Kunle Kalejaye 24 August 2016, Sweetcrude. Lagos – Any amendment to the Nigerian Liquefied Natural Gas, NLNG, Act of 2004 will cause the Nigeria economy collateral damage, outgoing Managing Director and Chief Executive Officer of the Nigeria LNG Limited, NLNG, Mr. Babs Omotowa, has warned.
According to the NLNG outgoing managing director, any such amendment of the Act will also damage bilateral business agreements with international investors, costing the nation over $25 billion in Foreign Direct Investment, FDI, and fines running into billions at the International Courts.
Omotowa disclosed this in Lagos, saying instead of the effort by the National Assembly to review the Act and create negative impact on the economy, such effort should be geared toward attracting investment into the country.
He also disclosed that plans were in motion to ensure the success of the NLNG expansion programme, pleading that this should not be disrupted by any amendment on NLNG Act.
Commenting on expansion programme, Omotowa said it involves the expansion of production capacity of the LNG plant in Bonny, Rivers State, with the addition of Trains 7 and 8, stating that this could attract $25 billion to the country, create 30,000 construction jobs, help to further reduce gas flaring, and generate $1 to $2 billion additional revenue for the country in taxes and dividend.
“In a period of huge youth unemployment and need for more revenue, this should really be a course we should have all hands on deck for, especially as NLNG has demonstrated its pedigree having attracted $15 billion in foreign investment, grown from a 2-train to 6-train plant, contributed to reducing gas flaring from 65 percent to below 20 percent, and delivered $33 billion to Nigeria from a $2.5 billion investment,” he stated.
He continued: “This potential $25 billion in investment, creation of 30,000 jobs, reduced gas flaring etc, is being put in jeopardy by attempts to renege on promises that Nigeria gave to foreign investors that enabled the $15 billion investment historically attracted.
“Whilst the executive (arm of government) has demonstrated full commitment to the need to keep the sanctity of the NLNG Act, the attempt by the legislature to amend the clear promises made to investors will cost the country quite a lot.
“Apart from the relocation of investments in excess of $25 billion to other countries, Nigeria will also be opened to fines running into billions of dollars in international courts for reneging on agreements. He pointed that the incentives provided by the NLNG Act were normal in the LNG world, including in Qatar, Oman, Malaysia, Angola, arguing that outside the gas sub-sector, more generous incentives even in Nigeria, are contained in such legislation as the Oil & Gas Free Trade Zone Act.
Moreover, he argued, “This period of low oil price is not a time to jeopardise Nigeria’s long term interests by showing Nigeria as a place not to be trusted, and projecting our business environment as uncondusive”.
Analysing the unfortunate trend of declining oil and gas prices globally, he said the crisis was responsible for the recession currently experienced in the country because of the mono-product structure of the economy which left development in the other parts of the economy stunted.