The Nigerian economy appears to be facing a new threat as oil companies operating in the Niger Delta continue to face fresh opposition to crude oil export. This trend may impact projections negatively, CHIKA IZUORA,writes. The Nigerian Liquefied Natural Gas (NLNG), is facing the burden of proving it is transparent in dealing with issues of tax remittances, having paid about N14.6 trillion to government coffers in the last nine years. CHIKA IZUORA examines the feud between the company and the Maritime Administration and Safety Agency (NIMASA), over issues of tax evasion.
The Nigerian Maritime Administration and Safety Agency (NIMASA) and Nigeria Liquefied Natural Gas (NLNG) Limited, have been at loggerheads as a result of perceived conflict in the enabling Acts of both organizations: the Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Act 1990 on one hand; and Nigerian Maritime Administration and Safety Agency Act 2007, Merchant Shipping Act and Coastal and Inland Shipping Act on the other hand. The NLNG is one of the prime beneficiaries of the pioneer status policy of the federal government on gas monetization and flare reduction. The NLNG Act is based on initial terms of contract between government and private shareholders of the company. The NNPC holds overriding 49 per cent financial interest in the company, while Shell Gas BV owns 25.6 per cent operating interest. Also, Total has 15 per cent in the company, while Eni International N.V.S.a.r.l holds the remaining 10.4 per cent interest. The terms include incentives, concessions, guarantees and assurances in letters to lenders for the NLNG Trains 4 and 5 expansion by ministry of finance, ministry of justice and Office of the Attorney-General of the Federation, and the Central Bank of Nigeria (CBN). The main thrust of the guarantees and assurances are to assure protection of foreign investments by the non-breach of the NLNG Act which, in recognition of its sanctity, has been protected by all administrations of the federal government right from inception. The terms of the contract were modeled after similar packages of incentives flaunted by other competing countries such as Qatar, Oman, Malaysia, Angola, and others to attract investors in gas liquefaction and export. Expectedly, the legal frameworks, commercial incentives and sanctity of contracts built into the NLNG Act formed the springboard for the company’s rapid growth from a single train gas processing company to an efficiently run six train company with one of the healthiest balance sheets among biggest commercial enterprises in Africa. Section 2 of the NLNG Act provides the company tax waivers and other incentives for its investments in facilities to harness Nigeria’s gas resources for exports. But NIMASA contends that its establishment laws exempt only military vessels from its various revenue payments. Thus, whereas NIMASA insists that its levies were applicable to NLNG, the latter argues that fiscal incentives embedded in the NLNG Act exempt it from such levies and charges. A cross section of legal experts whose opinions were sought on the matter declared that whereas they did not have all the facts of the matter but stressed that when two laws that confer rights contend, the first in time takes precedence and consequently overrides the later.

Source; Leadership

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