After a decade of continuous implementation, Nigerian Content practice is catching on in the oil and gas industry. Within this period, the thrust for Nigerian content has grown remarkably with many landmark achievements. The Nigerian Content Development and Monitoring Board (NCDMB) says “As a Board and, indeed, a country, we are not yet where we want to be. But we are clear where we want to be by 2027 based on our 10-year strategic road map. Our target is to ramp up to 70 percent, from less than five percent Nigerian content level, back in 2010.”
The target is not just to achieve quantum growth, but also to embed the practice in the Nigerian oil and gas industry and linkage sectors. The message is: produce, process, refine, manufacture, maintain, service, add value, retain value, pay taxes and create jobs in-country. According to the NCDMB, deepening Nigerian content is the recipe for our national economic survival and security. To depend on foreign inputs and supplies for our oil and gas operation leaves our economy vulnerable and subject to all kinds of global vicissitude, including tottering globalization, Coronavirus pandemic and the threat of energy transition hanging in the horizon.
Before the enactment of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010, also known as the Nigerian Content Act, most operations in the nation’s oil and gas space were executed by International Oil Companies (IOCs). The glaring lack of technical know-how in-country led to the importation of skills, with the affected expatriates being remunerated at a cost to the country (in capital flight) to the tune of $380 billion !
Enforced by the Nigerian Content Development and Monitoring Board (NCDMB), the NOGICD legislation paved the way for the supervision, coordination and monitoring of the Nigerian content plan, and implementation of local content.
Vigeo Shipping Limited is an NCDMB Double – A Rated Company.It is a wholly owned Nigerian shipping company operating in the deep-water vessel segment of the Nigerian Oil & Gas industry. It started operations in 2004 as a JV company – Vigeo Farstad Shipping Limitedproviding quality, effective and innovative service to diverse clients through the provision of modern support vessels managed by highly trained Nigerian crew. Vigeo Shipping became one of the pioneer expressions of the Federal Government of Nigeria’s success in initiating a policy that made it possible for Nigerian entrepreneurs to secure a fair share of the oil and gas spend in the country.
The Local Content Policy became a vital instrument aimed at facilitating the true indigenization of Nigeria’s oil and gas industry and the economic and social wellbeing of those engaged in it. The emphasis of the Federal Government in encouraging Nigerian entrepreneurs to set up key facilities and own strategic assets like marine vessels, transport & logistics operations, and oil rigs was also expected to serve and protect the industry by guaranteeing certainty of supply.
The Local Content Act of 2010 has been largely responsible for the emergence of a corps of technical and financially competent Nigerian oil and gas asset development companies who have cut their teeth providing support largely for Domestic Oil Companies (DOCs) who in turn, have had to look inwards and away from the international service providers.
In 2007, Vigeo Limited was granted a $14.5m facility by Oceanic Bank Nigeria Plc for the acquisition of a vessel, MV Vigeo Olufunke with the facility repayment from operational cash flow generated by the Offshore Supply vessel. In addition Oceanic Bank Plc also availed Vigeo Limited a N750m invoice discounting facility. All facilities were secured with a Legal Mortgage over the financed Vessel, as well as the Personal Guarantee of the Chairman of Vigeo, Mr Victor Gbolade Osibodu, amongst others. It is a fact that the now defunct Oceanic Bank Plc subsequently became deeply enmeshed in transparency, ethics & money laundering challenges leading up to its eventual collapse.
The September 2007 acquisition of MV Vigeo Olufunke a multi million dollar investment in an Anchor Handling Tug Supply (AHTS) vessel, was made by Vigeo Holdings to facilitate exploration and production activities in the nation’s deep water oil fields. Chairman/Managing Director Vigeo Holdings, Mr. Victor Gbolade Osibodu, at a press briefing in Lagos, said it marked “a major step towards the actualization of the company’s goal to own a fleet of Platform Supply Vessels (PSV) and Anchor Handlers Tug Supply (AHTS) to support oil and gas industry operations, particularly in the deep offshore segment of the Gulf of Guinea”. Specifically, MV Vigeo Olufunke was contracted to the SNEPCo Bonga Field.
The universal assumption at the time, was that deep offshore facilities like the BONGA Field were beyond the reach of Niger Delta militants who were very active in the region.
Unfortunately, one of the most successful militants’ attack, shutting in 225,000 barrels per day, came against Shell’s Bonga facility. At 120 km offshore, the Bonga attack demonstrated a new militant capability in the offshore environment. As Nigeria is one of the few states with the geological potential to significantly increase oil production and exports, the Bonga attack proved to be an extremely important development.
MV Vigeo Olufunke, which was inaugurated to serve the Royal Dutch Shell Bonga oil platform was affected by the attack on the oil platform. Royal Dutch Shell halted production of its Bonga field off the coast of Niger Delta region after the attack on the oil rig by Militants from the Movement for the Emancipation of the Niger Delta (MEND).
The attack led to production shut down and significant damage to MV Vigeo Olufunke, thus adversely affecting the continued operation ofthe vessel. The strike on Shell’s Bonga field forced the Anglo-Dutch giant to stop output from the $3.6 billion facility.
MV Vigeo Olufunke was relocated to Europe for dry docking and repairs, an exercise that is said to have cost Vigeo Limited well over US$5 million.Despite this challenge, Vigeo continued to service its bank loans associated with the Bonga contract. When the repairs and drydocking were completed the vessel returned to Nigeria to resume operations. Subsequently, the facilities were restructured with regular monthly repayments being made to Oceanic Bank by Vigeo.
Reliable sources claim that long before Vigeo Holdings could recover from the significant financial adversity that was a direct consequence of the first of its kindOff-Shore Terrorism in Nigeria, its major creditor Oceanic Bank Plc collapsed in 2009 under the weight of internal fraud, ethical challenges, financial malpractices/moneylaundering among others, at the end of which Mrs Cecilia Ibru, former CEO of Oceanic Bank, pleaded guilty to three of 25 counts of fraud and mismanagement, for which she received three concurrent jail sentences of six months each,and was ordered to hand over $1.2bn (£786m) in cash and assets.
With the Bonga offshore oil platform attack in April/May 2008, and a vessel out of service, compounded by the downturn in the economy, particularly in the oil and gas industry, and the collapse in oil prices to less than US$30 in the international market, Shell (SNEPCo) was forced to scale down operations, culminating in their non-renewal of the charter contract entered into by Vigeo Ltd for the MV Vigeo Olufunke.
Even under the resultant heavy burden of debt, Vigeo Holdings was said to have continued to make several good faith repayment obligations to Oceanic Bank/Ecobank Transnational Incorporated (ETI) while making concerted efforts to restructure the facility and seek a moratorium. The consensus from multiple sources seems to be that it has always been Ecobank and not Vigeo, that is severely troubled by its own debt load, internal inconsistencies, financial malpractices and generally toxic relationships along with endless litigations with its top management, staff and customers.
MERCANTILISTS KILLING LOCAL CONTENT POLICY
To date, Vigeo Limited has paid $16m out of the $17.1m loan and over N2.1 billion on the naira loan (borrowed from the defunct Oceanic Bank) but Ecobank continues to spread false information about a grossly exaggerated outstanding payment as over $16.88 million, all in a bid to exploit an otherwise legitimate financial transaction between Oceanic Bank and Vigeo Ltd.
Vigeo Holdings to date claims to have made a total repayment of approximately $16m on the USD loan (on an original loan amount of $17.1m) and over N2.1bn on the Naira loan (original amount was N750m). Despite these huge repayments, Ecobank is still publishing Vigeo’s indebtedness to it as $16.87m, and N862m on the USD and Naira facilities respectively. It is believed that such claims led to Vigeo requesting for an audit of the loan in order to determine the true position of things.
While Vigeo was engaging Ecobank on the issue of outstanding balances, Ecobank demanded full repayment of the loan and called the personal guarantee given by the Chairman of Vigeo. Ecobank also referred the matter to its lawyer for recovery, directing that all future discussions on the matter should be with their lawyers.
Vigeo met a couple of times with Ecobank’s appointed lawyers restating its commitment to repay the loan while stating its concerns and requirement for the loans to be audited. While Vigeo was engaging with Ecobank’s lawyers, they also made efforts to engage with the top management of Ecobank in order to resolve issues in contention. Ecobank gave the impression that they were willing to have a meeting with Vigeo, but then directed their lawyers to institute a case against Vigeo and its Chairman at the Federal High Court, Lagos.
Also, while Vigeo was making concerted efforts at finding a settlement, Ecobank without notice (either prior or post) sold 25m units of GTBank shares belonging to Vigeo’s Chairman used as security for the facility. For reasons best known to Ecobank, proceeds from the sales of the shares were not credited to Vigeo’s account until December 2016 despite the fact that the shares were sold between September and October 2016. This deliberate action further exposed Vigeo to unnecessary interest exposure.
Ecobank also unilaterally and despite Vigeo’s objections, converted the US Dollar obligation to Naira at an exchange rate of N430 to $1, official exchange as at the date of conversion was N304 to $1. Arising from the conversion, Ecobank increased disputed Vigeo’s obligation to it by almost 50%.
As a direct consequence of the conversion, Ecobank also effectively changed the interest rate on the Vigeo facility from 11% pa on the USD loan to 25%.
against such abuses. By these rules, before a Mareva injunction could be granted the applicant must show:
- that he has a cause of action against the defendant which is justiciable in Nigeria
- that there is a real and imminent risk of the defendant removing his assets from jurisdiction and thereby rendering nugatory any judgment which the plaintiff may obtain
- that the applicant has made a full disclosure of all material facts relevant to the application (iv) that he has given full particulars of the assets within the jurisdiction;
- that the balance of convenience is on the side of the applicant
- that he is prepared to give an undertaking as to damages.
If he fails to satisfy the Court in any of these preconditions for a grant of a Mareva injunction, it ought not to be granted.
Again and again the fact keeps getting repeated that some lawyers have been contriving grievous lies to secure Mareva injunctions against customers of their client banks. On 7th November 2016, Ecobank obtained an ex parte Mareva injunction from The Federal High Court Lagos against, Vigeo Limited, its sister companies and Chairman, Mr Victor Gbolade Osibodu.
The news eventually went viral that Vigeo, its sister companies and Chairman had appeared before the Federal High Court in Lagos and all the orders obtained by Ecobank against sister companies of Vigeo were vacated by the Federal High Court Lagos (same court that issued the orders) in January 2018 after being satisfied that the orders were fraudulently obtained.
The order against Vigeo Limited and its Chairman was vacated by the Court of Appeal sitting in Lagos in March 2021 after determining there was no basis for the order to be issued in the first instance. Ecobank did not appeal the vacation of the orders of both courts.
IN CONCLUSION…
A Definition of Nigerian Content : The NOGICD Act defines Nigerian content as “the quantum of composite value added to or created in the Nigerian economy by a systematic development of capacity and capabilities through the deliberate utilization of Nigerian human, material resources and services in the Nigerian oil and gas industry.”
The Local Content Act is one of the most successful economic policies of the Federal Government in recent times.The import of such a bold inward looking Federal Government initiative is completely lost on a foreign bank like Ecobank Transnational Incorporated that has through it’s local subsidiary Ecobank Nigeria Plc acquired the dubious distinction of being at the forefront of sabotaging the modest gains and impact of Nigerian entrepreneurs in the oil and gas sector, against the background of the Local Content Act
Even critics of the policy implementation admit its importance, and note that the Local Content Act does not try or intend to bar foreigners from taking an interest in the Nigerian oil and gas industry, but subject them to the fulfillment of conditions specified by the Act. Nigerian operators and Nigerian service companies are considered first in the award of oil blocks, license and works in the oil and gas sector before foreigners. The Act welcomes foreigners to be operators, shareholders, investors, and partners in the industry, as long as they conform with its provisions. The Act has been fundamental to the promotion of the development of indigenous capacity in the Nigeria oil & gas sector.
Conflicting figures on claims and counterclaims have been put out by both Vigeo Ltd and Ecobank on the exact size of any subsisting debt owed by Vigeo Ltd. While this may eventually turn out to be the subject of long drawn out litigation, suffice to say at this point that some key facts have already been substantially establishedas follows:
- Vigeo Ltd, a double-A rated company by the Nigerian Content Development and Monitoring Board (NCDMB),availed itself of Multiple Credit Facilities dated April 10, 2007 which Oceanic Bank Plc approved the grant of $15 million and $1,750,000
- By another duly executed offer of Multiple Credit Facility also dated April 10, 2007, Oceanic Bank Plc in three tranches granted to Vigeo Ltd the sum of N200 million, N750 million and N350 million respectively for the purpose of working capital and import duty payments with a tenor of 12 months (renewable annually) at the interest rate of 16 per cent per annum
- All loans received by Vigeo Ltd from Oceanic Bank Plc were for the expressed purpose of purchasing a vessel (MV Vigeo Olufunke) and servicing a SNEPCo contract at the offshore Bonga Field
- To date, Vigeo’s position is that it has made a total repayment of approximately $16m on the USD loan (from an original total loan amount of $17.1m) and over N2.1bn on the Naira loan (original amount was N750m) all borrowed from Oceanic Bank Plc. Vigeo has further asserted that despite huge repayments, Ecobank continues to make claims of Vigeo’s indebtedness to it at $16.88m and N862m on the USD and Naira facilities respective. Vigeo has repeatedly countered with demands for an audit of the loan positions
- On 30 July 2011, Oceanic Bank and ETI signed a Transaction Implementation Agreement in relation to the Acquisition and recapitalisation of Oceanic Bank Plc, with a publicly expressed intention to merge Oceanic Bank with its Nigerian subsidiary Ecobank Nigeria Plc at an unspecified future date
- From the start, the credit facilities Vigeo obtained from Oceanic Bank Plc were primarily secured by operational cash flow generated by the vessel contract, and the vessel itself. Findings have also revealed that part of the security for the facilities was a charge on the shares in blue chip companies belonging to the Chairman of Vigeo Limited, along with his executed personal guarantee.While Vigeo was making concerted efforts at finding a settlement, Ecobank without notice (either prior or post) sold 25m units of GTBank shares belonging to Vigeo’s Chairman used as security for the facility.
- The well publicized series of unilateral from Ecobank, have continued to unconscionably compromise Vigeo’s brand, image, reputation and relationships, not to mention the literal killing of the spirit and purpose of Local Content Development in the nation’s oil and gas sector.
In like manner, Ecobank has continued to contend with Vigeo’s albeit via social media litigation, that its account had remained non-performing as they had failed to meet unspecified agreed terms
