Senate, voices of dissent and NLNG Act


By Foster Obi

Except the Senate backs down on concurring with the House of Representatives on the passage of the Nigeria Liquefied Natural Gas (NLNG) Amendment Bill, the current angst trailing the passage of the bill by the House may just remain as babel of angry voices on what has become the battle for the soul of the Nigerian cash cow.

The current uproar by concerned stakeholders kicking against the amendment began when developments at the National Assembly showed strong determination by the law makers to tamper with the NLNG Act, primarily to force the company to remit three per cent funding to the Niger Delta Development Commission (NDDC).

The NDDC, in a bid to start receiving its statutory 3 per cent remittance from NLNG, had approached the courts in 2005, but lost at the Supreme Court. The claim was quashed by the highest Court.

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 shall be paid into the funds of NDDC for the development of the Niger Delta region.

However, the NLNG (Fiscal Incentives, Guarantees and Assurances) Act clearly exempted the NLNG from such contributions or payments and this had been established in all the court judgments up to Supreme Court in 2011.a

But the Chairman of the Senate Committee on Niger Delta, Senator Peter Nwaoboshi in February alleged that the amount due for payment to the Niger Delta Development Commission (NDDC) from the NLNG, which the company refused to pay since the last 16 years, was enormous and insisted that by this action, NLNG disobeyed the laws of the country.  “It is not whether they contributed certain percentage. The point is that they had refused to obey the law since 2000,” he argued.

Although the NLNG management explained that the Act that established the firm exempted it from payment such payments, the lawmaker insisted that the legislature will revisit the Act. He said: “We have asked the Managing Director of the NLNG, Mr. Babs Omotowa (now ex.), 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 They argued that the NDDC Act has not repealed the Gas Act.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 declared.

Scarcely one month after the pronouncement, the House of Representatives said it had declared support for the enforcement of the NLNG (fiscal incentives, guaranteed and assurances) Act, Cap. N87, Laws of the Federation of Nigeria, 2004, which recommends the remittance of three per cent annual revenue into the NDDC Fund.

Lending voice to the amendment, the House of Representatives, the Minority Leader, Honourable Leo Ogor, reeled out the extreme environmental and health havoc oil exploration and production had wrecked on the people of the Niger Delta for decades.

He said the only way the problem could solved was to bring relevant amendments to the Act because the indigenes have suffered so much and it was very important for the House to appreciate the enormity of the danger in the region for them to act quickly and as a people, hold the NLNG responsible for unnecessary gas flaring, using this amendment.

He said the amendment to this Act was aimed at redressing the great injustice that the NLNG has meted to the people of the Niger Delta region for almost 27 years now. According to him, to partly or completely rejuvenate the environment, the NDDC Act, specifically in Section 14 (2)(b), stipulates that three 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 the NLNG, shall pay the said percentage into the funds of the NDDC.

“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 disservice 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,” he said adding “It is important that we come to the rescue of the people of the region.”

Since the passage of the Bill in May by the House of representatives, a lot of feathers seemed to have been ruffled, enough to warrant fisticuffs, creating serious disquiet in and around the NLNG.

But knowing that the only window left was to get the Senate to reject the amendment, the management of NLNG quickly appealed to the Senate not to amend the NLNG Act for the sake of the nation.

NLNG’s Manager, Corporate Communications, Tony Okonedo, made the appeal at the press conference organised by the company in Lagos.

He said the appeal was imperative because the bill would soon be submitted for passage to the Senate.

“We think that this is a huge error to pass the bill as it is a direct collision with the Federal Government’s drive to attract Foreign Direct Investment (FDI,” he said.

Okonedo said that the Act, if amended, would adversely affect the NLNG, which is Nigeria’s number one gas company. “NLNG is proudly the country’s biggest and most successful indigenous company, run by 100 per cent Nigerian management and over 95 per cent Nigerian staff, yet competing effectively globally.

“It is today the country’s highest tax payer and the 4th largest supplier of LNG in the whole world. NLNG is a pride to Nigeria and the nation’s flagship corporation whose model is being considered for replication in various sectors of the economy.

“But 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,” he said.

Besides NLNG management official reaction, many stakeholders had since waded in to get the National Assembly to rescind the decision.  Some analysts believe that the gas company may have mobilized voices of dissent to get the authorities to listen.

Former Minister of Petroleum Resources, Prof. Tam David-West, faulted a similar move that suggested the sale of NLNG.

David-West, in a media interview said the clamour showed lack of understanding of the current economic quagmire, describing oil and gas sector as the blood of the nation, saying the campaign for outright sale of the country’s shares in the company was a wrong way to tackle economic recession.

President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Francis Johnson, said oil workers are opposed to the amendment of the NLNG Act because it will impact negatively on the image of Nigeria.

Johnson said it remained worrisome that legislators that are elected by Nigerians, who ought to be at the vanguard of protecting national interest are the ones championing the cause to mortgaging the future of generation yet unborn.

The proposed amendment, it said, could directly affect some $25 billion worth of foreign investments as well as another 18,000 Nigerian jobs linked to NLNG’s Train 7 and 8 expansion programmes, adding that this will negate the job creation and job security policy being propagated by the current administration.

A non-governmental organisation, the Committee for the Defence of National Interests (CODNI), has however warned against alleged secret moves by the National Assembly to hurriedly amend the Act establishing NLNG.

National Coordinator, Mr. Zach Ezoh said “We wish to alert the general public about this insidious plot and to call on patriotic members of the National Assembly to rise to the occasion and prevent this looming economic catastrophe as it will further compound the country’s woes.”

Petroleum Club, an association of chief executive officers of oil and gas companies, both indigenous and foreign, also raised alarm that the nation’s economy is seriously under threat, following the moves to amend the NLNG Act.

In its memorandum to National Assembly, which was signed by Chairman of the Board, Otunba Funso Lawal, and Dr. G.S. Ihetu, Chairman of Policy Committee, the Club said the premise is totally wrong because NLNG is not a gas producer and does not flare gas.

Rivers State governor, Nyesom Wike, said his administration will always defend the economy of Rivers State and the South-South geo-political zone, adding that the state government will join forces with other governors of the zone to stop the amendment of the NLNG, Bill.

Immediate past Managing Director of NLNG and now the Vice President, Safety and Environment (S&E), Shell Upstream International Leadership Team, Babs Omotowa said any tinkering with the Nigeria NLNG Act of 2004 will violate bilateral agreements with international investors as well as cost the country a huge $25 billion in Foreign Direct Investment (FDI) and fines running into billions at the International Courts.

Industry sources believe the dissenting voices may force the Senate to change its opinion by stepping down the bill.

However close sources to the red chamber thinks the Senate is not perturbed by such voices. “While it is important to listen to public opinion, the law must run its course and has nothing to do with emotions. The Senate can only change its mind if it discovers that those clamouring in favour of NLNG are doing it genuinely and not the handiwork of professional trumpeters or white washers who live by such unholy vocation.”

Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to as the source.