LNG Act Vs NNDC Act: How NASS leadership saved the day

Last month, between the Senate and the House of Representatives, though many Nigerians are not aware, a development occurred which created scare among the international oil and gas companies, particularly subscribers to the LNG project.

Sometime last June, senators from the oil producing South-south geo-political zone protested during plenary that gas producing companies operating in their region are not contributing to the funds that Niger Delta Development Commission (NDDC) require for development efforts in the oil producing areas. They noted that, unlike oil companies, the gas-producing companies are hiding under the pretense that they were not specifically mentioned in Section 14 of the NDDC Act, which mandated oil-producing companies to contribute three per cent of their total annual budget into the coffers of the commission to evade making any contribution.

While the Senate leadership promised to engage the gas producing companies and ensure that the grouse of their counterparts is redressed, the representatives of the oil producing communities in the House of Representatives decided to take a radical measure. They sponsored a bill to amend the Liquefied Natural Gas (LNG) Act.

In the amendment, they inserted a clause that the LNG company and other gas-producing companies must pay not less than three per cent of their annual total budget into the coffers of NNDC as their contributions to the fund. They also included that the percentage should be fixed by the minister of petroleum resources as he may deem fit. 

The implication of the amendment into the LNG Act is that, unlike the situation of the oil companies as contained in the NDDC Act, the percentage of the budget of the gas companies to be contributed into the NDDC may be as high as 10 per cent depending on the rate fixed in a particular year by the minister.
This realisation rang a bell in the ears of the gas companies. They quickly sent a delegation to the Senate President, Dr. Abubakar Bukola Saraki and Speaker Yakubu Dogara seeking their intervention. They explained that the amendment to the LNG Act has grievous implications for the smooth operation of the LNG project and other gas companies and their ability to fulfill the contractual agreement which they have with international buyers of their products as well as the targets already set on the production, sale and development of the products.

They also added that the uncertainty created by the flexibility of the funds to be contributed into the NDDC makes budgeting and planning difficult for them, a situation not good for their business. Saraki and Dogara, at a meeting with their colleagues during a joint leadership parley of both chambers in Saraki’s house considered the plea of the gas producers. It was then agreed that the House should step down the amendment bill on the LNG Act.

Rather, it was agreed that both chambers should adopt the NDDC amendment bill, which is already before the Senate seeking the inclusion of the gas producing companies in section 14 of the original Act. The section fixes the percentage of the budget due to be paid by the oil companies. Thus, the Senate bill passed on Wednesday, November 29, 2017, amends the sub-section 2 (b) of the NDDC principal Act by substituting the existing words. The new provision reads that what will be contributed is three per cent of – (i) “the total annual budget of any oil producing company operating onshore and offshore, in the Niger Delta area” and (ii) “the total annual budget of any gas processing company operating in the Niger Delta area, excluding the cost of feed gas.”

With the passage of the NDDC (Establishment) Act 2000 (amendment) Bill 2017, the House has, therefore, dropped its amendment to the LNG Act. This is a credit to the good relationship between the two chambers of the Eighth National Assembly. It also underscores the pro-business and pro-people stance of the current National Assembly, as they seek to balance between national interest and the need for key players in the economy to remain afloat and happy that their investments are not jeopardised by legislations and government policies.

More important, the leadership of both chambers of the National Assembly has demonstrated their ability for prompt response to issues that affect their constituents and to always ensure that the nation and her people are not short-changed by multi-national companies operating in Nigeria.

One, therefore, commends Senator Saraki, Rt. Hon. Dogara and their colleagues for rising to the occasion when necessary and for being able to carry along the people in ensuring that things go on seamlessly in the process of making necessary changes to the law, albeit in overall national interest.
• Quassim is an Abuja-based Legislative/Public Policy Analyst