Back to basicsMay 5, 2016
Frida Ndong, base manager of the K5 Oil Centre, talks to TOGY about the current status of the centre amid low commodity prices and governmental stipulations regarding the opening of the Luba Freeport. K5 provides logistical support in the oil industry in the region and Equatorial Guinea, particularly in offshore drilling operations.
What have been the latest developments at the K5 Oil Centre?
This is a particularly difficult year for the oil and gas industry. We still have most of our customers, but they have reduced activity to a minimum. However, we still keep on providing the basic services of an oil base.
We have bunkering, stevedoring, harbour handling and berthing at the port. In terms of diversification, we are also in the shipping business as part of the UAL Group. Liaised in co-operation with K5 is a shipping line which brings cargo to K5. This is beneficial for the country as cargo is distributed along the coast of West Africa.
In terms of expanding our business we are in discussions with other entities and institutions of the government, and we see potential to work together to attract other players into the country and the port.
How has the regulation stipulating that oil services companies needed to move to Luba Freeport by 2018 impacted K5?
We have not lost any clients due to the regulation yet. It will impact K5 if the customers were to move out because K5 was created to support the oil and gas industry. At that time, the commercial port wasn’t as developed as it is now.
K5 has an agreement with Equatorial Guinea’s government, and I’m sure the government, in its wise guidance, will look into it to make sure that their objectives are met and the interest of K5 is respected.
In fact, we had a meeting with the Ministry of Mines, Industry and Energy when the Luba Freeport notification letter was first received, and the response we got was positive. The ministry told us that it’s a free economy, so companies are free to choose whether they wanted to work with K5 or with Luba Freeport.
How likely is it that Equatorial Guinea will become a regional logistics centre?
The government has invested a lot in training Customs officers, which makes the understanding and continuous operations of a free port much easier. This alone will attract more activity to the benefit of all.
We are fortunate that K5 was built in this location because it’s a natural strategic area. With the equipment, facilities and the space we have, we can contribute greatly to making Equatorial Guinea a regional centre.
What changes need to be made in the legal framework?
Taxes are necessary but at the same time must stay at a reasonable level companies can afford to pay without having to squeeze investments.
There are other benefits a centre can bring to the country as a whole. I think we should work on that area so we can be competitive.
Sometimes, potential investors come to the country to see what we can offer. If we put competition out of the equation for one second, I personally think it is a plus if business activity stays in Equatorial Guinea, whether that activity is at Luba, K5 or the commercial port. This is something we need to work on, because we all have advantages. I think if we can get the legal framework to be competitive, then there will be business for all.
What would the implications of switching to an electronic Customs system be for Equatorial Guinea?
An electronic Customs system would greatly improve the sharing of information and obtaining of signatures and approvals. If it were standardised, there will be major benefits such as reduced costs and human errors, increased processing speed and improved relationships with business partners.
Why is it important for ports to prioritise security and how does that benefit your clients?
This is a priority due to the threat of global piracy, and you want to make sure that the customer’s cargo is safe. The longer the ships stay in the port, or if the cargo cannot be delivered, both the cargo owners and the ship operators lose money. We are very proud to have International Ship and Port Facility Security approved status, something that is an absolute must in today’s market place.
It’s also expensive when you have to go through additional security measures in another port because your previous port was not properly certified or it did not meet the standards for security according to the International Ship and Port Facility Security regulations. So it’s important to keep that level because then you have a guarantee that ships can come into your facility. If there are no ships, then there is no commerce and no business.
It’s important that you meet the standards for that. Your ships can come in, deliver the cargo or take whatever they have to. For global trade, if you don’t feel safe in a certain area, then you will not have many ships calling at your port because of the security risk.
What is your vision for the next five years for K5?
Our vision is to develop more of the land because we have a lot of it. I would like for our logistics to be more sophisticated. Apart from the commercial port in Bata, which has gantry cranes, warehouses and dedicated terminals, I would also like K5 to attend to bigger ships.
My vision is to develop the port, bring in more machinery and segregate the area between project cargo, oil and gas cargo and warehouses for other types of cargo. There is so much more that we can do because there is still room for improvement. It’s not easy to put your vision out there on the field, so we are improving every day.