the light of agitations, in the light of advice that it had received from the Minister for Transport, Minister for Industry, the Attorney General and the NPA. You have to remember that the long standing government policy under President Obasanjo and under President Yar’Adua was that importers should be free to choose where to go to.

It was some corrupt people that tried to change that. That had been in existence all along right up to 2014 when President in January of that year reversed it and then in February under further pressure reversed himself, which then created uncertainty.

It wasn’t clear whether he was reinstating the pre-Jonathan position or whether he was maintaining the Jonathan position. It was a confusing situation. And it was very unfortunate. Why as a President should try to reverse what your predecessor did in January, 2014 and then a few weeks later, early February, 2014, you say my last memo should not be implemented until further notice.

Then on the 20th of April, 2015, having lost the election and knowing that you were on your way, you go back and say that my memo that I said you shouldn’t implement, I now want to implement it. I think it was just most unfortunate. What you must not do in the twilight of your administration if you find yourself in the position that Jonathan found himself was to leave the status quo as it was. It was clear that if he as the president had lived with that policy for five years, there cannot be any imperative that was strong enough to dictate a change so late.

What do you suppose would have happened if Jonathan had won the election?

If Jonathan had won the election, we would have been in court. We were in court. I am not a lobbyist. I don’t go to lobby. I go to court to get a declaration of the right of the party.

I am quite convinced that based on the legal grounds that I have laid out-the government policy, the lease agreement, the approvals, the Africa Charter of Human Rights, which is incorporated into the Nigerian law and the Nigerian constitution, you find enough legal instrument on those four basis, you find the right to be able to protect the rights of people like Ladol-private investors who are trying to develop port infrastructure at their own expense for public good and for, obviously private gain; as opposed to people who simply want to collect government money, create a monopoly without their expenses being audited, you set a price-you need to see what the Executive Secretary of the NCMDB sent to Shell with regards to the Bonga tender which is on-going.

It is a grace, saying to them that instead of going to look for logistics providers in Lagos, it should give to Intel that is in the East; that came from NCMDB that is supposed to protect and develop local capacity. I have a letter from NCMDB telling them to give the business to Intel. If you ask the IOCs, they will tell you. And it is the same problem when you go to NAPIMS-a corrupt network, where everybody is falling over themselves to perpetrate an Intel monopoly.

Is it possible to quantify the loss to government in monetary terms as a result of the monopoly?

The loss to government must run into millions. If I collect your monies and I make expenses I don’t come to you to authorize my expenses. I settle whatever expenses I like, I say I have invested N3 billion and I have collected N6 billion or I have collected N7 billion. I am simply the person who decides how much investment to make, how much I have collected and how much to give to you, it is a debt that the government will never completely pay.

It is a self-perpetrating debt. Whereas the other investors are going to borrow money and pay interest to make investment. These people are collecting public revenue without any accountability. No audit of their expenses and they simply decide how much to declare and how much to pass on to the government. Which country runs like that? It is one thing for you to say that you are creating a concession and you invite concessionaires to make their investment and source their own capital.

Why won’t I be very rich? Under such arrangement the loss will run into many billions of dollars. Those leakages are what fuels the corruption and everybody is falling all over themselves to perpetrate this monopoly. Why would NCMDB be asking the IOCs to deal only with one person/> Why would NAPIMS be asking them to contract only with one person? This people simply give you a price, take it or leave, you have nowhere else to go to. You can’t event create a level playing field because them have been enjoying it for long.

They have been using government money to build their facility. How do you compare that with someone who is borrowing money to build? We are saying let’s even create a space so that other people can participate in this business, but you don’t want them to participate. It is very easy for the government to say our tariffs are based on the type of cargoes that come to town; it is oil and gas, you pay X., if you are peanuts, you pay Y. You don’t have to go to any particular terminal because all you need to do is to ensure that the government agencies are available at that time to enforce tariffs based on cargo type, You don’t need anyone to tell you we are the ones that can collect this because it is oil and gas.

If they were to implement this new government policy, it will stop some of the revenue leakages and you should couple that with the TSA. See how much we are going to borrow. Some countries are trying to give us as little as USD100 million, whereas we have our own billions of dollars that we are giving away to private people. We have a company collecting our money and we have Nigerian government officials trying to perpetrate that monopoly by saying everybody must deal with one company.

Those things can only happen in a Mickey Mouse Republic, like these, where the institutions are very weak. Why are they in Africa? Why don’t they go to Europe to create that kind of monopoly-collect state money and determine what they give back to the state?

Do you know if implementation of the Presidential directive has started?

It must have started. This is the current policy that everybody should go through. They should implement that alongside the Treasury Single Account. How can we not find a government agency top collect money? How can collecting money be difficult? You now allow a single company to collect money, take whatever they like from the money and give you what they like and you don’t audit their expenses.

On top of that, you government agencies like the NCDMB and NAPIMS now direct IOCs to go and contract with them as opposed to encouraging a public tender where people tender for these services and you give it to them on the basis of objectivity, transparency, level playing field and value for money. You abandon all the objectives of public procurement and direct them to go and deal with one person.

It is even more laughable what the NCDMB did by asking Delooite to go and conduct on behalf of the company the comparative cost of doing logistics business in Lagos. Have you ever seen that, where someone is tendering for contract and a government agency which is supposed to ensure a level playing field is now asking an accounting body to go and find out the cost of others in Lagos so as to tell them so that they can make their own bids more competitive; so that they can win all the tenders.

Is what the government agencies protect by any law?

It is very unlawful. It is contrary to all the public procurement laws, which to tell you how government services should be procured.

Are they open to litigation?

Of course, we will get an injunction against them if they don’t desist from that. How do you say NNPC which should protect government interest in all these is procuring services by direct bid, it is forcing the OICs to a particular provider, who is not even Nigerian and you are supposed to be Nigerian Content Monitoring and Development Board. And you are trying to encourage the perpetration of a foreign monopoly at the expense of local providers of the same service.

What can be done to restrain the government from going back and forth with its policies?

Policies by nature are supposed to be fluid and flexible so that you can adapt them. That is why they are not legislation. But that policy has to be reasonably consistent as well and stable. The life cycle of investment is often four or five years and you find that policy change by the government, especially in the short term, which are not responsive to external factors but point to special interests by people who want to achieve particular objectives for themselves discourage investment.

If I take for example land as an issue, since Mr. Fashola became the Minister for Lands, he has not signed a single consent. When you transfer land in the case of states, you get the governor’s consent, in the case of federal, you get the consent of the Minister for Housing. For over two years, he has not signed a single one. There are many investors in the real estate sector who have pending application for consent over three years.

You can imagine what has happened to the Naira in that time. People are coming to invest in the country. They have bought land with their money, they only want the government to consent, they have paid all the duties and it is difficult. That is why I keep saying it is a Mickey Mouse Republic. How else can you explain such failure? If you changed your money three years ago to buy land, today that same money-the exchange rate has gone up, what type of rent are going to charge that will allow you recover your money? The arrogant response you get from government officials is annoying, ‘if there is no money here, why are they coming’? It is so shortsighted.

You are competing for capital with Singapore, Malaysia and you are telling people who came here that you don’t care and when they leave, what do you have, graduate unemployment? Every year you have hundreds of thousands of people coming out of school not getting any job. Where are the companies that are going to create the jobs? All those companies that existed in Nigeria, when government cynically indiginised them and gave their assets to their friends instead of encouraging more people to come, they gave the asset to their friends in the name of indigenisation. All the Nigerians who took the company assets stripped the companies and bought big houses in London and America and the government has not collapsed.

You must be happy with the Acting President for issuing some new directives that are supposed to make the business environment more friendly?

Of course, love those three policy guidelines, especially the one about the default approval that says if the period for saying no has passed, then it s deemed to be yes. It is fantastic. I hope they can follow up. The biggest problem we have in this country is the civil or public service. Given the size of the public service that is very incompetent, very corrupt, very inefficient, how do you deliver public services? You don’t even know where incompetence ends and corruption begins.

As a Nigerian, we have to be reasonably positive to believe that these changes and policy initiatives will provide some good, at least in the short term.

I want to believe that in the short term, there will be some initial response which will help the ease of doing business in Nigeria. Provided that will is sustained. My fear is that Nigeria as a nation has shown very little capacity or willingness to enforce anything; so why where would they suddenly have capacity or willingness to enforce this new initiative? We have laws and policies, but who is going to enforce? It is the same civil servants, who will find some kind of justification for not enforcing it.

You want to retire someone who is very well connected and suddenly you get a call from the presidency telling to hands off. That is the end. The problem is not that we do not have laws or policies, the problem is the inability or unwillingness to enforce them.

That is why someone commits a crime today, nothing will happen to him, so long as he is connected. Of course, if you steal a chicken, you are more likely to go to jail than if you steal, say, N1 billion. When you have N1 billion, then you can hire a good lawyer, you can reach out to whoever you need to reach out to make sure that you are kept out of jail.
But, if you steal a chicken, even to get bail, you won’t get.

That is why you find that many people stay many years as remand prisoners whose crime is so small that even they are convicted they would have spent more time in the remand than they would have spent if they were convicted. Some of these crimes carry fines of N1000, why would anyone go to jail for three years in lieu of a fine of N1000 or N5000? Because they have no capacity to procure bail, they remain on remand and their cases are not making any progress because of the failure of the criminal justice system.

If you steal N1 billion, the EFCC will come in a Gestapo style and then there will be a headline, you have been arrested at most after two weeks, you have fulfilled all the bail conditions and you are a free man or woman in Nigeria, living large because the country has no capacity to enforce its laws.

Does this inability to enforce laws frustrate you sometimes, as a lawyer?

Honestly. It does. I have to tell you that because I have developed as a lawyer abroad before I came to Nigeria, I was shocked at what I saw. I did not think that there was any justice administration that could go as low as the Nigerian system.

I was used to English courts where things are reasonably efficient. When you get to Nigeria, nothing prepares you for the chaos that is the civil and criminal justice system. You wonder, how is it that we have good lawyers and good justices but no collective capacity to deliver a good criminal and civil justice system? It is a tragedy.

It starts from wrong recruitment policies to questionable promotion policies to lack of infrastructure to corruption at all levels. You can go to court and they say the judge has travelled.

Where in England will you go to court and they tell you that the judge has travelled? It is impossible. There are all sorts of reasons why judges don’t come to court-they went to a conference, funeral. It can be that there is a wedding. It can be that someone is having a birthday. It can be that there is half-term break or they are ill or there is traffic or that there is no light. Why don’t you simply re-assign the case to another judge? That case will still go ahead.

Sometimes I arrive from London to find that a court session that was duly scheduled is not sitting. Look at the risk. Even if I was travelling from Lagos to Benin or Uyo, I have taken a risk. Lawyers die in car crashes all the time. Why do they make you take unnecessary risk? We have so much to learn. When you tell them, they say no, we know what we are doing. We have been doing it like this. We are so conceited. If you go to a place like Singapore, they are eager to learn. They ask, do you think you can help us. They are very strategic and open to new ideas. We sit here and say we know it all. Who are you? Do you know you are talking to? And then nothing happens.

In Nigeria you can find a chief judge lamenting that judges are overworked. That is unacceptable. If the system is dysfunctional, I expect the chief judge to know what to do.

One of the executive orders concerning the ease of doing business that was signed by the acting president, says there will be a terminal for agricultural produce-for export and import, is that not similar to the oil and gas directive?

I don’t think so. I think what the government is trying to do is to reduce the cost of doing agricultural business. In a superficial way, they are similar, except that in the case of the agricultural products, the terminal is for export. They are trying to make it easy to facilitate the export of agricultural products, rather than allow it go through the bottle necks which characterize the export of everything in Nigeria.

That might work. It is similar because it is categorizing the terminal according to the type of cargo, except that the cargo that we are talking about in the case of oil and gas is incoming cargo. In relation to outgoing cargo, you have the oil and gas free zones, which are supposed to make value added products for export.

The whole concept of free zones was wrong from the beginning, because when these goods come into the oil and gas free zone or terminal free zone, they are to be consumed within those free zones. If they are for consumption outside the free zone, then it is subject to tariff like any other goods that come into Nigeria. The whole thing was twisted upside down. It was a deliberately engineered misunderstanding to achieve a particular goal.