The Oil and Gas Free Zones Authority (OGFZA) has ordered a comprehensive compliance audit of Intels Nigeria Limited’s operations in the last 10 years.
The Authority said it appointed a team of auditors to examine Intels’ books.
The firm is a concessionaire of the Nigerian Ports Authority (NPA) and a licensee of OGFZA.
The audit is over the company’s alleged serial violation of the laws and regulations governing operations in the free zone.
Intels was accused of failing to submit its records, warehouses and equipment imported under the zero duty regime of the free zone for inspection in compliance with the OGFZA Act.
In a letter to Intels Managing Director, OGFZA drew his attention to the alleged breaches.
The letter, signed by OGFZA Managing Director Mr Umana Okon Umana, accused Intels and her affiliate companies of having “transferred and sold off their assets” imported into the free zone under the zero duty regime, which only free zone companies are entitled to.
He said the company allegedly did so “without the approval and consent of the Authority,” in contravention of Section 12(6)(a-b) of the Oil and Gas Export Free Zone Act.
The section states: “Where any goods which are dutiable on entry into the Customs territory are sent from the Export Free Zone into the Customs territory, the good shall be subject to the provision of the Customs, Excise tariff, etc. (Consolidation) Act and any regulations made thereunder, and if the goods are intended to be disposed of in the Customs territory, shall not be removed from the Export Free Zone unless— a) the consent of the Authority has been obtained; and b) the relevant Customs authorities are satisfied that all imports restrictions relevant thereto have been complied with and all duties payable in connection with the importation thereof into Customs territory have been paid.”
According to Umana, on March 20, the Authority issued a new standard operating procedure (SOP) to enforce the laws and regulations in the free zone.
Two days later, 16 affiliates of Intels filed applications for de-registration from the free zone
It was learnt that the revised SOP made it mandatory that all requests for transfer of cargoes from the free zone had to be made to the Authority in keeping with the law, to protect the interest of government and other stakeholders.
Following Intels’ affiliate’s applications, OGFZA informed the companies that in line with section 15 (1) of Act, they would have to be audited.
The Authority said the audit is to ensure that their assets were fully accounted for and that appropriate revenue payable to the Federal Government is remitted when the assets are disposed of.
In keeping with section 15(1)(a-c) of the Act, a joint team of OGFZA and Nigeria Customs Service was set up to visit the companies’ premises to inspect their records and equipment ahead of the de-registration.
Umana alleged that the assets that may have been disposed of by Intels and its affiliate companies, including Prodeco, add up to 3,000 project vehicles, trucks, cranes, forklifts and a large number of assorted construction equipment.
In the letter OGFZA also drew the attention of Intels to the fact that its Free Zone operating licence, which had expired since 31 December 2016, had not been renewed.
Following the OGFZA allegations, Intels Nigeria Limited (INL) has threatened legal action against Umana, saying he leveled “false and malicious allegations against the company and its management which are injurious to its business interests, as well as the reputation of INL.”
INL said it is compiling the losses being suffered by the organisation due to Umana’s actions both in his official and private capacity.
It said: “We have no doubt that as these are deliberate actions, you are well aware of the consequences as these are clearly crude, irresponsible and off-limits. At the appropriate time, we will initiate necessary legal measures to ventilate this grievance.”
In a letter titled ‘Re: Various Matters in Contention between Oil & Gas Free Zone Authority (OGFZA) and Intels Nigeria Limited,’ Intels listed some issues of contention between INL and OGFZA, which he said Umana capitalised on to disparage the reputation of the company.
Intels listed some of the contentious issues to include the refusal of OGFZA to renew the 2017 Operating License for Intels Nigeria Limited; the imposition of land charges by OGFZA; nullification of INL’s Industry Wide Standard Tariff (IWST) and other port related charges by OGFZA.
INL also frowned at Umana’s “penchant for conveying messages to government agencies and clients injurious to INL business interest and reputation; non-payment for INTELS’ premises occupied by OGFZA at Onne and Heliconia Park Estate and the refusal of OGFZA to renew the residence permit and re-designation of INL expatriate employees in the Onne Free Zone.
Part of the Intel’s letter reads: “We refer to the various exchange of correspondence, meetings and discussions held between our company and the OGFZA regarding various demand notices issued by the OGFZA, as well as other measures taken by the OGFZA affecting our status and operations in the Onne Oil & Gas Free Zone.
“As you are aware, we have so far engaged you in discussions with a view to resolving the matters amicably, in line with our conviction that a harmonious working relationship will be of mutual benefit to our two organisations and will be in the overall interest of both parties. However, in view of your persistent engagement in actions deliberately aimed at undermining our business, as well as tarnishing our hard-earned reputation, it has now become imperative to formally address the various issues on both the law and facts with the hope that you will be better guided to retrace your ill-advised actions,” the company said.
On OGFZA’s refusal to renew the 2017 Operating License of Intels Nigeria Limited, the company states: “OGFZA has refused to release INL licence for 2017 on the ground that INL has to pay all charges and fees demanded by the OGFZA notwithstanding that INL has paid in full the renewal fee for the licence. The other fees in question relate to new free zone tariffs on land charges imposed by the Free Zone (Tariffs & Other Charges) INL has raised some issues concerning the land charges (which are further enumerated hereunder) with the result that the claim by the OGFZA on INL for those charges are presently being disputed.
Intels said OGFZA’s view that INL has not complied with Regulation 35(1) (b) (“payment of any outstanding sum due to the Authority”) and is therefore not entitled to have its licence renewed, is a grave error, insisting that OGFZA should issue INL its licence for 2017.
On the land charges imposed by OGFZA, Intels maintained that INL is not liable to pay the land charges levied on it by OGFZA, pointing out that the premises it occupies in the ports were granted by the Nigerian Ports Authority (NPA); the statutory/legal owner of the land on which our operation is situate. It said OGFZA has no legal authority to administer or manage land vested in the NPA in any manner whatsoever. “OGFZA cannot levy any charges over NPA land, and not having any interest over the land, it cannot register third party interests or transactions over the land.”
Intels, in its letter, said the charges of terminal operators for stevedoring or other terminal handling is certainly not part of Regulation 11 of the Free Zone Regulations which grants the OGFZA the authority to issue a schedule of Tariff that should apply in the Free Zone. The OGFZA tariff, Intels maintains, relates to services intended to be provided by or through the OGFZA, insisting that this was never intended to regulate NPA services including cargo handling of any sorts, as these are the preserve of NPA.
Intels said it is on record that it has paid the prescribed FZ licence fees for the 2017 Operating License after filing the 2016 annual return along with other formalities, stating, “as already demanded by us, we expect that OGFZA should immediately release our FZ (Free Zone) license for 2017.”
“If you fail or neglect to release the said License within five days of receipt of this letter, we shall have no option but to take appropriate legal steps to compel the OGFZA to release our 2017 FZ Operating License along with all other services and benefits ancillary thereto and accruing to us as FZ Licensee, including the grant of expatriate quotas and re-designations thereof as validly applied for,” Intel said.