The Lagos Deep Offshore Logistics Base (LADOL) Group and Samsung Heavy Industries (SHI) Nigeria, yesterday signalled an end to their five-year hostility, which had cost the economy substantial fortune in jobs and revenue. The historic truce, achieved through the Alternative Dispute Resolution (ADR) mechanism, is expected to unlock over $300 billion in Foreign Direct Investments (FDIs) to the country.
Respite came following the formal signing of a Memorandum of Understanding (MoU) on the sub-lease in terms of settlement and service agreement between both parties. This brought to an end the conflict that arose between Samsung and Ladol in 2018.
Present at the landmark ceremony were stakeholders in the nation’s economic zones, including Managing Director/Chief Executive, Nigeria Export Processing Zones Authority (NEPZA), Professor Adesoji Adesugba; acting Managing Director, Nigerian Ports Authority (NPA), Mr. Mohammed Bello Koko.
Others were Executive Chairman/Founder, LADOL, Chief Ladi Jadesimi; erstwhile Managing Director, Samsung Heavy Industries (SHI) Nigeria, Mr. Jejin Jeon; and Chairman, Nigerian Economic Zones Association (NEZA), Chief Oluwatoyin Elegbede.
Adesugba said the dispute had shut out investments worth over $7 billion and 3,000 jobs, adding that the peaceful resolution would also provide direct employment opportunities to over 10,000 Nigerians.
He said, “We are very happy that we have been able to actualise Mr. President’s directive that we must as a matter of national urgency ensure that this dispute is arrested.
“We are celebrating that investments worth this quantum is being unlocked into the Nigerian economy and we hope that we will continue to monitor what is happening between Samsung and LADOL to ensure that they live up to the spirit of what they have signed today.
“We expect that we shall start seeing visible results within the next couple of months, not up to a year; we will start seeing employments and different projects coming into the country.
“We were in Seoul, and they promised us that if we can resolve this, Nigeria is going to have more companies coming from South Korea to invest in the Nigerian economy. We are very optimistic that this is going to be a win-win situation for both the investors and Nigeria.”
He also attributed the resolution of the five-year commercial conflict to the setting up of ADR unit on his assumption of office, in collaboration with the National Dispute Resolution Centre at the Abuja Chamber of Commerce (ACCI).
Adesugba said, “What NEPZA has done is that as soon as I resumed office last year, we set up the NEPZA Alternative Dispute Resolution Centre. And you can see, this is the outcome of what we did.”
He commended President Muhammadu Buhari for his insistence on unlocking investments in the country as well as the Minister of Industry, Trade and Investment, Mr. Niyi Adebayo, for his role and leadership to ensure the success of the intervention.
Speaking at the occasion also, Koko said the conflict, which had previously defied multiple attempts towards a resolution, had led to loss of jobs and revenue to government.
He stated, “In the past three years, no activities have been taking place there (economic zones). There’s been loss of economic values and loss of jobs. So we are happy that has been resolved today. Both parties have agreed to work together and going forward, if there are any disputes, NPA will be involved in it.
“We want to thank President Muhammadu Buhari who had taken the action that has led to the resolution of this dispute. Today is a happy day and is good for the nation and this would ensure that confidence of investors improve in term of foreign direct investment in Nigeria.”
Amid the imbroglio in 2020, Buhari had issued a directive to NPA to return the land taken away from Ladol to the company, but the order was not implemented.
“Today, we are formally implementing that directive. And the essence of this is to ensure that both parties resolve their problem and activities at the yard in Ladol actually starts,” Koko added.
Jadesimi confirmed that the disagreement between LADOL and Samsung had finally been laid to rest in the interest of the Nigerian economy.
He said, “The meeting today is to bring an end to a dispute between the Ladol Group and SHI, which has been lingering for a little while and which became critical that it be sorted out. And now it has been completely resolved.”
“The key thing is to be able to resolve it peacefully for a far stronger joint venture going forward. It was a commercial dispute but the key thing is that it had been completely resolved in the interest of the Nigerian economy.”
On his part, Jeon said the resolution of the crisis would foster greater collaboration with all parties towards achieving better performance in the industry.
He said the dispute had further strengthened and reinforced SHI’s relationship with its partners.
Jeon added, “Based on that experience and enforcement, I am sure both Samsung and Ladol under the leadership of relevant government agencies, we will continue our collaboration for the growth of the industry and our business.
“Our assignment will not damage any relationship with the Nigerian government and our industry.
“So based on our 10 years of experience, good and bad experience, including those disputes but I think through those disputes, our relationship with our partners have been far more strengthened and reinforced.”
Jeon also expressed regret over what transpired over the past decade, expressed confidence that, God helping, the industry will witness better improvement going forward, adding that Samsung will be part of Nigeria’s development.
Chairman, Nigerian Economic Zones Association (NEZA), Chief Oluwatoyin Elegbede, said, “The Nigerian Economic Zones Association is very happy for the resolution of this problem because this is a problem between two of our members, Ladol and SHI. It’s been on for a decade and we just thank God that this has been resolved today.”
Essentially, the dispute over land lease between the LADOL, an indigenous firm, and SHI, a Korean firm, started in 2018, with NPA’s purported unilateral revocation of the presidential 25-year lease approval granted to Ladol and its replacement with a Direct Lease in 2019.
NPA, by that action, claimed to have taken a portion of land from Ladol and leased to Samsung.
The controversy led to the closure of business activities in the zone by both firms with over 3,000 job losses, halting of economic value chains and other losses that have stifled free flow of revenues to government and further investments.
In view of the unabated dislocation the dispute made on the country’s industrialisation process, another presidential directive was issued in 2020 to reaffirm the 2018 presidential approval of the land to Ladol.
However, the latest presidential directive was also jettisoned.
Concerned by the prolonged dispute, Minister of Transportation, Mr. Chibuike Ameachi, waded in. Amaechi instructed Koko to ensure the presidential directive, as communicated by the Attorney-General of the Federation (AGF), was implemented without further delay.
But two other resolved issues hinged on SHI MCI FZE’s sub-lease agreement with a LADOL affiliate, Global Resources Management Limited (GRML) and SHI MCI’s operating licence as a free zone enterprise within the LADOL free zone.
By this settlement, all the cases filed in various courts by the two parties have been withdrawn with the stage set for full-scale operation to begin in that business ecosystem.
The terms of settlement were agreed in January and both the lease and sublease agreements were formally signed yesterday.
Stock futures rise as Wall Street looks to snap losing streak
Stock futures gained on Friday morning as Wall Street looked to grind out a rare positive week in what has been a rough first half of the year.
Futures tied to the Dow Jones Industrial Average rose 102 points, or 0.33%. Futures for the S&P 500 were 0.51% higher, while Nasdaq 100 futures advanced 0.78%.
The moves in futures come as the stock market appears to have found some stability this week, at least for the short term. After an afternoon rally on Thursday, the S&P 500 is up 3.3% for the week, while the Nasdaq composite is up 4% and the Dow is 2.6%.
All three averages are looking to snap three-week losing streaks.
Economic data will be a key focus on Friday, as investors try to determine if the U.S. economy is falling into a recession. New home sales data is due out at 10 a.m. ET and the final University of Michigan consumer sentiment report for June will follow later in the day.
“Recession talk remains the focal point on Wall Street and that means whatever stock market rebounds emerge will probably be short-lived,” Oanda senior market analyst Ed Moya said in a note. “Wall Street won’t have any answers anytime soon for the questions on when will inflation peak, how soon will we see a recession, and how high will the Fed raise rates?”
The consumer sentiment reading could be particularly important for investors, as Federal Reserve Chair Jerome Powell said that a surprise drop in the preliminary reading was one of the reasons the central bank hiked its benchmark interest rate by three-quarters of a percentage point earlier this month.
On the corporate front, shares of FedEx moved higher in extended trading despite a mixed fourth-quarter report after the logistics company delivered an upbeat earnings forecast. Carnival Cruise Line is scheduled to release a business updated on Friday morning.
States to lose N19bn in oil, gas revenues in 2022 – World Bank
The World Bank has said that Nigerian states will likely lose N18.8bn in oil and gas revenues in 2022, as worsening revenue collection at the federation level increases budgetary pressures for the states.
The Washington-based bank said this in its Nigeria Development Update report, titled, ‘The Continuing Urgency of Business Unusual’.
According to the lending bank, the declining revenue from the federation level had put many states in a precarious fiscal position.
The bank warned that many states would be unable to meet up with their expenditures, adding that there was an increase in debt servicing expenditures of States.
The report read in part, “With net oil and gas revenues stagnating, most states will not be able to achieve their intended levels of expenditures in 2022.
“In addition, debt servicing expenditures at the state level are also mounting due to a decline in gross statutory account revenue transfers from the federation account allocation committee, which comprises oil and non-value added tax, non-oil revenues.”
The bank further said that the expected higher VAT collection or improvements in independently generated revenues would not compensate for the lower transfers from the Federation Accounts Allocation Committee in 2022.
The financial institution also warned that there would be a 2.7 per cent decline in FAAC transfers in 2022 when compared to 2021, adding that this decline would push states to borrow more and slash discretionary expenditure.
“Stagnating net oil revenues will significantly affect the fiscal situation at the state level. State governments are projected to collectively receive 2.7 per cent fewer revenues than in 2021, as federal transfers are estimated to decline by 10 per cent against 2020 levels.
“Lower transfers will cause state governments to incur debt or drastically slash discretionary expenditure. Although states receive the majority of VAT revenues, VAT increases would not make up for the loss of net oil revenues.
“As a result, in 2022, the average state in Nigeria will lose N18.8bn in oil and gas revenues, while optimistic projections place average gains from VAT and the electronic money transfer Levy at N7.1bn per state, and average increases in each state’s independent revenues at N6.7bn. As a result, the average state can expect to lose N5bn in revenue in 2022,” the report stated.
The Nigerian National Petroleum Company Limited (NNPC) might deduct over N1tn in the next six months from the Federation Accounts Allocation Committee, following the decision of the Federal Government to continue subsidising Premium Motor Spirit, popularly called petrol.
Figures obtained from the oil firm on its subsidy deductions in 2021 indicated that the amount deducted monthly from FAAC by the NNPC was higher during the periods of higher crude oil prices.
This was also confirmed by economists, who explained that the higher the international price of crude oil, the higher the amount to be deducted by the NNPC from FAAC.
“Of course, the NNPC will spend more on subsidies this year because crude oil price has been increasing and the higher the price of crude, the higher the amount to be spent on subsidy,” the Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, said.
He added, “In fact, about N2.5tn might be spent on subsidy this year, meaning that about half of that amount could be spent in six months and this means hard times for states because the funds will be deducted from FAAC as usual.
“Some states would struggle to pay salaries, especially states that are heavily dependent on federal allocation. Some may have to lay off some of their work force. Many will struggle to meet their financial obligations as sub-nationals.”
Nigerian banks record N1.21tn non-performing loans
The total non-performing loans in the banking sector hit N1.21tn as of the end of February 2022, figures obtained from the Central Bank of Nigeria have revealed.
The CBN stated in reports obtained from the Monetary Policy Committee that the total credit in the sector rose to N25.25tn as of the end of February 2022 from N21.13tn as of the end of February 2021.
It stated that the non-performing loans reflected the case-by-case review of regulatory forbearance, effects of the Global Standing Instruction policy, and sound industry risk management practices.
A member of the MPC, Kingsley Obiora, said the banking system maintained its resilience amid economic recovery.
He said, “Overall, the industry credit increased by 19.53 per cent to N25.25n in February 2022 from N21.13tn in February 2021. The industry NPL ratio continued to trend below the prudential threshold of five per cent.
“It decreased to 4.80 per cent at the end of February 2022 compared with 6.38 per cent in February 2021. The downward trend was attributable to recoveries, restructuring of facilities and sound management practices by DMBs (Deposit Money Banks).”
The Deputy Governor, Financial Systems Stability Directorate, CBN, Aishah Ahmad, said, “Total credit also increased by N4.13tn between end February 2021 and end-February 2022 with significant growth in credit to manufacturing, general commerce, and oil and gas sectors.”
She added that the non-performing loans ratio declined further to 4.8 per cent in February 2022, from 4.94 per cent in December 2021.
A member of the MPC, Robert Asogwa, said, the financial sector remained strong similar to the position at the last MPC meeting especially looking at the banking and capital market developments.
He said the banking sector appeared sound and resilient with a considerably high Capital Adequacy Ratio and Liquidity Ratio in February 2022, in line with prudential requirements.
With a persistently lowering non-performing loan ratio since 2021 despite the shocks caused by the COVID-19 pandemic, he said the asset quality of the banking system was now one of the strongest in Sub-Sahara Africa.
He said, “Bank intermediation continued to improve in February 2022 with industry total credit increasing from N24.6tn in January 2022 to N25.25tn in February 2022.”
“The extension of the moratoria on bank loans up to the middle of 2022 as part of the COVID-19 relief measures continues to alleviate the burden on the borrowers impacted severely by the pandemic.”
- Organ harvesting: Dino Melaye reacts to arrest of Ekweremadu, wife
- Supreme Court set to rule on controversial Electoral Act on Friday
- New endorsement deal excites Tiwa Savage
- U.S. swimmer Alvarez saved from drowning by coach at world championships in Budapest (Photos)
- World’s most livable cities: Vienna climbs back to its No. 1 spot. These are the biggest decliners
NEWS2 days ago
Organ harvesting: Dino Melaye reacts to arrest of Ekweremadu, wife
NEWS2 days ago
World’s most livable cities: Vienna climbs back to its No. 1 spot. These are the biggest decliners
NEWS2 days ago
Supreme Court set to rule on controversial Electoral Act on Friday
CELEBRITIES2 days ago
New endorsement deal excites Tiwa Savage
SPORTS2 days ago
U.S. swimmer Alvarez saved from drowning by coach at world championships in Budapest (Photos)
BUSINESS2 days ago
Stock futures rise as Wall Street looks to snap losing streak
POLITICS2 days ago
Wike meets PDP senators, Orubebe
NEWS2 days ago
Reps want gambling operators to obtain customers’ NIN before placing bets