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Why NPA transferred LADOL’s land to Samsung in fresh lease agreement

 

The Nigerian Ports Authority (NPA) said it took the decision to revoke the land lease agreement signed with the Lagos Deep Offshore Logistics Base (LADOL), after it discovered that LADOL allegedly shortchanged the Federal Government and also violated the terms of the lease.

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According to the NPA revoked the lease of the land at Tarkwa Bay, near Light House Beach in Lagos via a letter dated November 14, 2019 and addressed to the managing director of Messrs Global Resources Management Limited (GRML), the parent company of LADOL.

The letter, signed by Yusuf Ahmed, general manager in charge of Land and Asset Administration in NPA, reminded LADOL that “Clause 4.5 (a) of the agreement prohibits the lessee (LADOL) from subletting any part of the premises without written approval of the Lessor (NPA) and stipulates that any contravention shall result in the automatic cancellation of this lease.”

NPA’s letter further stated that its investigation revealed that LADOL executed a sublease dated September 13, 2013 with Messrs SHI-MCI Fze (representing Samsung Heavy Industries Nigeria) without the required approval or recourse to the Lessor.

It reads: “Your actions in that regard led to the current impasse with resultant negative attention within and outside the country. Consequently, the authority has reviewed the events and decided to exercise its rights under the lease and hereby revokes it with immediate effect.”

“LADOL collected about $45 million (N16.2billion) from Samsung Heavy Industries Nigeria Limited (SHIN) for the 11.2426 hectares of land for which it paid only $524,105 (N37.73 million) to NPA,” NPA claimed.

It would be recall that in a letter dated November 22, 2013, “GRML applied to NPA to sublease the 11.246 hectares to MCI-SHI FZE for the “purpose of expanding facilities at LADOL offshore support facility in readiness to handle the integration of the Egina FPSO onshore in Nigeria for the Nigerian National Petroleum Corporation (NNPC) and Total Upstream Nigeria.”

According to NPA, while it obliged the application in March 12, 2014, it suspected foul play when GRML failed to furnish it with the sublease agreement between it and SHIN throughout the five-year tenor of the sublease, so as to conceal the actual amount it collected from SHIN.

During a period of five years, LADOL through GRML charged SHIN $9 million as rent per year for the portion of land which it was paying $104,821.95 annually to the ports authority.

Other available documents also alleged that LADOL, through GRML had also entered into another sublease agreement with an American company called Africoat Nigeria Limited, without any recourse to the NPA contrary to the provision of the head lease agreement with NPA.

Following these infractions, NPA terminated the contract before leasing the 11.24 hectares to SHIN in a fresh agreement of $219,230,700.00 per year to save SHIN’s fabrication and integration yard for which it borrowed $270 million to build.

Having allocated 11.24 hectares for SHIN, NPA also granted a fresh lease under new terms to LADOL for 5.7574 hectares of developed land and 69,2874 hectares of undeveloped land for five years with effect from November 14, 2019.

LADOL was required to pay N112,269,300 per annum for the developed land and N57,177,000 per annum for the undeveloped land, in addition to Value Added Tax (VAT) of N8,472,315.

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