Secret Plot To Amend NLNG Act To Pave Way For Sale Of National Oil Asset Exposed

A non-government organisation, the Committee for the Defence of National Interests, CODNI, says it has uncovered secret moves by the National Assembly to hurriedly amend the act establishing the Nigeria Liquefied Natural Gas, NLNG, before the end of this week to pave way for easy sale of the ‘crown jewel’ of Nigeria’s national oil assets.

The group disclosed this in a statement issued on Wednesday, November 16, 2016 in Lagos and signed by its national co-ordinator, Zach Ezoh, saying that information at its disposal indicated that the federal lawmakers have perfected plans to hurriedly amend the NLNG Act possibly on Thursday [Nov 17] so as to pave the way for the sale of the federal government’s shares in the NLNG.

“We wish to alert the general public about this invidious plot and to call on patriotic members of the National Assembly to rise to the occasion and prevent this looming economic catastrophe as it will further compound the country’s woes,” CODNI said.

The group warned the lawmakers not to do anything to tamper with the NLNG Act, describing such as a miscalculation which would effectively kill the goose that lays the golden egg for the country’s economy.

“We wish to appeal to the conscience of our lawmakers not to allow this economic tragedy to befall our dear nation. It is said that you do not change a winning strategy. The NLNG as it presently is has proved to be a roaring success. There is, therefore, no cogent reason to tamper with the Act establishing this national cash cow,” the statement said.

CODNI noted that NLNG, which was incorporated after over 30 years of unsuccessful efforts by successive Nigerian administrations to attract foreign investors in the LNG sector, has been an outstanding success. “From the initial investment of US$6.0 billion at its incorporation on May 17, 1989, the NLNG now has an asset base of over $11 billion, generated over $90 billion in revenues and has contributed over US$15 billion to the Nigerian government in dividends over the last 12 years,” CODNI noted.

It further noted that the company has paid a total of over US$5.5 billion in taxes comprising Companies Income Tax, Tertiary Education Tax, WHT, VAT and other payments to Government including PAYE, state and local government taxes, as well as regulators’ levies and fees totalling over N51 billion.

CODNI pointed out that the NLNG Act, which has been ratified by the Nigerian Constitution as an Act of the National Assembly, has as its basis, a contract between the Federal Government of Nigeria and the Shareholders of Nigeria LNG Limited (“NLNG”). The group noted that this contract includes Incentives, Concessions, Guarantees and Assurances which were provided for and also reaffirmed in Letters of Assurance to lenders for the Nigeria LNG Trains 4 and 5 expansion by the then Minister of Finance, Minister of Justice and Attorneys-General of the Federation and the Central Bank Governor.

“The main thrust of the Guarantees and Assurances were to assure the foreign Investors that their investments would be protected by the non-amendment of the NLNG Act. It is instructive to note that the Act has been protected by all administrations from inception, in recognition of the sanctity thereof,” CODNI said.

It reminded the lawmakers that NLNG’s shareholders have treaty protection under Bilateral Investment Treaties (“BITs”) entered into by Nigeria with France, The Netherlands and the United Kingdom.

“To amend or change the NLNG Act would portray Nigeria as a promise-breaker and untrustworthy, damaging the country’s reputation and hamstringing its ability to attract foreign investment. It could also mean an immediate loss of foreign investment of US$25 billion in respect of Train 7 investment (USD$15 billion by the upstream and USD$10 billion for construction).

“In addition, any amendment could result in loss of income of between US$53m – US$124m being amount attributable to the Nigerian Government in form of dividends, and related Withholding tax. Further immediate impact would also be the potential loss of about 18,000 jobs required for the construction activities for Train 7,” the group said.