Planned amendment of NLNG Act, threat to economy – Stakeholders

Kunle Kalejaye 13 July 2016, Sweetcrude, Lagos – Stakeholders in Nigeria’s petroleum industry have described efforts by the National Assembly to amend the Nigeria Liquefied Natural Gas, NLNG, Act as a threat to the nation’s economy.

Senate Chambers, Nigeria5

Nigeria’s Senate in session

The Petroleum Club, an association of chief executive officers of oil and gas companies in the country – both indigenous and foreign – warned that the proposed amendment would have far reaching negative consequences not only for the Liquefied Natural Gas, LNG, business, but also for the nation’s petroleum industry and the economy.

Chief executive officers of the companies in the Club pointed out that if the proposed amendment of the NLNG Act sailed through, more oil companies and international lenders would no longer view Nigeria as a country where they could have confidence in the fiscal and commercial terms granted to investors.
Chairman of the Senate Committee on Niger Delta, Senator Peter Nwaoboshi, who is leading the campaign for the amendment of the NLNG Act, had premised his reason on the gas company’s refusal to pay dues to the Niger Delta Development Commission, NDDC, in the last 16 years.
The minority leader of the House of Representatives, Mr. Leo Ogor, while arguing for an amendment of the Act, hinged his reason on untold environmental and health havoc wrought on the people of the Niger Delta.
Ogor said: “The only way we can solve this problem is to bring relevant amendments to the Act because our people have suffered so much and I said that it is very important that we appreciate the enormity of the danger present in the region for us to act quickly and as a people, hold the NLNG responsible for unnecessary gas flaring using this amendment.”
But the Petroleum Club, while reacting, described the premises adduced by the sponsors of the amendment of NLNG Act as preposterous, stating that NLNG was never a gas producing company but only a processing firm and, therefore, should not be held responsible for the unnecessary gas flaring in the Niger Delta.
In its memorandum to the National Assembly, which was signed by Otunba Funso Lawal, Chairman of the Board, and Dr. G.S. Ihetu, Chairman of Policy Committee, the Club said: “This premise is totally wrong because NLNG is not a gas producer and does not flare gas.
“As a matter of fact, it purchases gas from its gas producing shareholders. It should also be noted that these gas producers are already subject to the NDDC Act which is targeted at companies in oil and gas production”.
The memorandum further read: “Perhaps these levies and tax disputes with Nigerian Maritime Administration and Safety Agency (NIMASA) and NDDC may also have given impetus to this proposed amendment to make the company subject to additional levies and taxes.
“However, it should be noted that the second schedule of the NLNG Act provides unambiguous guarantees and assurances to the NLNG shareholders. Specifically, sections 2 and 3 of the schedule state as follows:
“The venture shall be subject to the fiscal regime contained in the provisions of this Act. Such fiscal regime shall not be amended in any way, except with the prior written agreement of the Government, the Company and each of the Company’s shareholders.
“Without prejudice to any other provision contained herein, neither the Company nor its shareholders in their capacity as shareholders in the Company, shall in any way be subject to new laws, regulations, taxes, duties, imports or charges of whatever nature which are not applicable generally to companies incorporated in Nigeria or to shareholders in companies incorporated in Nigeria, respectively”.
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