Following attempts to amend the Nigeria LNG (NLNG) Act of 2004, the Managing Director and Chief Executive Officer of NLNG, Babs Omotowa, has said that such moves will violate bilateral agreements with international investors as well as cost the country a huge $25 billion in foreign direct investment (FDI) and fines running in billions at the international courts.
Omotowa stated at the recently concluded Annual Conference by the National Association of Energy Correspondents (NAEC) in Lagos
Omotowa, who was the chairman at the event, said NLNG, through its expansion growth programme which involves the expansion of production capacity of the LNG plant in Bonny, Rivers State with a Train 7 and 8, could attract $25 billion, create 30,000 construction jobs, help to further reduce gas flaring, and generate over $1 billion to $2 billion additional revenue to the country in taxes and dividend.
“In a period of huge youth unemployment and need for more revenue, this should really be a cause we should have all hands on deck for, especially as NLNG has demonstrated its pedigree having attracted $15 billion in foreign investment, grown from a 2 Train to a 6 Train plant, contributed to reducing gas flaring from 65 per cent to below 20 per cent, delivered $33 billion to Nigeria from a $2.5 billion investment.
“This potential $25 billion in investment, creation of 30,000 jobs, reduced gas flaring, etc is being put in jeopardy by attempts to renege on promises that Nigeria gave to foreign investors that enabled the historical $15billion investment historically attracted.
“Whilst the Executive has demonstrated full commitment to the need to keep the sanctity of the NLNG Act, the attempt by the Legislature to amend the clear promises made to investors will cost the country quite a lot. Apart from the relocation of investments in excess of $25 billion to other countries, Nigeria will also be opened to fines running into billions of dollars in International Courts for reneging on agreements. Such incentives in the NLNG Act are normal in the LNG world including in Qatar, Oman, Malaysia, Angola, etc. Even in Nigeria, more generous incentives are contained in legislation such as the Oil & Gas Free Trade Zone Act,” he said.
“This period of low oil price is not a time to jeopardise Nigeria’s long term interests by showing Nigeria as a place not to be trusted, and projecting our business environment as unconducive,” Omotowa added.
Analysing the unfortunate trend of declining oil and gas prices globally, he said the crisis was responsible for the recession currently experience in the country because of the mono-product structure of the economy which left development in the other parts of the economy stunted.
“We must, as a country, move past sloganeering and tokenism, and double down on planning and execution. “Never let a good crisis go to waste” said Winston Churchill. The current crisis provides a good opportunity to resolve a raft of underlying issues, economic diversification, looking inward and developing areas of natural strengths, fiscal stability, creating a conducive environment for business, and ensuring our reputation as a country to be trusted, and as a place where investments should flow into.
“This crisis gives us a good opportunity to pause, reflect and reset. By putting the interest of the country first we will be able to not let this crisis go to waste,” he said.
The Minister of State for Petroleum, Dr Emmanuel Ibe Kachikwu, in his keynote address, assured that the Federal Government was in solidarity with NLNG on ensuring that Nigeria’s contractual agreements are honoured. He added that reforms in the industry can’t be done on the altar of investments, instead collaboration, creativity and reality should be applied.
Others at the event include Minister of Power, Works and Housing, Babatunde Fashola, represented by Ag. Managing Director, Niger Delta Power Holding Company (NDPHC), Mr Chiedu Agbo; former Minister of Power, Professor Barth Nnaji and top energy executives.
The NAEC conference serves as a platform for interaction between industry leaders and the media. The conference focused on key issues in the Nigerian oil and gas industry and synergizes stakeholders on finding long lasting solutions.
NLNG is owned by four shareholders, namely, the Federal Government of Nigeria, represented by the Nigerian National Petroleum Corporation, NNPC (49 per cent), Shell Gas BV, SGBV, (25.6 per cent), Total LNG Nigeria Limited (15 per cent) and Eni International (N.A,) N. V. S. a. r. l (10.4 per cent).