NDDC : THE RECALCITRANCE OF NLNG

That the Niger Delta region has been greatly and most unjustifiably hampered in its development needs is no longer news. That the region has been badly raped and devastated by oil prospecting and production activities is also no news.

What is news is the deliberate refusal, over the years, of successive administrations even at the Federal level to live up to its obligations to the people of the region. When the Niger Delta Development Commission was established in 2000 by Obasanjo administration to confront the enormous development challenges of the region after decades of criminal neglect, the people of heaved a sigh of relief.

However, something has gone terribly wrong with the funding of the agency that all stakeholders must stand up and be heard.

The Act establishing the NDDC stipulates “3 percent of the total annual budget of any oil producing company operating, on shore and off shore, in the Niger-Delta Area; including gas processing companies.”

Unfortunately, NLNG, one of the gas processing companies, has bluntly refused to make its contributions of the stipulated 3% of its annual budget to the NDDC but rather hangs on to a provision in the Reliefs/Waivers granted it on inception by the FG. Thus today, the company is in serious conflict with some government agencies that have crossed its path in the discharge of their duties. How can NLNG not compel itself to realize that its operations in Nigeria have been made easy through the cooperation of all Nigerians? How can the company not realize that it needs to give something back to the people in appreciation having reaped bountifully from its investments over the years?

The NLNG was granted Pioneer Status Tax Relief as contained in, “[Cap. C21.]:
2. Tax relief period
Notwithstanding the provisions of section 10 of the Industrial Development (Income Tax Relief) Act, the tax relief period of the Company shall commence on the production day of the Company and shall continue for a period of ten years, so however that the tax relief period shall terminate at the first anniversary date after the first five years when the cumulative average sales price of liquefied natural gas reaches US 3 dollars/mmbtu as calculated in the First Schedule to this Act in accordance with which such calculation shall only be made annually at each anniversary date.”

From the foregoing, it is clear the two conditions above i.e 10 years tax relief and the average sales price of liquefied natural gas reaching US 3 dollars/mmbtu had since been met and surpassed. Indeed , as at January 2004 which was the fifth anniversary of the production of the company, the New York Mercantile Exchange (NYMEX) showed convincingly that the price of gas stood at $9 per million metric British Thermal Units (MMBTU). Analyzed further, this translates that as at the said January 2004, a period of almost 13 years ago, the milestone for the expiration of the exemption period had been surpassed by 200 percent in the cumulative average sales price. So why should NLNG not honour its tax and levy obligations?

From available records, NLNG has been having a running battle with NIMASA over its refusal to pay relevant taxes and dues to the agency. It got to a boiling point in May 2013 when NIMASA blocked all vessels from entering or coming out of NLNG jetty in Bonny. This perspective is for another day.

Now to the most scandalous of them all. In granting NLNG investment incentives, the Nigerian authorities inadvertently signed away our future by questionably giving them a leeway to evade responsibilities to Nigerians. Now please read this and make your judgment:

According to Second Schedule
GUARANTEES AND ASSURANCES TO NIGERIA LNG LIMITED AND ITS SHAREHOLDERS
[Section 9.]
[1993 No. 113.]

3. “Without prejudice to any other provision contained herein, neither the Company nor its shareholders in their capacity as shareholders in the Company, shall in any way be subject to new laws, regulations, taxes, duties, imposts or charges of whatever nature which are not applicable generally to companies incorporated in Nigeria or to shareholders in companies incorporated in Nigeria, respectively. “

With the above provision, NLNG believes it has an umbrella to hide under in its refusal to contribute funds to the NDDC. And it has taken full advantage of this clause to deny the people of Niger Delta their right as guaranteed in the Act setting up NDDC.
This means if there is specific need to ask the NLNG to undertake certain responsibilities not applicable generally to companies in Nigeria, the company would not be bound by any such demands even if it is backed by laws made in such states as are home to the NLNG.

Sadly, state governments, youths and other stakeholders who are member states of the agency have not made their voices heard enough. We have become so complacent that NLNG has taken the entire region for a jolly ride. Thankfully, the House of representative has given life to this struggle be amending and inserting clauses that would push the demand for NLNG to be responsive and responsible to the environment it is deriving huge benefits from.

Matthew Michael