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NLNG burdened by double tax, pipeline security issues

By Roseline Okere
02 November 2016   |   4:20 am
The Managing Director and Chief Executive Officer of Nigeria LNG Limited, Tony Attah, has listed the challenges confronting the company to include operations of multiple regulatory agencies, pipeline security issues....
 Member of Senate Committee on Gas, Sen. Rose Oko Okoji (left); Chairman gas Committee, Sen. Albert Bassey Akpan; Managing Director/Chief Executive Officer, Nigeria LNG Limited (NLNG), Tony Attah; member of the committee, Sen. Barnabas Gemade; Govt Relations Manager, NLNG, Salem Sallam; and Sen. Danjuma La’ah at the NLNG Plant on Bonny Island during a plant tour by members of the Senate Committee on Gas.

Member of Senate Committee on Gas, Sen. Rose Oko Okoji (left); Chairman gas Committee, Sen. Albert Bassey Akpan; Managing Director/Chief Executive Officer, Nigeria LNG Limited (NLNG), Tony Attah; member of the committee, Sen. Barnabas Gemade; Govt Relations Manager, NLNG, Salem Sallam; and Sen. Danjuma La’ah at the NLNG Plant on Bonny Island during a plant tour by members of the Senate Committee on Gas.<br />

The Managing Director and Chief Executive Officer of Nigeria LNG Limited, Tony Attah, has listed the challenges confronting the company to include operations of multiple regulatory agencies, pipeline security issues, and double taxation.

Speaking during an oversight visit by the Senate Committee on Gas to the NLNG facility in Bonny, Atah disclosed that there were 19 recorded pipeline disruptions this year alone.

He also alluded to the problem of double taxation, which is capable of impacting the company’s competitiveness and compromising its ability to maintain its position as the world’s 4th global largest gas supplier.

According to him, the situation if not checked, is capable of leading to a number of unfavourable consequences such as loss of revenue for the Federal Government, potential loss of jobs and loss of status as inspirational business model and number one indigenous company in the country.

On LPG supply to the domestic market, the NLNG MD said the structure is threatened, as the system encourages tax-free importation of LPG while NLNG supply is subjected to Value Added Tax (VAT), thereby frustrating the company’s effort to support and grow the local LPG market for which it already sets aside 250,000 metric tonnes annually.

The Chairman Senate Committee on Gas, Senator Bassey Albert Akpan, therefore promised that his committee will do all in its power to sustain the NLNG legacy and encourage the entrenchment of the NLNG business model in other parts of the Nigerian economy.

Speaking after a business presentation by NLNG’s General Manager Production, Tayo Oginni, the Senate Committee Chairman said: “I am particularly happy with what I have seen and heard today, and I will be glad to have your comprehensive presentation slide to share with other members of the Upper Chamber to get them better informed.

The Senate resisted calls for the sale of government equity in Nigeria LNG because we believe that Nigeria LNG is the most successful Oil and Gas venture in the country.”

Senator Akpan said a business like NLNG which has succeeded over decades should be encouraged, and assured that the company has the Senators buy-in on the proposed Train 7 expansion programme which will potentially add an estimated 18,000 new jobs, while reinforcing the company’s position as a major player in the global energy market. He noted that to achieve this “we must be able to sustain our output to be able to sustain our profitability.”

He said the visit provided a clear picture and understanding of the trends and issues involved in the business. Attah told the visiting Senators that NLNG’s incorporated joint venture (IJV) model granted it the capacity and autonomy to successfully approach the international capital market to source funds. This model he added, contrasts with the less flexible upstream unincorporated JVs which are directly funded by the shareholders. NLNG’s business model he said was made possible by the NLNG Act, which is currently being threatened by a proposed amendment by the National Assembly.

The NLNG MD added that the proposed amendment would have adverse implications for NLNG’s ability to continue its business profitably, to attract future investments, and to help build a better Nigeria.

Attah said: “NLNG needs all the necessary support to be able to go to the market to raise 15 billion dollars for Train 7 investment, which is capable of generating 18,000 jobs. This will enable Nigeria resolve most of the youth restiveness in the country; help the company to remain a global player in the natural gas market, and help build a better Nigeria. We believe we can achieve all these with your help”.

He assured that Nigeria has sufficient proven and non – proven gas resources to the extent that the country was referred to in a global conference, as “that gas country that has some oil,” whereas the country actually classifies its economic strength in terms of oil and not gas, adding that proven and estimated gas reserves at 187 and 600 TCF respectively, are more than sufficient to serve domestic and commercial needs of the country.

He also pointed out that Nigeria LNG has helped to reduce gas flaring from 65 per cent at the commencement of its operations to about 20 per cent today, removing the country from the top of the list of erring nations, with a real chance of further improvement, if given the enabling operating environment including the actualisation of Train 7.

Reacting to the issues one after another, the visiting Senators repeatedly recognised and expressed support for Nigeria LNG operations and successes so far.

They assured that they would do all in their power to support the good work at NLNG by taking a serious look at the issues raised, to enable the company and the nation remain successful.

The Committee agreed that from what they saw, there is strong evidence that the company is well run. They also observed with satisfaction that the plant from which this success story has been created is operated by Nigerians. They however expressed the need for the company to help the nation achieve zero gas flaring while also indicating their concern about how to sustain the aging plant, expedite the train 7 project and maintain the successful NLNG model.

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