by Joel Sam, Contributing Editor
April 2, 2017 – Luring fresh investment through competitive incentives continues to be the first the order of business for Umana Okon Umana, managing director of Nigeria’s Oil & Gas Free Zones Authority (OGFZA). Mr Umana was appointed as the new head of the Authority at the end of 2016, and he has not shied away from making potentially big changes.
In March 2017, Mr Umana announced that a review of oil and gas free zone tariffs was underway. The review is part of a wider strategic roadmap which the Authority hopes will improve its operations and the competitiveness of the country’s oil and gas free zones.
The rationale put forward byMr Umana and other stakeholders is based on the fact that negotiations which led to the existing tariff structure were dominated by representatives of the national oil company subsidiary, National Petroleum Investment Management Services (NAPIMS), and international oil majors such as ExxonMobil, Shell, Total and Chevron without the input or involvement of other investors in the free zones. Mr Umana has assured licensed investors that they will have their say in a new process which they hope will result in a lower tariff regime and ‘ease of business’ concessions.
At present, OGFZA’s licensed operators enjoy special incentives, including exemptions from all federal, state and local government taxes. Equipments brought into the zone are waived any import duty, while new finished products, arising from value added processes which have generated additional employment, benefit from a 75 percent rebate on export duty. Complete foreign ownership of free zone businesses is permitted and all oil and gas free zone companies are entitled to a more streamlined application and issuing process for immigration visas. However, all companies are encouraged to employ domestic labour.
Mr Umana has actively courted investors in the past, highlighting particular growth industries and the support his institution is offering. Speaking to delegates at the Malaysian High Commission in 2016, Umana informed investors that “…attractive opportunities for downstream industries, like refineries, manufacturing of pipes for the oil and gas sector…as well as infrastructure, exist for investors in the free zones.” The Authority, he said, “is willing to partner with any investors using the public-private partnership (PPP) model to achieve its mandate and business plan.”