Home / Lead Story / NLNG team visits Global Patriot Newspapers; Insists Nigeria’ll lose $25b foreign investment, 18, 000 jobs, reputation, if Act is amended

NLNG team visits Global Patriot Newspapers; Insists Nigeria’ll lose $25b foreign investment, 18, 000 jobs, reputation, if Act is amended

Dr. Kudo-Eresia Eke, General Manager, External Relations, NLNG
Dr. Kudo-Eresia Eke, General Manager, External Relations, NLNG
  Dr. Kudo Eresia-Eke and Anne-Marie Palmer-Ikuku at Global Patriot Newspapers office in Lagos, Monday
Dr. Kudo Eresia-Eke and Anne-Marie Palmer-Ikuku at Global Patriot Newspapers office in Lagos, Monday

Nigeria Liquefied Natural Gas (NLNG) Limited has again cautioned against the move by the National Assembly to amend the Act establishing the company, insisting that the plan would put the country at risk of losing foreign investors’ confidence, billions of dollars in cancelled projects and fines arising from lawsuits, and thousands of direly needed jobs, especially in the Niger Delta region.
The controversial bill, if passed into law, would compel the NLNG to begin to pay three percent of its annual budget to the Niger Delta Development Commission (NDDC).
Sounding this alarm during a courtesy visit to the corporate office of Global Patriot Newspapers, in Ikeja, Monday, General Manager, External Relations, of NLNG, Dr. Kudo Eresia-Eke, lauded Global Patriot Newspapers for distinguishing itself in the media industry, stressing that there was need for partnership between the media and the NLNG to ensure that the public is properly enlightened concerning the operations of the world-class, multi-billion dollar company. .
Accompanied on the visit by Anne-Marie Palmer-Ikuku, Head, Media Relations, NLNG, Dr. Eresia-Eke pointed out that if the Act establishing the foremost gas firm in the country is amended, Nigeria stands to lose $25 million in foreign direct investment, FDI, as a result of the potential cancellation of the construction of the proposed Train 7 of the company, made up of $10 billion from the construction of the facility and $15 billion in upstream investment for gas to supply NLNG.
Fielding questions by journalists during the visit, Eresia-Eke stressed that the risk of ‘national reputation damage, resulting from reneging on promises and re assurances consistently given by succeeding governments that the Act would not be altered, would be too costly for Nigeria to bear.
He said that apart from the $25 billion that is expected to flow in soon from Train 7, the country would lose 18,000 construction job opportunities that would have come with the mega project for Nigerians, not counting the opportunity it would offer to reduce gas flaring in the Niger Delta region to a single digit.
NLNG’s Trains 1-6, he said, have already reduced gas flaring from 65 per cent at the company’s inception to 10 per cent presently.
Also, as have happened with some other countries that breached bilateral agreements, Nigeria would most likely be sued at the international court and be liable to a heavy fine that could run into billions of dollars, a scenario that would further damage the nation’s already ailing economy. Russia, for instance, recently suffered a $50 billion fine, Ecuador $1.8 billion and Venezuela $1.6 billion as a result of breaches of bilateral agreements.
Continuing, Dr. Eresia-Eke noted that the three per cent tax to the NDDC that the new bill proposes would amount to double taxation since the shareholders of the NLNG, upstream operators, including Shell, Total and Agip are already paying the levy to the NDDC.
He also pointed out that the proposed law would amount to smuggling in through the legislature what the proponents could not secure through the judiciary, since according to him, the High Court, Appeal Court and Supreme Court have all ruled against the move.
At the Public Hearing on the proposed Amendment to the NLNG Act organized by the House of Representatives Committee on Gas Resources in April, the outgoing Managing Director of NLNG, Babs Omolowa, in his presentation urged the Federal Government to respect the sanctity of agreements with investors, so that the country would not be seen as a nation that breaks agreements.
“NLNG needs to be in position to support the region through being a successful Nigerian company bringing value to the Delta and the nation in general, but that this would only be possible if the promises made to investors are not broken by amending the NLNG Act which will certainly portray the country as one that does not honour agreements”.
“As evidence of our commitment to the development of the Niger Delta, NLNG has spent $177 million in the areas of infrastructure and education in the region. So it is not an issue of reluctance to support the 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,” Omotowa had cautioned.
“The intervention of 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 US$33billion from its initial investment of $2.5billion. The Act enabled the company to grow from its original 2-Trains to 6-Trains, creating an asset base of $19 billion, 49 per cent of which the federal government owns.”
“Incentives which have been granted to 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.”
“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,” Omotowa had stressed.
On its part, the Petroleum Club, an association of chief executive officers of oil and gas companies in the country, both indigenous and foreign posited that the proposed amendment would have far reaching negative consequences not only for the Liquefied Natural Gas, LNG, business, but also for the nation’s petroleum industry and the economy.
In its memorandum to the National Assembly, which was signed by Otunba Funso Lawal, Chairman of the Board, and Dr. G.S. Ihetu, Chairman of Policy Committee, the Club maintained that the 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.
“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..
“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.”
Appealing passionately against the proposed amendment, which would clearly be against Nigeria’s interest, Dr. Eresia-Eke said that there are very many patriotic National Assembly members who understand the adverse implications of what a few of their colleagues are canvassing, stressing that nothing must be done to drive away the investors that the country desperately needs to revive its economy.

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