Proposed amendment of NLNG Act puts economy under threat – Petroleum Club

Petroleum Club, an association of chief executive officers of oil and gas companies, both indigenous and foreign, has raised alarm that the nation’s economy  is seriously under threat, following the National Assembly’s determined efforts to amend the Nigeria Liquefied Natural Gas (NLNG) Act.

The association, which described the National Assembly’s intended action as an adventure in the wrong direction, warned that the proposed amendment would have far reaching negative consequences not only for the Liquefied Natural Gas (LNG) business, but also for the entire petroleum industry in the country.

These oil and gas firms’ chief executive officers pointed out that if the proposed amendment of NLNG Act sailed through, more oil companies and international lenders would no longer view Nigeria as a country in which they could have confidence in the fiscal and commercial terms granted to investors.

The Chairman of the Senate Committee on Niger Delta, Senator Peter Nwaoboshi, who demanded for the amendment of NLNG Act, had premised his reason on the gas company’s refusal to pay dues to the Niger Delta Development Commission (NDDC) since the last 16 years.

Nwaoboshi said: “It is not whether that they contributed certain percentage. The point is that they had refused to obey the law since year 2000. We want to know those who are contributing to the agency.

“We have asked the Managing Director of the NLNG, Mr. Babs Omotowa, and he said that they have not been contributing money to the NDDC. They showed us a Supreme Court judgment, which described NLNG as a gas processing company and that there is a Gas Act that came before that of NDDC Act.

“They argued that the NDDC Act has not repealed the Gas Act. The NLNG claimed that the Gas Act has given them tax holiday. We are lawmakers and we are going to revisit the two Acts. We will go into the root of the matter. We don’t just make laws for the purpose of making it,” he stressed.

The Minority Leader of the House of Representatives, Honourable Leo Ogor, while arguing on this same issue, hinged his reason on untold environmental and health havoc wrecked 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.

“The amendment to this Act is aimed at redressing the great injustice that the NLNG has meted to the people of the Niger Delta region for almost 27 years now. To partly or completely rejuvenate the environment, the NDDC establishment Act, specifically section 14 (2)(b), stipulates that 3 per cent of the total annual budget of any oil producing company operating onshore and offshore in the Niger Delta area, including gas processing companies like NLNG, shall pay the said percentage into the funds of the Niger Delta Development Commission.

“To my knowledge, the NLNG Limited has not contributed a kobo to the NDDC fund as required by the NDDC Act, 2000 for about 27 years of its operation in the region, despite the huge earnings it has made. This is great injustice and dis-service to the people of the Niger Delta region.

“The NLNG has continued to hide under the pretext that the Nigeria LNG (Fiscal incentives, Guarantees and Assurances) Act exempted it from such contributions or payments, we now know that it is right and just for it to make such payment, especially when they have enjoyed these incentives for more than 27 years.

“It is important that we come to the rescue of the people of the region. It is on the basis of this injustice that I seek the amendment to the Fiscal Incentives Guarantees and Assurances Act,” he added.

But 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 National Assembly, which was signed by Otunba Funso Lawal, Chairman of the Board, and Dr. G.S. Ihetu, Chairman of Policy Committee, Petroleum 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.

“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,” the organization stated.