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Nigeria Liquefied Natural Gas (NLNG) and The storm of opposition

When the Nigerian Liquefied Natural Gas (NLNG) Limited was incorporated by the Federal Government on May 17, 1989, with an initial investment of $6 billion, little did it know that, that step of faith and courage taken would later translate to fortunes for the country.

Thirty years post incorporation, the company has more than doubled its asset base now, currently at $15.4 billion, according to the company’s latest data contained in its 2018 facts and figures.

It was the NLNG, for instance, that paid $2.1 billion dividend in 2015, with which the Federal Government bailed out states and local governments with financial challenges to enable them pay their workers.

But despite these far reaching achievements, some threats capable of eroding its gains have continued to be a stumbling block to the existence of this all important national asset, which if not urgently addressed, could cause its doom.

Before now, the NLNG has confronted and surmounted some political rift and litigations which experts have described as counter-productive and a mere distraction to the core operations of the company.

The latest of such cases is the rift with the Nigerian Maritime Administration and Safety Agency (NIMASA) which the Court of Appeal has remitted to the Federal High Court for retrial.

Act amendment

Efforts by the National Assembly to surreptitiously amend the NLNG Act primarily to compel NLNG to remit 3 per cent of its annual budget as funding to the Niger Delta Development Commission (NDDC) was without success.

Having exhausted all the legal options to collect the three per cent levy without success, the NDDC apparently took the battle to the National Assembly with the proposed amendment of the NLNG Act to ensure the remittance of the levy.

But the move, however, met stiff resistance from Nigerians, public commentators, stakeholders, and especially oil workers who maintained that, the amendment was uncalled for because it will go against Bilateral Investment Treaties (BIT).

One of the industry unions, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) had opposed the proposed amendment, describing it as unnecessary and saying, “the amendment can cause imminent losses that will far outweigh any doubtful gains.”

President of PENGASSAN, Mr. Francis Johnson, had in an interview with Daily Sun, said oil workers are opposed to the amendment of the NLNG Act because it will impact negatively on the image of Nigeria.

Johnson said it remained worrisome that legislators that are elected by Nigerians, who should be at the vanguard of protecting national interest are the ones championing the cause to mortgage the future of generation yet unborn.

Also, former Minister of Petroleum Resources, Prof. Tam David-West, equally faulted a similar move that suggested the sale of NLNG.

David-West, in chat with Daily Sun, had said the clamour showed lack of understanding of the current economic quagmire, describing the oil and gas sector as the blood of the nation, warning that, the clamour for outright sale of the country’s shares in the company was a wrong way to tackle economic recession.

But, former Chairman of the Senate Committee on Niger Delta, Senator Peter Nwaoboshi, had in February 2016 alleged that the amount due for payment to the NDDC from the NLNG, which the company refused to pay since the last 16 years, was colossal and insisted that by the action, NLNG disobeyed the country’s laws.


On May 3, 2013, at about 4.20pm, a tug boat blockaded an NLNG chartered vessel, LNG Adamawa at the instance of NIMASA acting through Global West Vessel Specialists Limited. The blockade, according to industry watchers was a self-help effort to extract levies purportedly owed NIMASA by NLNG. According to NIMASA, these include shipping levies based on gross freight on exports and imports.

Ironically, the NLNG Act exempts Nigeria LNG from payment of the Sea Protection Levy, the 3 percent freight levies on cargo exports shipped by NLNG, and the 2 per cent Cabotage Levy.

NIMASA eventually lifted the blockade on May 5, 2013 after a meeting between the management of NLNG and NIMASA, in which it was resolved for lasting solutions to be sought under the rule of law.

Again, on June 21, 2013, and despite a subsisting court order barring it from further blockade of the Bonny Channel, NIMASA effected another illegal blockade of the Bonny Channel, , preventing NLNG vessels and vessels belonging to its buyers from accessing or leaving the NLNG terminal.

After a three week illegal blockade, during which NLNG was compelled to start making the disputed payments “under protest”, NIMASA ended the blockade.

According to NLNG, the illegal blockade which persisted in spite of court orders, led to lost revenues of over $355 million.


In June 2013, NLNG filed a case at the Federal High Court, Lagos, seeking judicial clarity and interpretation on the legality or otherwise of the various levies imposed on NLNG by NIMASA.

By October 2017, the Federal High Court sitting in Lagos, delivered judgment in favour of NLNG against NIMASA, over applicability of the NIMASA levies.

According to the court, NLNG was not liable to make the said payments to NIMASA, and all such payments already made by NLNG to NIMASA “under protest”should be refunded to NLNG forthwith. The court further held that NIMASA was wrong in blockading the Bonny Channel for the purpose of enforcing the payments against NLNG and went further to restrain NIMASA from taking or continuing any steps to block, restrain, seize, detain or restrict NLNG (or its shareholders or subsidiary vessels or chartered vessels).

The said Judgment of the Federal High Court was however, reversed on March 29, 2019, following an appeal filed against the same by NIMASA, with the Court of Appeal directing that the case between the two parties be remitted to the Federal High Court for a re-hearing.

This decision gives the parties right to either go back to the Federal High Court for a re-hearing or appeal the decision to the Supreme Court.

Where the case is to be heard afresh, the position of the parties would revert to what it was as at the time the case was filed, in which case no payments of the levies in dispute would be made by NLNG to NIMASA pending the re-hearing and determination of the suit. Where, on the other hand, the right of appeal to the Supreme Court is exercised, the status quo as of the date of the Court of Appeal judgment will be maintained, which is to the same effect.

Contributions NLNG has monetised over 6.37 trillion cubic feet of Associated Gas to Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs), thus helping to reduce gas flaring by upstream companies from over 60 percent to well under 20 percent.

From the monetisation of gas hitherto being flared, NLNG has generated over $100 billion revenue since inception; paid over $36 billion to shareholders as dividends, of which 49 per cent of that figure has gone to the Federal Government by virtue of its shareholding stake; $28 billion paid to Joint Ventures (JVs) feedgas suppliers while 55 per cent to 60 per cent of that amount has gone to the Federal Government courtesy of its stake in the JVs

According to the company’s latest edition of its facts and figures, NLNG is by far the highest individual payer of Companies Income Tax in Nigeria. In 2018, the company’s corporate income tax paid to the Federal Government amounted to about $864 million, over 40 percent of what was paid in 2017.

‘‘World Class Operations at NLNG, ranked number one in Plant Reliability in 2018 with the achievement of 98.4 per cent Plant Reliability, projecting Nigeria’s image positively and ranked fourth LNG Company worldwide by market share.

“NLNG is arguably number one in CSR in Nigeria. It has spent over N25 billion on community projects over the years; spent over N2 billion on building world-class engineering laboratories in six Nigerian universities through the University Support Programme; spending N120 billion on the construction of Bonny-Bodo Road in Rivers State. Furthermore, the company signed an MoU with the Bonny Island community to provide N3 billion each year for 25 years for the overall development of the Kingdom,” the 2018 facts and figures reports.

NLNG’s planned expansion with the construction of Train 7 will increase plant production by 35 per cent, attracting huge Foreign Direct Investment (FDI)- $2 billion in upstream investment; some $5 billion in construction; and creating over 10, 000 jobs during construction. The 35 per cent increase is expected to significantly impact on revenue, dividends, taxes and CSR contribution in Nigeria.

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