THE NIGERIAN DECADE OF GAS – POTENTIAL OPPORTUNITIES FROM THE RUSSIA – UKRAINE CONFLICT

THE DECADE OF GAS

On 29 March 2021, the Nigeria International Petroleum Summit (N.I.P.S) Pre-Summit Conference, marked the official launch of the “The Decade of Gas in Nigeria Initiative” in furtherance of the Federal Government initiative that declared January 1, 2021 to December 31, 2030 as “The Decade of Gas Development for Nigeria”.

 At a time of rising global demand for cleaner energy sources this has been viewed as a bold statement that gas development and utilization should be a national priority to stimulate economic growth, further improve Nigeria’s energy mix, drive investments, and provide the much-needed jobs for Nigerian citizens and eliminating energy poverty, currently affecting about 40% of the population.

The commitment to developing the gas value chain by reviewing and gazetting policies and regulations to enhance operations in the sector had been commenced under the National Gas Policy (2017).

RECENT GAS DEVELOPMENTS

Developments have been made in recent years in gas infrastructure development.

The Nigerian National Petroleum Company Ltd is currently deepening natural gas utilization to reduce energy poverty through the National Gas Expansion Programme and intensifying the use of petrochemicals.

The NNPC has also upscaled efforts in the gas sector through various projects like the Nigerian Liquefied Natural Gas NLNG Train 7, Ajaokuta–Kaduna–Kano Natural Gas Pipeline (AKK), OB3 and ELPS among others. The (NLNG) project since delivering its 1st LNG cargo in October 1999 continues to be the Federal Government’s arrowhead in the reduction of gas flaring in Nigeria and contributes about one per cent to Nigerian GDP, having generated $114 billion in revenues over the years, $9 billion in taxes, $18 billion in dividends to the Federal Government and $15 billion in Feed gas Purchase.

The NNPC is also expanding and integrating both domestic and regional power grids and growing the domestic gas markets through Autogas/Compressed Natural Gas/Liquified Petroleum Gas to power vehicles.

On Wednesday, February 2, at the 2022 Nigeria International Energy Summit (NIES) held in Abuja, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) newly created under the Petroleum Industry Act (2021) revealed that Nigeria’s proven natural gas reserve had risen to 209.5 Trillion Cubic Feet (TCF) as of January 1, 2022. The new figure represents a major increase of 2.97 TCF in proven natural gas reserves, which, of itself, represented a 1.42 percentage increase from the 206.53 TCF recorded on January 1, 2021.

Such growth, together with the prospects for continued increase, come at the most auspicious moment, given the possibility of buying into the current European need for alternative sourcing of gas.

In January 2002, the idea of a Trans-Saharan Natural Gas Pipeline that was first mooted in the 1970s, came alive when the Nigerian National Petroleum Corporation (NNPC) and the Algerian national oil and gas company, Sonatrach, signed a Memorandum of Understanding for preparations of the project. Aimed at enabling Europe to tap into West Africa’s abundant natural gas supplies, the pipeline included the northernmost Nigerian neighbouring country of the Republic of the Niger for two excellent rationales. The pipeline was going to link through its borders to get from Nigeria to Algeria and it was expected to boost exploration in Niger and expand its energy industry. The 4,128-kilometre pipeline, with 1,037 kilometres in Nigeria, 841 kilometres in Niger, and 2,310 kilometres in Algeria, and a capacity of 30 billion cubic metres of natural gas per year, will connect the Warri region in southern Nigeria, through the length of Niger to the town of Hassi R’Mel in northern Algeria, where it will connect to existing Trans-Mediterranean, Maghreb-Europe, Medgaz, and Galsi Pipelines, allowing Europe to tap into West Africa’s abundant natural gas reserves and diversifying its supply.

RUSSIA-UKRAINE CONFLICT

Russia’s invasion of Ukraine has opened up opportunities for gas rich nations in Africa to tap from the multi-billion-dollar market.

 Russia which accounted for about 45 per cent of the Europe’s gas imports and 40 per cent of its entire gas consumption is facing huge economic sanctions as Europe seeks to reduce dependence on their gas by 80 per cent by the end of 2022.

Nigeria has been described as a gas nation with 206.53 trillion cubic feet of proven gas deposit and hopes to use the energy source as its transition fuel.

The scramble for African gas has begun as Italy’s Prime Minister Mario Draghi on Monday, visited Algeria over diversifying gas supply mix. Italy depends on Russia for 40 per cent of gas imports.

Nigeria has Africa’s biggest proven gas reserves and ninth in the world, according to the United States Energy Information Administration.

The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) newly created under the Petroleum Industry Act (2021), Mr Gbenga Komolafe said, “The situation in Ukraine has actually presented a huge opportunity for Nigeria to occupy the market space in terms of the gas supply. I believe that is possible and as a regulator, we are doing everything possible to ensure that Nigeria is able to fulfil that obligation”.

“TACKLING NIGERIA’S INFRASTRUCTURE CHALLENGES” 2022 – RENEWAL OF ENGAGEMENT OF F.O. AKINRELE & CO INFRASTRUCTURE PRACTICE BY ADAM SMITH INTERNATIONAL

In 2022, Adam Smith International through its subsidiary, the Nigerian Infrastructure Advisory Facility (NIAF) renewed the engagement of F.O. Akinrele & Co to act as legal consultants in NIAF II as it seeks to transform the Nigerian infrastructure landscape.

F.O. Akinrele & Co shall continue to bring to bear, it’s global expertise in providing legal and regulatory roadmaps towards the implementation of large-scale infrastructure interventions in public road, water transportation and the urban regeneration of residential and business developments.

The infrastructure practice has been recognized for its work on a variety of integrated transportation and housing infrastructure developments, focusing on World Bank and UNCHR intervention programmes. F.O. Akinrele & Co. has advised extensively on Public-Private Partnerships including:

Lagos Waterways
Ogun State Bus and Mass Transit
Ogun/Lagos State Road Transport Network

Rendeavour Nigeria Alaro City Project development site is located on 1,000 ha (2,470 acres) within the Lekki Free Zone, the largest free zone in West Africa. The site is adjacent to the approved location for the proposed Lekki International Airport and in close proximity to the deep seaport and a number of planned industrial developments.

NATURE OF DISPUTES THAT MAY BE REFERRED TO ARBITRATION

  1. Introduction:

Arbitration is a process by which disputes or difference between two or more parties as to their mutual legal rights and liabilities is referred to and determined judicially with binding effect by the application of the law by one or more persons (the arbitral tribunal) instead of by a court.[1]

An arbitration agreement is therefore where two or more persons covenant that a dispute or a potential dispute between them shall be resolved and decided in a legally binding way by one or more impartial persons in a judicial manner, upon evidence put before him or them. The agreement is called an arbitration agreement or a submission to an arbitral proceeding when after a dispute has arisen, it is put before such person or persons for decision. The procedure is called arbitration and the decision when made is called an award.[2]

It is apposite to note that arbitration may either be voluntary or compulsory. In other words, it may be by parties’ agreement or by statutes. A voluntary arbitration is by mutual consent of the parties whilst a compulsory arbitration is that which is demanded by the provision of the statute.

2.    Meaning and test of ‘dispute’ for purposes of arbitration:

The word dispute means contention, discord, conflict, friction and antagonism. It also implies a conflict or controversy. If there was concord and harmony, then the parties have no valid legal basis to seek a reference to arbitration. Our apex Court has defined dispute to mean “act of arguing against, controversy, debate, contention as to right, claims and the like or on a matter of opinion.”[3]

A matter shall be referred to arbitration when it becomes clear or is to be interpreted to mean that a difference or dispute exists between the contending parties. Therefore, where a party admits liability of an existing debt but simply defaults to pay, or when a cause of action has been extinguished owing to the death of a party embedded in the Latin maxim, actio personalis noritur cum persona, then there is no dispute to arbitrate upon or relevant party to arbitrate with. The conflict which the parties to an arbitration agreement agree to refer to must consists of a justiciable issue triable civilly. A fair test of this is whether the difference can be compromised lawfully by way of accord and satisfaction.[4]

The next step is to determine whether the dispute or difference necessarily arises from or it is connected with the clause contained in the agreement i.e. it falls squarely within the scope of the parties’ agreement. If a party to an agreement has compromised his position by conceding to numerous alternative remedies to the other party, other than resort to arbitration, and by showing an intention to compromise, to an act of the party which he is complaining about, he has, in consequence, robbed himself of competence or premise of referring the subject matter of complaint to arbitration.[5]

3.    Arbitrable Disputes:

It is a general perception that any agreement that contains an arbitration clause shows a clear and unmistaken indication that the contract requires the parties to resolve their disputes through an arbitration process. Unarguably, arbitration is generally encouraged in Nigeria in particular and the international community in general because arbitration clauses reduce the court dockets to resolve disputes. Therefore, in keeping with the sanctity of agreements, the law is enthusiastic to ensure the validity of arbitration clauses notwithstanding any apparent inadequacy or lack in the normal formal language with legal contracts.

Hence, once parties covenant in their agreement to resolve their dispute through arbitration and an issue is perceived or is to be interpreted to mean a difference or dispute exists, such dispute shall be referred to arbitration. The difference or dispute must, however, arise from the clauses contained in the agreement i.e. fall within the scope of the parties’ agreement. Therefore, it is not every dispute or difference that can be referred to arbitration. The Disputes must be capable of being disposed of judicially, in a civil form. These disputes include all matters in controversy about any real or personal property, disputes as to whether a contract has been breached by either party thereto, or whether one or both parties have been discharged from performance thereof.[6]

Sections 48 (b) (i) & (ii) and 52 (2) (ii) of the Arbitration and Conciliation Act, CAP A18, Laws of Federal Republic of Nigeria[7] provide that even when an award has been procured and it becomes clear that an agreement on which the arbitral award was premised on arose from an invalid contract or the subject matter of the dispute is not capable of settlement or is contrary to public policy, such an award is bound to be set aside. This, therefore, reinforces the position that the dispute must be capable of settlement before it qualifies as an arbitrable dispute. This is also the same position in international arbitration under Chapter VII, Article 34 (2) b) and Chapter VIII, Article 36 1) a) i) & 1 b) of UNCITRAL Model Law on International Commercial Arbitration 1985 with amendments as adopted in 2006.[8]

4.    Matters that cannot be referred to Arbitration:

It is trite that the disputes, which are the subject of an arbitration agreement, must not cover matters, which by the law of the State are not allowed to be settled privately or by arbitration usually because this will be contrary to public policy.[9]

It is manifestly clear that the following categories of matters cannot be the subject of an arbitration agreement as enunciated by the Nigerian Supreme Court and therefore cannot be referred to arbitration: –

  1. an indictment for an offence of a public nature;
  2. disputes arising out of an illegal contract;
  3. disputes arising under agreements that are void as being by way of gaming or wagering;
  4. disputes leading to a change of status, such as a divorce petition;
  5. any agreement purporting to give an arbitrator the right to give judgment in Therefore, a criminal matter, like the allegation of fraud does not admit of settlement by arbitration. This is because these issues are a matter of public concern. It is contrary to public policy to compromise such disputes.[10]

Similarly, the Nigerian Court of Appeal has held in two decisions[11] in Esso Petroleum and Production Nigeria Ltd & Anor. (SNEPCO) vs. NNPC unreported Appeal No. CA/A/507/2012; delivered on 22 July 2016 and Shell (Nig.) Exploration and Production Ltd & 3 others vs. Federal Inland Revenue Service unreported Appeal No. CA/A/208/2012; delivered on 31 August 2016 that tax disputes arising from a Production Sharing Contract (PSC) are not arbitrable because the subject matter of the dispute is within the exclusive jurisdiction of the Federal High Court. The rationale for the above decisions seems to appear that it may be contrary to public policy to compromise the revenues due and payable to the government. These decisions are currently subject of appeals to the final Court in Nigeria. Until then, they remain the authority that tax disputes are not arbitrable.

5.    Conclusion:

It is pertinent to note that by the provisions of Section 2 of the Arbitration and Conciliation Act 1988 (ACA). (Cap A18 Laws of the Federation of Nigeria 2004)[12] an

arbitration agreement shall be irrevocable except by agreement of the parties, or by leave of Court, or a Judge. Consequently, the mere fact that parties agree to proceed to arbitration once there is a dispute does not ipso facto make the agreement to arbitrate irrevocable because not all disputes are arbitrable. The disputes must be triable civilly. It should not be illegal or tainted with a crime or fraud.

However, it is worthy of mention that the right to go for arbitration is a personal right. It is not a constitutional right. Therefore, it can be waived by either of the parties to the agreement expressly or by contract, more particularly where the two contending parties submit their disputes to Court for determination.[13]

 

[1] Miss Nigeria –v- Oyedale (1960) NCLR 191

[2] C. N. Onuselogu Enterprises Ltd. -v- Afribank (Nigeria) Plc. (2005) 12 NWLR (Pt. 940) 577

[3] Plateau State & Anor. v. AG Federation & Anor.(2006) LPELR-2921(SC)

[4] Chief Felix K. Ogunwale v. Syrian Arab Republic (2002) 9 NWLR (Pt. 771) 127

[5] United World Ltd Inc. –v- MTS Ltd (1998) 10 NWLR (Pt.568) 106.

[6] BCC Tropical Nigeria Ltd. v. The Government of Yobe State of Nigeria & Anor. (2011) LPELR-9230 (CA).

[7] Sections 48 (b) (i) & (ii) and 52 (2) (ii) of the Arbitration and Conciliation Act, CAP A18, Laws of Federal Republic of Nigeria

[8] Chapter VII, Article 34 (2) b) and Chapter VIII, Article 36 1) a) i) & 1 b) of UNCITRAL Model Law on International Commercial Arbitration 1985 with amendments as adopted in 2006

[9] B. J. Export & Chemical Company Ltd v. Kaduna Refining & Petro-Chemical Company Ltd (2002) LPELR- 12175(CA).

[10] Kano State Urban Development Board V. Fanz Construction Ltd. (1990) 4 NWLR (PT.142) 1 at 32-33.

[11] Esso Petroleum and Production Nigeria Ltd & Anor. (SNEPCO) vs. NNPC unreported Appeal No. CA/A/507/2012; delivered on 22 July 2016 and Shell (Nig.) Exploration and Production Ltd & 3 others vs. Federal Inland Revenue Service unreported Appeal No. CA/A/208/2012

[12] Section 2 of the Arbitration and Conciliation Act 1988 (ACA). (Cap A18 Laws of the Federation of Nigeria 2004)

[13] Kurubo v. Zach-Motison (Nig.) Limited (1992) 5 NWLR (Pt. 239) 102.

THE NIGERIAN PETROLEUM INDUSTRY ACT 2021: ‘NEW BEGINNINGS & NEW CONCERNS’

In 2021, the most significant development in the energy sector was the enactment of the Petroleum Industry Act (PIA), bringing to a close a 20-year effort to reform the Nigerian oil and gas sector, with the aim of overhauling the regulation and governance of the oil and gas industry.

A lot has changed in the sector domestically and globally since the reform efforts began. The number of indigenous oil and gas firms has grown, but so has the number of oil-producing countries in Africa. Militancy in oil-rich communities, while remaining, has diminished. Concerns over climate change have fuelled aggressive efforts to reduce global consumption of fossil fuels, driving divestment from the Nigerian oil and gas sector by international companies and institutions.

The PIA represents a new beginning and an effort to meet the changes in the oil and gas environment. In 2019, the oil and gas sector accounted for about 5.8 percent of Nigeria’s real GDP and was responsible for 95 percent of Nigeria’s foreign exchange earnings and 80 percent of its budget revenues. The law is therefore far-reaching in its remit; however, it is complex, and serious concerns remain as regards its implementation.

If well implemented, the PIA can represent an international standard for natural resource management, with clear and separate roles for the subsectors of the industry; consisting of:

  1. The existence of a commercially oriented and profit-driven national petroleum company;
  2. The codification of transparency, good governance, and accountability in the administration of the petroleum resources of Nigeria.
  3. The economic and social development of host communities; environmental remediation; and a business environment conducive for oil and gas operations to thrive in the country.

The PIA which embodies 5 Chapters, 319 Sections, and 8 Schedules, was enacted to provide for the legal, governance, regulatory, and fiscal framework for Nigerian petroleum industry, the establishment, and development of and other related matters in the upstream, midstream and downstream sectors of the petroleum industry. It, therefore created an array of provisions and innovations that will affect the private, public sector and stakeholders in the oil and gas industry.

Key provisions

Dual Regulatory and Governance Architecture

NUPRC

The Act establishes dual regulators for the petroleum industry. One is called the Nigerian Upstream Petroleum Regulatory Commission NUPRC (the “Commission”), which is a body corporate with perpetual succession whose functions are limited to only the upstream petroleum activities as provided for in Section 4 of the Act, which provides that “the Commission is responsible for the technical and commercial regulation of the upstream petroleum operations”. The Commission is also established to ensure compliance with all applicable laws and regulations governing upstream petroleum operations.

NMDPRA

The other regulatory agency under Section 29 of the Act is the Nigerian Midstream and Downstream Petroleum Authority – NMDPRA (the “Authority”), responsible for the technical and commercial regulation of the midstream and downstream petroleum operations in the petroleum industry as provided under Section 29(3) of the Act.


NNPC

The PIA commercialises the perennially loss-making state-owned enterprise, the Nigerian National Petroleum Company (NNPC), turning it into the NNPC Ltd, a quasi-commercial entity the ownership of which shares shall be vested with the government, and the ministries of Finance and Petroleum, who shall hold the shares on behalf of the government.

Pursuant to the PIA’s provisions, the president of Nigeria will appoint the president of NNPC Ltd as well as heads and members of the regulatory agencies. Separately, the minister of petroleum, then, will head the industry with a wide range of powers to formulate, monitor, and administer government policy under the PIA.

Importantly, the PIA provides that 30 percent of the profits of the NNPC Ltd will fund a new entity, to finance exploration in other basins in the country (Frontier Exploration Fund). Ten percent of rents on petroleum prospecting licenses and 10 percent of rents on petroleum mining leases are also assigned to Frontier exploration. The PIA is unclear on whether there will continue to be exploration in existing basins.

Host Communities

The PIA aims to address the relationship between the oil companies/operators and the host communities by creating the Host Community Development Trust Fund (HCDTF) whose purpose will be to, among others, foster sustainable prosperity, provide direct social and economic benefits from petroleum to host communities, and enhance peaceful and harmonious coexistence between licensees or lessees and host communities.

Specifically, the law stipulates that existing host community projects must be transferred to the HCDTF, and each settlor (or oil license holder) must make an annual contribution of an amount equal to 3 percent of its operating expenditure for the relevant operations from the previous year. The management committee of the trust must include one member of the host community. In addition, the act stipulates a penalty for failure to comply with host community obligations, including revocation of license.

Section 257 of the PIA also imposes the responsibility to protect oil and gas assets on host communities and stipulates that any host community that fails to protect oil assets in its community from vandalism will be held accountable for the repairs.

Fiscal framework

The PIA introduces a new tax regime, replacing the existing petroleum profits tax with a hydrocarbon tax and introducing a tax on the income of oil companies. Under this new fiscal regime, hydrocarbons—including crude oil, condensates, and natural gas liquids produced from associated gas—will be subject to taxation. Notably, crude oil from deep offshore is excluded from the tax.

A controversial provision in the PIA is the provision stating that, in the event of supply shortfalls, only companies with active refining licenses or proven track record of international crude oil and petroleum products trading will be allowed to import such products. This is a controversial provision that has been interpreted as an attempt to confer monopoly powers on a few domestic refiners.

Finally, the fiscal framework provides for penalties for gas flaring arising from midstream operations. Revenues from these penalties will accrue to the Midstream and Downstream Infrastructure Fund and will be used to finance midstream and downstream infrastructure investment.

 

KEY ISSUES

The success of the PIA are conditional on Nigeria’s political and oil industry leaders overcoming some key challenges.

The PIA’s wording does create challenges to interpretation through imprecise language. This gives rise to ambiguity.  For example, it is unclear whether host community development trust obligations are additional to existing community levies (such as the Niger Delta development levy) or will be an aggregation of those levies. Similarly, the law is silent on the definition of “frontier basin” and host community, instead deferring to the NUPRC on the definition of frontier basin and to settlors or license holders on the definition of “host community.” These definitions are not neutral to revenue; they have revenue implications. This lack of clarity creates uncertainty and even possible disputes, especially if relevant parties define them differently.

Capacity building. This law is complex and complicated. While capacity in the oil and gas sector has been built over the years, the new legal provisions and fiscal framework will need new capacities to succeed. This challenge will be particularly acute in the new regulatory institutions; in the understanding, interpretation, and application of the law; and in the management of the funds, including the HCDTF.

There are several lingering North/South disagreements about the PIA. The bill that became the PIA was originally proposed by the executive (largely supported in the North) and passed largely along regional (North/South) lines. Leading politicians from the Niger-Delta states opposed it and many lawmakers from the South believe the bill advances Northern interests to the detriment of the South.

The African Continental Free Trade Area Agreement (AfCFTA) – One year After – A Fresh Air of Optimism in 2022?

On the 1st of January 2021, continental trade between African countries significantly changed with the official commencement of the African Continental Free Trade Area Agreement (AfCFTA).

The AfCTA was an initiative that had been in the pipeline since 2012, with five years of negotiations and other logistic planning, which finally crystallised on March 21, 2018, after 44 African countries signed the pact at an AU extraordinary summit in Kigali, Rwanda. Shortly after, 10 more countries, including Nigeria, added their signatures, and the operational phase of the AfCFTA was marked to kick off by mid-2020. However, the covid-19 pandemic threw a cog in these projections, leading to a delay in starting operations until 1 January 2021, when the AfCFTA officially kicked off.

African countries have not been able to scale up their economic activities due to a variety of reasons exacerbated by the conflicts in the 7 different regional trading blocs currently in operation, hence the need for a deeply integrated and outwardly united front from which to achieve the cohesion needed to boost the scale of economic activity in Africa. This considered, the AfCFTA is aimed at creating the world’s largest free trade area; one that integrates 1.3 billion people across 54 countries.

As at December 2021, 41 out of 54 signatory countries have ratified the treaty, making the AfCFTA the fastest instrument in the African Union to be ratified. The ratification is significant as it signals the increasing interest of the State parties. The fact that the top 4 economic powers and richest countries on the continent, Nigeria, South Africa, Egypt, Algeria have ratified the trade agreement is clearly also significant.

The year 2021 also saw the roll-out of the pilot phase of the Pan-African Settlement System (PAPSS), a combined initiative of African Export-Import Bank (AFREXIM) and the AfCFTA, which was formerly launched in Ghana on 13 Jan 2022. The PAPSS serves as the continent-wide platform for the processing, clearing and settling of intra-African trades and commerce payments. The system was developed by the AFREXIM and promises to reduce the cost and time of payments, lower the level of banking liquidity required to make payments, and improve central bank oversight of payments.

The full implementation of PAPSS is expected to save the continent more than US$5 Billion in payment transaction costs each year.

Given the interests generated by the AfCFTA and the potentials it holds for established businesses, start-ups and SMEs, it is expected that 2022 will provide another opportunity for the State Parties to make significant progress.

According to the UN Conference on Trade and Development – UNCTAD’s Economic Development in Africa Report 2021, the total untapped export potential of intra-African trade is around $21.9 billion, equivalent to 43 per cent of intra-African exports (yearly average for 2015–2019), with an additional $9.2 billion projected through partial tariff liberalization under the AfCFTA over the next five years. This statistic highlights the ultra-low level of intra-African trade when compared with that of countries in other continents, and in particular reflects Africa’s unenviable position as an exporter of raw materials to the rest of the world.

 

Optimism v Action

After the optimism that greeted the official launch of the AfCTA, one year after the launch, trade restrictions between African countries still abound. Although the pandemic may have had some effect on the AfCFTA’s integration goals, the reluctance of African leaders to open up borders and liberalising trade remains a major impediment.

AfCFTA had projected that the phase II negotiations consisting of the underlisted would be finalised and ratified by the end of 2021, namely:

  1. Trade in goods and services,
  2. Intellectual property rights
  3. Investment and competition policy, and
  4. E-commerce

The AfCFTA projections above have not been fulfilled and there are still many loopholes in negotiations that were not finalised in 2021 among member countries. There is still a feeling of uncertainty concerning where countries stand on the agreement— an uncertainty that has affected the AfCFTA’s implementation.

The abovementioned phase II negotiations and the general framework for trade in services appears to have taken a back seat pending the conclusion of the negotiations on rules of origin.

The following are the three key challenges:

  1. With African countries favouring protectionist policies in their African trade outlook, there is some unwillingness by State parties to ratify all the articles of the agreement exemplified by the prolonged negotiations on phase I consisting of rules of origin. Many African countries are still holding out on ratifying some of the phases of the AfCFTA. These countries, who make most of their revenue from exports to non-African countries, are yet to be convinced of the benefits that the AfCFTA to their economies.
  2. A lack of a manual of information for African businesses about the AfCTA regarding the ways to take advantage of it, and a substantial percentage of African businesses are still unaware of its terms (particularly the tariff arrangements). Until businesses are aware, the costs of trading under AfCFTA will remain high.
  3. A lack of customs infrastructure and policy to be able to complement the AfCFTA’s customs and tariff obligations (only three countries in the AfCFTA so far have the infrastructural and systemic customs capabilities on par with AfCFTA benchmarks), as well as a lack of capacity in the AfCFTA’s Secretariat to push the integration agenda, given its launch in the middle of the pandemic.

 

Private Sector Initiatives

Reports suggest that the AfCFTA enjoys wide acceptance and heightened interest amongst the young African entrepreneurs and SMEs who are ready to explore the potentials that a larger African market presents.

Private sector start-ups have notwithstanding the delays of States parties sought to integrate African trade with start-ups offering services for company formation and compliance across Africa’s 54 countries and others offering a single digital infrastructure for businesses to start, scale and operate in every African country efficiently.

More traditional companies namely, two of Africa’s major logistics companies, Ethiopian Airlines Group and A-E Trade Group, signed a MoU to establish the East African smart logistics and fulfilment hub, committed to the establishment of a business relationship to provide end-to-end logistics solutions across Africa. Also, some AfCFTA-focused organisations like the AfCFTA Young Entrepreneurs Foundation (AfYEF) – have been formed. This and many other intra-African private partnerships and agreements show that the private sector has been more enthusiastic about the AfCFTA than African governments so far.

 

Expectations in 2022

The priorities for the implementation of the AfCFTA regime is for the finalisation of negotiations such that the following are agreed upon:

  1. Member States should ensure the attainment of at least 90% attainment of the Rules of Origin. The Rules if properly crafted remain the building blocks for the industrialization of Africa through increase in local production and cross-border value chains. There are over 6000 tariff lines under the HS Code system and the AfCFTA ambition is to liberalize over 90% of them. The AfCFTA Rules of Origin would require that only made in Africa goods will benefit from the tariff concession. However, measures must be put in place to prevent its abuse as non-compliance will turn the member countries into dumping grounds and lead to significant job losses and displacements of workers in key sectors such as agriculture and manufacturing.
  2. Addressing non-tariff barriers in order to harmonised customs interconnectivity system and transit procedures across the major trade corridors in Africa.  For example, the Abidjan to Lagos trade route/corridor deserves special attention in view of its significance to the ECOWAS region. The non-tariff barriers inhibiting intra-trades across the Regional Economic Communities (RECs) should also be addressed.
  3. Providing access to private businesses and individuals of general information about AfCTA particularly about progress in Phases 1 & 2 negotiations.

Nigeria’s Suppression of Piracy and Other Maritime Offences Act (2019) and the Deep Blue Project (2021)

Nigeria’s Suppression of Piracy and Other Maritime Offences Act2019  and the Deep Blue Project aim to ‘prevent and suppress piracy, armed robbery’ and any other unlawful act against a ship, aircraft and any other maritime craft, including fixed and floating platforms.

As Nigeria gets set to deploy the Deep Blue Project to protect its coastal waters, the Nigerian Maritime Administration and Safety Agency (NIMASA) says “piracy will no longer be allowed to thrive”.

The combined effect of these two initiatives is to halt the rising trend of piracy and other illegal acts against maritime traffic. The objective being to enhance the flow of maritime activity in Nigerian waters and the Gulf of Guinea.

 

Nigeria’s Suppression of Piracy and Other Maritime Offences Act, 2019

The Suppression of Piracy and Other Maritime Offences Act 2019 (SPOMO) gives effect to the relevant provisions of the Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation, Protocol for the Suppression of Unlawful Acts Against the Safety of Fixed Platforms Located on the Continental Shelf (SUA) The SUA convention was adopted on 10 March 1988 and entered into force on 1 March 1992. Nigeria ratified his convention.

SPOMO has ended the controversy around whether the crime of sea piracy is defined in any local legislation. The Federal High Court has exclusive jurisdiction to determine matters of armed robbery and other unlawful acts at sea.

Without clear domestic statutes, the prosecution of parties suspected of sea piracy, prior to the law’s enactment, was problematic in Nigeria.

Notwithstanding the purported domestication of the SUA Convention (and its protocol) by section 215(h) of the Merchant Shipping Act 2007 there were doubts about the proper domestication of SUA as required by the Nigerian Constitution.

Section 3 of SPOMO has clarified the position by defining ‘piracy’ as any:

(a) illegal act of violence, act of detention. or any act of depredation, committed for private ends by the crew or any passenger of a private ship or private aircraft and directed

(i) in International Waters against another ship or aircraft or against a person or property on board the ship or aircraft, or

(ii) against a ship, aircraft, person or property in a place outside the jurisdiction of any state;

(b) act of voluntary participation in the operation of a ship or of an aircraft with knowledge of facts making it a pirate ship or aircraft; and

(c) act of inciting or of intentionally facilitating an act described in subparagraph (a) or (b) of this section.

SPOMO is a further illustration of the fact that Contracting states are empowered in accordance with their municipal laws to arrest and prosecute persons, ships or aircraft suspected of committing piracy regardless of whether the pirate or attacked ship flies a foreign flag or has a foreign crew. The definition also covers violent acts committed against property other than ships, such as aircraft and floating and fixed platforms in the Nigerian Exclusive Economic Zone.

Section 4 of SUA lists 18 maritime offences and unlawful acts at sea, which include armed robbery at sea and acts other than piracy committed within Nigeria or its maritime zone. Such acts include:

  • the hijacking of a ship, aircraft or fixed or floating platform.
  • the destruction or vandalism of a ship, installation, or navigation facility; or
  • interference with the operation of a ship, installation, or navigation facility.

Jurisdiction of the Federal High Court of Nigeria

Section 5(2) of SUA the Federal High Court, to the exclusion of all other courts, has jurisdiction to hear and determine any matter under the act.

Some Key SPOMO Provisions

Such provisions include those relating to restitution to owners of violated maritime assets and the forfeiture of proceeds of piracy or maritime offences.

The act also provides that the right of prosecution shall reside in the Attorney General of the Federation of Nigeria; any officer so designated by the attorney General; or the Nigerian Maritime Administration and Safety Agency (NIMASA), with the Attorney General’s consent. These provisions have given rise to genuine concerns about the potential for delays or outright vetoes, due to bureaucratic process or political reasons in the grant by the Attorney General of consent to commence proceedings, which may be very urgent.

 

Deep Blue Project – 2021

Nigeria is investing much of its maritime safety and security hopes in the Deep Blue Project. Initiated by the Federal Ministry of Transportation and Federal Ministry of Defence, it is being implemented by the Nigerian Maritime Administration and Safety Agency (NIMASA), with participation from the Nigerian Navy, Nigerian Army, Nigerian Air Force, Nigeria Police, and Department of State Services.

The Deep Blue Project aims to prevent illegal activities in the Nigerian Exclusive Economic Zone (EEZ), enforce maritime regulations, enhance safety of lives at sea, and prevent illegal activities in the inland waterways. In February, the Federal Government added the Secure Anchorage Area (SAA), off the coast of Lagos, to the areas under the protection of the Deep Blue Project.

The project is designed with three categories of platforms to tackle maritime security issues on land, sea, and air. The land assets comprise the Command, Control, Communication, Computer, and Intelligence Centre (C4i) for intelligence gathering and data collection; 16 armoured vehicles for coastal patrol; and about 600 specially trained troops for interdiction, known as Maritime Security Unit. On air, there are two Special Mission Aircraft for surveillance of the EEZ, one of which was received May 12, with the second expected to arrive soon; three Special Mission Helicopters for search and rescue; and four Unmanned Aerial Vehicles. The sea assets consist of two Special Mission Vessels and 17 Fast Interceptor Boats.

All the assets have been delivered, except one Special Mission Aircraft.

The Deep Blue Project assets would be deployed to prevent pipeline vandalism, oil theft, illegal bunkering, arms smuggling, drug trafficking, human trafficking, and illegal fishing. They would also be deployed for pollution prevention and control in the Nigerian maritime environment.

The project is in line with the country’s total spectrum maritime security strategy, anchored on four pillars, namely, situational awareness, response capability, law enforcement and local partnerships, and regional cooperation.