The Nigeria LNG Limited has urged members of the House of Representatives not to amend the NLNG Act, saying if the move sails through, it will portray the country as one that does not honour agreements.
The House Committee on Gas Resources on Thursday held a public hearing in Abuja on a bill to amend the NLNG Act.
NLNG restated its commitment to the development of the Niger Delta and willingness to partner government agencies, including the Niger Delta Development Commission to develop the region, but said the current effort of the lawmakers could be counter-productive if allowed to go on.
The Managing Director, NLNG, Babs Omotowa, who addressed the committee said that the firm needed to be in a position to continue to support the region by being a successful Nigerian company, bringing value to the Niger Delta and the nation in general.
“As evidence of our commitment to the development of the Niger Delta, NLNG has spent $177 million in the areas of infrastructure, education etc in the region. So it is not an issue of reluctance to support Niger Delta, but one of ensuring we work within the confines of the law and honour agreements and promises to maintain the valued reputation of our country in international business,” he said.
He, however, said this would only be possible if the promises made to investors were not broken through the amendment of the NLNG Act, which would portray the country as one that did not honour agreements.
Omotowa said keeping agreements entered into with investors was crucial to retaining and attracting foreign investment into the NLNG, as well as other sectors of the economy in line with the drive of the current administration.
“The intervention of the NLNG, more than any other single factor, has led to the progressive decline in Nigeria’s gas flaring profile over the years, from well over 65 per cent in the 1990s, to less than 20 per cent today.
“Therefore, aside from the fact that the company is earning revenue for the Federal Government and its other shareholders, it is cleaning up the Niger Delta environment in the process.
“It goes without saying that the NLNG Act has been pivotal to the commencement of the project in the first place and for the huge success the company has represented for Nigeria, with the country reaping over $33bn from its initial investment of $2.5bn.
The Act enabled the company to grow from its original two trains to six trains, creating an asset base of $19bn, 49 per cent of which the Federal Government owns.
“The incentives, which have been granted to the NLNG, are not peculiar to Nigeria. They were granted to encourage investments in gas utilisation to reduce flaring, which had become a major problem for the country. Examples of similar incentive initiatives abound in Angola (12 years), Oman, Malaysia, Qatar and Trinidad (up to 10 years). Other more generous incentive schemes also exist in Nigeria, in the Free Trade Zones.”
The NLNG Chief Executive remarked that the current amendment effort is most unusual as it attempts to enforce the payment of a levy from which an entity is expressly exempted by a valid and subsisting legislation in which the Federal Government of Nigeria gave unequivocal undertakings and declarations that induced significant investments.
“As far as we are aware, this is the first time in the history of legislative practice in Nigeria that a proposal is being made to amend a law for the sole purpose of imposing a levy against a company for the benefit of an agency of government.
“We urge the Honourable Committee not to lend itself to the establishment of an unjust precedent. To do otherwise would be to encourage other agencies of government who fail to make their case in judicial proceedings in court, to resort to legislative engineering to achieve what they failed to obtain in court,” he said.
The NLNG is owned by the Federal Government of Nigeria, represented by the Nigerian National Petroleum Corporation (49 per cent); Shell Gas BV (25.6 per cent); Total LNG Nigeria Limited (15 per cent); and Eni International (10.4 per cent).
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