- NASS should rather seek to replicate its business model, not sully it
The common saying is: if it ain’t broke, don’t fix it. Or, don’t change a winning formula. This simple principle ought to apply to the Nigeria Liquefied Natural Gas (NLNG). The 28-year-old firm can be described as the flagship company of the Nigerian oil industry, having remained a success story since inception.
Established by the NLNG Act and incorporated in 1989, the company has a clear-cut duty to harness the vast natural gas deposit in Nigeria. Four major shareholders own the company with equity participation as follows: Federal Government of Nigeria, represented by NNPC (49%); Shell (25.6%); Total LNG Nigeria Limited (15%) and Eni (10.4%).
Its major products are Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs). It also supplies about 40% of Nigeria’s liquified petroleum gas (LPG or cooking gas). Based in Bonny Island in Rivers State, it is developed in trains; it has six trains operational while the seventh and eighth are in development.
The joint venture company which started with an initial investment of about $6 billion has generated over $90 billion in revenues and currently has an asset base of about $11 billion. It also has two subsidiaries – Bonny Gas Transport Limited (BGT) and NLNG Ship Management Limited (NSML).
Apart from employing thousands of Nigerians, NLNG’s activities have reportedly reduced gas flaring in Nigeria from about 65% in 1999 to about 20% today, with the figure liable to reduce further when trains seven and eight are completed.
According to a communique by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN ), NLNG has since inception paid to the Federal Government, over $15 billion as dividends; $5.5 billion in taxes and N51 billion in levies, among other benefits.
The foregoing is by way of back-grounding. The crux of the matter here is that a bill to amend the NLNG Act is currently before the National Assembly. Stakeholders, including PENGASSAN, insist that such an action would be tantamount to sabotage and hardly in the interest of Nigeria.
Proposed amendment include a deletion of government’s undertaking to honour shareholders’ agreements and contracts; a deletion of assurances by government to retain agreed fiscal and security regimes of the investment; and the need to make NLNG contribute three per cent of its annual budget to the Niger Delta Development Commission (NDDC). Only upstream oil firms pay this levy currently.
We agree with other Nigerians who think the NLNG should be left well alone. The reason is simple: the NLNG is no doubt the best thing going for the Nigerian National Petroleum Corporation (NNPC) and indeed the Federal Government as far as the oil industry is concerned. It is a multi-national special utility investment vehicle which has performed quite well and made handsome returns since inception.
The benefits the firm has brought to the industry and the nation are numerous and to unilaterally tinker with some basic agreements that set it up is bound to injure Nigeria’s credibility in international financial circles. It is noteworthy that the firm was built largely from international financing based on certain agreements and assurances.
Of course change would be inevitable at a point but there is need to build consensus among shareholders. While we think the NLNG should contribute to the NDDC, negotiation would bring about mutual understanding on the imperative for this.
And if the National Assembly feels so strongly and justified in updating the agreements binding the NLNG, it must be done with utmost good faith, openly and transparently: this will include wide consultations and a series of public hearings. We feel uncomfortable at what seems like a recent untoward interest in the NLNG. Not long ago, another government agency tried imposing a levy on it; recently, there was a campaign to sell a bit of Federal Government shareholding, and now this.
We appeal for caution; we urge the National Assembly (NASS) to rather enact laws to allow many more firms like NLNG take root in Nigeria. For instance, the same principles can be applied to build refineries, petrochemical complexes and large, integrated, modern ranches, for instance.
The NASS should seek to expand our possibilities instead of seeming to limit us.
