11 May 2017, Sweetcrude, Lagos — The Federal House of Representatives passed a bill on Tuesday to amend Nigeria Liquefied Natural Gas, NLNG’s (Fiscal Incentives, Guarantees and Assurances) has sent shock waves down the spine of the company.
The House of Representatives through the passage of the bill seeks to subject the company to three percent Niger Delta Development Commission, NDDC levy.
The NDDC levy is said to target gas producers with the aim of reducing gas flaring in the country. However, NLNG said it’s operations involves purchase of gas from gas producers that have paid the said levy.
The passage of the bill came one week after the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu gave foreign investors an assurance at the just concluded 2017 Offshore Technology Conference, OTC that they FID for NLNG’s Train 7 and 8 will be ready in 18 months.
In a swift reaction the NLNG said the passage of the bill is a direct attack on the company, and the present government’s ease of doing business agenda and determination to attract direct foreign investment to Nigeria.
“We understand that this bill will be progressed to the Senate. We think that this is a huge error to pass into law as it is in contradiction with the Federal Government’s drive to attract Foreign Direct Investment (FDI),” he said.
Stating the reasons why Bill is not in the interest of Nigeria Dr. Kudo Eresia-Eke said the fact that the company is being targeted by this amendment while fellow gas purchasers and processors in other businesses such as fertilizer, petrochemical, and electricity are left untouched, gives the world the impression that Nigeria would rather drag down than support its best.
“NLNG succeeded largely due to the provisions of the NLNG Act, which gave investors the confidence to invest in the country. But with the amendment, that confidence will be eroded and jeopardize critical ongoing investments for the continued survival of the company; critical among which is the $1 billion needed annually for the next three years to guarantee the current operation of six existing Trains.
“After 35 years of unsuccessful effort, NLNG could only be incorporated upon the enactment of the NLNG Act which then enabled the establishment of the company. To thus amend the basis of the investment in Nigeria will obviously breach the promises of Government to its co-investors. This will badly damage the reputation of the country, its credit rating, and ability to attract or even retain future investments,” he said.
Kudo added that any amendment will also mean an immediate potential loss of foreign investment of US$25 billion in respect of Trains 7 and 8 investments (US$15 billion by the gas producing and supplying companies and US$10 billion for construction of the project).
“The expected 18, 000 construction jobs for Trains 7 and 8 will also be lost if the Act is amended. This is at a time when the Niger Delta, and the country at large, is in dire need of jobs. Needless to mention the impact of such a huge number of jobs on the peace of the Niger Delta region and the economy of the country.
“NLNG purchases gas from upstream suppliers, who already pay 3% NDDC levy, which would have otherwise been flared. The company has almost singlehandedly caused the reduction of gas flaring from about 65% in 1999 to about 20% currently. With the required investment, NLNG is capable of reducing that figure even further upon the completion of the Trains 7 and 8 Project.
“Any Amendment will however ultimately result in a return to high flaring if NLNG ceases to exist with attendant negative impact on the Niger Delta environment.
NLNG’s General Manager, External Relations Division Dr. Kudo Eresia-Eke maintained that the amendment will contain the company’s development initiative in the Niger Delta.