Unending Controversy Over NLNG Act Amendment

Unending Controversy Over NLNG Act Amendment

The National Assembly has continued to receive knocks from oil industry stakeholders for the on-going attempt to amend the Nigerian LNG Fiscal incentive law, to compel the company to pay an NDDC levy. Ejiofor Alike reports

ASupreme Court ruling in 2011 exempted Nigeria LNG Limited from the payment of a levy amounting to three per cent of its total annual budget to the Niger Delta Development Commission, in accordance with the provisions of the NLNG Act of 2004. But following this ruling, there was pressure on the National Assembly to amend the NLNG Act to compel the company to pay the levy.

Amendment

The campaign to amend the NLNG Act came to a peak recently when the House of Representatives passed “a bill for an Act to amend the Nigerian LNG (Fiscal incentive, Guarantees and Assurances) cap. N87, Laws of the Federal Republic of Nigeria 2004 to empower NLNG Limited, to make its statutory contribution to the NDDC fund and for other matters connected therewith.” This was contrary to the position of the Nigerian National Petroleum Corporation and other stakeholders in Nigeria’s oil and gas sector.

The bill, which seeks to ensure that NLNG pays three per cent of its annual budget to the NDDC, will also remove the NLNG’s status as dollar-denominated, which was part of the incentives to protect the company and its shareholders against the Naira’s flip-flop.

The contentious bill, sponsored by House Minority Leader, Leo Ogor, will also force NLNG’s subsidiary, Bonny Gas Transport Company, to pay tax in Nigeria, while the NLNG itself will equally pay three per cent of its gross freight on international inbound and outbound cargo to the Nigerian Maritime Administration and Safety Agency (NIMASA).

A new provision – Section 7(b) – added to the original NLNG Act says, “Notwithstanding Section 7, or any other provisions of this Act, the Nigerian Liquefied Natural Gas Limited shall pay three per cent of its total annual budget to the Niger Delta Development Commission Fund as required by Section 14, Subsection 1 and 2 (b) of the NDDC Establishment Act, 2000.”

Criticism 

A former Managing Director of NLNG, Mr. Babs Omotowa, had said the attempt to remove the assurances and guarantees in the NLNG Act, which incentivised the investors to commit $6 billion to build the plant, would backfire and scare investors from Nigeria. Omotowa said it took more than 30 years for NLNG to come to fruition, as the investors had doubts about whether Nigeria was a suitable place to put so much money.

Minister of State for Petroleum, Dr. Ibe Kachikwu, said NLNG’s ability to attract future investments to maintain and grow the plant was being put in jeopardy by attempts to renege on promises that Nigeria gave to foreign investors that had enabled the country attract $15 billion in foreign investment, and grow LNG capacity from a two- Train complex to a six- Train plant.

Group Managing Director of NNPC, Dr. Maikanti Baru, had reportedly said the review of the NLNG Act was causing a challenge for the federal government and the majors, adding that it is sending wrong signals to the international community about how business is done in the country.”

The Trade Union Congress (TUC) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) had also opposed the amendment, saying it is not in the interest of Nigeria.

topics from
There is no comment