Business

NLNG Act amendment to result in double taxation

Published

7 years ago

July 12, 2017

Olu Emmanuel

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By Chioma Obinagwam

The General Manager for Production at Nigeria LNG Limited (NLNG), Tayo Oginni, has said making amendments to the NLNG Act would lead to the double taxation since gas suppliers to NLNG already pay the Niger Delta Development Commission (NDDC) 3 per cent levy.

Oginni disclosed this recently while briefing journalists on a visit to the NLNG plant facility in Bonny, Rivers State.

He remarked that the development is inimical to the progress of the oil and gas industry, especially, when the country should be developing its vast gas resources and attracting foreign direct investments into the country.

He stated that after nearly 30 years of false and half attempts to start the LNG project in Nigeria, it was the enactment of the NLNG Act that made it possible for NLNG to be established and subsequently for Final Investment Decisions (FIDs) to be taken for all six trains, earning the country the reputation of the fast growing LNG project in the world.

He added that the milestone would be watered down by attempts to change the rules of the game built into the Act.

Recounting his experience with the NLNG project, he said that the loss of hope experienced prior to the incorporation of NLNG is again manifesting itself in NLNG’s bid to expand its production facility with Trains 7 and 8 as a result of lack of investment in the upstream sector to guarantee gas supplies.

He called on the Federal Government to preserve the sanctity of agreement in the NLNG Act and pass the Petroleum Industry Bill to spur exponential growth in the oil and gas industry in the country.

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“The Nigeria LNG Limited (NLNG) Fiscal Incentives, Guarantees and Assurances Act (NLNG Act) allowed investments to flow into the country. It provided investors the confidence that any agreement entered into would be respected and preserved. To amend the Act will not help Nigeria, NLNG and its hopes for expansion. It will erode investors’ confidence that the Act provided in the first place,” he added.

He pointed out that the imminent requirement of over US$1 billion investment every year in the upstream for the next few years in order to guarantee steady gas supply just to ensure that NLNG’s Trains 1 – 6 can be kept full over the contracted life of the plant will be impossible with the amendment.

“It will also mean an immediate loss of foreign investment of US$25 billion in respect of Trains 7 and 8 investment (USD$15 billion by the upstream and USD$10 billion for construction).

This will also cost the Niger-Delta region and the country about 18,000 jobs required for the construction activities of the new trains,” he said.

Commenting on the achievements by NLNG, he stated that the company has generated $90 billion in revenues as at 2015, paid $5.7 billion in taxes as well as committed more than $200 million to Corporate Social Responsibility(CSR) projects in the Niger Delta especially in the areas of capacity building and infrastructure development. He said the company was also to commit some N60 billion to see the Bonny-Bodo road come into reality and commit N3 billion annually for the next 25 years to transform Bonny into a Dubai of sorts.

NLNG is owned by four shareholders, namely, the Federal Government of Nigeria, represented by the Nigerian National Petroleum Corporation, NNPC (49 per cent), Shell Gas BV, SGBV, (25.6 per cent), Total LNG Nigeria Limited (15 per cent), and Eni International (N.A,) N. V. S. a. r. l (10.4 per cent).