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Stop the rumour! No one is forcing Addax Petroleum to buy Jide Omokore’s building… Wrongful accusation of Jide Omokore, Dafe Sejebor and Ibe Kachikwu

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Stop the rumour! No one is forcing Addax Petroleum to buy Jide Omokore’s building… Wrongful accusation of Jide Omokore, Dafe Sejebor and Ibe Kachikwu

Stop the rumour! No one is forcing Addax Petroleum to buy Jide Omokore’s building… Wrongful accusation of Jide Omokore, Dafe Sejebor and Ibe Kachikwu
October 17
17:28 2016

· The challenges of doing business with Addax

Fresh facts have emerged concerning Minister of State, Ibe Kachikwu and Group General Manager, National Petroleum Investment Management Services (NAPIMS), Dafe Sejebor’s alleged controversial tango with Addax Petroleum. Contrary to news reports that Sejebor and Kachikwu, are pressuring oil giant, Addax Petroleum, to purchase a building owned by Bashorun Jide Omokore, at $48 million above the asking price, there is no such proceedings.
Investigations revealed that Sejebor and Kachikwu are not involved in any such plot neither have they co-opted senior staff of the Nigerian National Petroleum Corporation (NNPC) in furtherance of such scheme. More importantly, it has been discovered that Jide Omokore is not the owner of the controversial building. The situation was actually misread and misinterpreted in the news reports.
Findings revealed that, in early 2010, NNPC management examined the costs of renting offices and residences of JV/ PSC Partners, particularly their contribution to cost per barrel of oil produced by PSC companies, which is cost recoverable. The oil corporation’s management considered that in order to reduce costs, it was expedient that producing partners acquired and purchased their office property.
Consequently, management directed all producing PSC partners to acquire and own office property, which for all intent and purpose was in the interest of both Federal Government of Nigeria and the PSC companies. The initiative was geared to derive long-term benefits, achieving cost savings for the PSCs and maximizing revenue from the Federal Government investments. Also, the property was billed to be returned to NNPC at the end of the PSC and after the costs have been fully recovered by the companies; PSC partners’ contributions, under this arrangement, was only sourcing for finance since all costs are recoverable.
Sequel to the directive by NNPC Management, NAPIMS directed Addax Petroleum Development Company, where high cost of office accommodation had been flagged, to identify a property for outright purchase. At this time, Addax allegedly requested for and had been granted some enablers in support of oil and gas development. On the strength of being a partner that has enjoyed many enablers from the Federal Government, Addax was expected to set a good example to others, and to see it as an opportunity to contribute positively to the development of the oil and gas industry.
Addax initially identified Churchgate Tower 2 Building in Victoria Island, Lagos as a prime property for this purpose, thus paving the way for preliminary engagements/ price negotiation for the property. The oil company allegedly complained that its present office lease situated at No. 32, Ozumba Mbadiwe Street, Victoria Island, Lagos was inadequate in terms of office space, car park thus the need for future expansion.
The company’s observations were duly acknowledged by NAPIMS but when the latter sought to align with Addax’s interests in the Churchgate Tower 2 Building, the oil firm started throwing spanners in the works, thus thwarting the acquisition and purchase of the identified building.
Subsequent events indicated that Addax was deliberately using diversionary tactics to frustrate the acquisition of the property. In reaction, NAPIMS informed Addax in December, 2010 that the lease of Addax’s current office at No.32, Ozumba Mbadiwe, belonging to Rocky Sporting Club, would only be considered subject to Addax’s compliance with NAPIMS directives on the purchase of Churchgate Tower 2. Addax reportedly failed to comply.
Instead, the company abandoned discussion with the owners of Churchgate Tower 2 and requested NAPIMS to consider the purchase of its present office lease situated at No. 32, Ozumba Mbadiwe Street Victoria Island Lagos, which Addax initially considered inadequate. This culminated in series of engagements and setting up of a joint NAPIMS/ Addax negotiation team to meet with Rocky Sporting Club (owners of No. 32 Ozumba Mbadiwe building) and Churchgate Group (owners of Churchgate Tower 2 building).
A comparative analysis showed that Churchgate Tower 2 has premium value over No. 32, Ozumba Mbadiwe in terms of location of property, price per square (62% of that of Rocky Sporting Club property), car park availability, and so on.
In line with the recommendations of the Joint NAPIMS/ Addax Negotiation Team, NAPIMS in a letter dated August 24, 2011 to Addax, communicated the choice of Churchgate Tower 2. Addax equally wrote to NAPIMS asking for approval to purchase Churchgate Tower 2. The request was granted by NAPIMS, yet Addax did not comply.
Meanwhile Addax had allegedly committed the Churchgate Group to acquire an adjoining plot, already with a pile foundation for a multi-storey building, to be used as car park and for future expansion, only for Addax to back out of the purchase of the Churchgate Tower 2 building few months later.
Addax allegedly complained that structural defects had been discovered in Churchgate Tower 2 by Addax engineers. This led NAPIMS to set up a Joint NAPIMS/ Addax Inspection Team that collected soil cube tests, foundation documentation, structural designs, drawings and thoroughly inspected the building. The team did not find any structural defects and submitted a no objection verdict on the structural integrity of Churchgate Tower 2. Yet Addax did not comply with the move to purchase the building.
Rather than proceed with the purchase of Churchgate Tower 2, Addax in January 2012 secretly entered into a deal with Rocky Sporting Club to continue the lease of No. 32, Ozumba Mbadiwe property, and unilaterally negotiated an increase in the cost of lease from US$ 1.6 Million per annum to US$ 4.3 Million per annum (nearly 300% increase). This implied that for the total space of 6,640m2 in the present office lease Addax would pay over US$ 65 Million in less than 15 years for the Rocky Sporting Club building!
Addax immediately drew a sale agreement with Rocky Sporting Club on the property and paid US$21,580,000 as deposit, stating clearly in the agreement with Rocky Sporting Club that the latter would consider the deposit as advance lease payment if NAPIMS objected to the arrangement. NAPIMS initially rejected this cost and directed Addax to close out on the purchase of Churchgate Tower 2. Addax still did not comply.
Addax later wrote to NAPIMS requesting for approval to seek other properties, which would give the PSC more advantage. The NNPC board frowned at Addax’s action and directed NAPIMS to take appropriate steps to ensure that ADDAX complied with the Board’s directive. NAPIMS therefore issued a letter to Addax on April 29, 2015 suspending approval of budgets and activities until the company complies with the board’s directive. NAPIMS set up a joint negotiation team in September 2015 to finalise negotiation on Churchgate building. Yet Addax remained adamant and would not comply with the directive.
In November 2015 Addax again brought up other buildings, and appealed to new NNPC Management to prevail on NAPIMS to consider these options. Management budged to Addax’s pressure and requested that NAPIMS allowed Addax to present all identified options for assessment by the joint negotiation team. Following rigorous assessments of identified options, structural integrity assessment, cost/ benefit analysis, valuation exercise and Addax’s internal due diligence, Addax identified Temple Building in Ikoyi as the preferred choice of the company. This paved the way for price negotiation to commence with Benchmark Nigeria Ltd, the owners of Temple Building.
NAPIMS/ Addax negotiation strategy meeting was held on May 23, 2016, followed by the first negotiation engagement. The second and final negotiation was to come up a week later but Addax quietly withdrew, after seeking and obtaining NAPIMS support in securing approvals for lifting of crude, early approval of some outstanding spends and the ongoing value for money audit. Addax’s refusal to conclude this negotiation became a clear testimony of the diversionary tactics adopted by the company to avoid this property purchase till the end of the PSC, and the plan to commit the PSC to pay for the present office lease beyond the November 29, 2016 lease expiration dateline.
NAPIMS in the meeting of August 23, 2016 reportedly reviewed the progress in the acquisition of office property by Addax as directed by the NNPC Board, and questioned the stalling of the negotiation process for the outright purchase of Temple building, the preferred property by Addax. Meanwhile, in Addax’s 2016 budget, $115 Million was provided for the purpose of purchasing Addax’s office property.
Accordingly, NAPIMS and Addax on September 23, 2016 held a meeting to revise negotiation strategy, followed by another negotiation engagement with Benchmark Construction Ltd, the owners of Temple Building. The negotiation resulted in a lump-sum offer of $127 Million for both Temple building and the external, multi-layer car park to be built by Benchmark Construction Company Ltd to accommodate 350 cars. This was in addition to the proposal by Benchmark for a bridge loan to Addax from their bankers (IBTC Bank) after 50% down payment.

Addax was thereafter, expected to move in and occupy the building.

However, Addax once again, refused to expedite action in the purchase and occupation of Temple Building. This reportedly spurred NAPIMS to urge Addax to expedite action on the acquisition of the building.
Fears that Addax may request for extension of the office lease if the acquisition of Temple building is dragged beyond November 29, 2016 persists within the rank and file of NAPIMS and NNPC.

This position is highly objectionable to the latter; further investigations revealed that management of the oil corporation are dissatisfied with Addax’s body language and penchant for stalling on developmental steps. The thinking within NAPIMS and NNPC is that Addax Petroleum’s attitude would not favour the developmental dreams of the Nigerian State, considering the present economic situation, the drive to eliminate waste and cut down cost, and the fact that, if allowed to happen, Addax would be spending over $65 Million on office lease alone in 15 years, an amount allegedly far above 50% of what is needed to purchase Temple Building.
These, according to investigations, are the facts of the matter. Jide Omokore does not own Temple building and Dafe Sejebor, Ibe Kachikwu are not in cahoots with NNPC management in a bid to force Addax to purchase any building allegedly owned by Jide Omokore.

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