The management of Global Resources Management Limited (GRML), a subsidiary of Lagos Deep Offshore Logistics (LADOL) has shed light on the reason why it ejected Samsung Heavy Industries (SHI) Nigeria Limited from the LADOL Free Zone in Lagos.
In a release by the company’s legal adviser, Prof. Fidelis Oditah (SAN) cited “unremedied and material breaches of sublease covenant” as the first reason for the termination of the agreement.
Acording to Nairametrics, He also alleged that SHI had earlier approached the Nigerian Ports Authority (NPA) to carve out a portion of GRML’s leased land and grant a direct lease in SHI favour so that it could deal directly with all government regulators without needing to go through GRML or the zone management.
Lastly, he also alleged that there are indications of SHI MCI FZE’s anticipatory breach of the sublease agreement.
Although the sublease provided for an upward-only rent review, SHI MCI FZE wrote to GRML and numerous government agencies informing them that on the expiry of its current sublease in June 2019, it would unilaterally reduce its rent from $70 per square metre to $5 per sq metre – a reduction of more than 90 per cent.
In his words:
“GRML regarded the renunciation of the upward-only rent review as an anticipatory breach of the sublease contract which it accepted and immediately terminated the sublease as it is entitled to do as a matter of law. It did not need to wait and see whether in June 2019 SHI MCI FZE would recant and pay the reserved rent or insist on paying $5 per sq metre. It was entitled to accept SHI MCI FZE’s anticipatory breach and accelerate the termination of the sublease.”
The SHI-MCI yard is a joint venture between LADOL and SHI, with SHI having 70 percent stake and LADOL 30 percent.
The dockyard is the only one of its kind in Africa, designed to make Nigeria a hub of FPSO fabrication in the continent.
The South Korean shipbuilder, had in 2017, confirmed that Total’s Egina FPSO sailed away from its Geoje shipyard, heading to Nigeria. The FPSO, operated by Total, is 330 meters in length, 61 meters across and 34 meters high, with a storage capacity of 2.3 million barrels of oil.
SHI is one of the largest shipbuilders in the world and one of the “Big Three” shipbuilders of South Korea.
The core subsidiary of the Samsung Group, South Korea’s largest conglomerate, focuses on the engineering, procurement, construction, commissioning and the delivery of transportation ships for the commercial industry, topsides modules, drilling and floating production units for the oil and gas sector, gantry cranes for fabrication yards, digital instrumentation and control devices for ships, and other construction and engineering services.