The Managing Director of Nigeria LNG Limited (NLNG), Tony Attah, has said that the NLNG Act and the shareholding and governance structure of the company were key factors responsible for NLNG’s success story.
Attah made the comment at a technical session chaired by Dr. Maikanti Baru, Group Managing Director of Nigerian National Petroleum Corporation, at the ongoing 22nd Nigerian Economic Summit (NES) in Abuja, under the theme: “Creating a global Champion from Made in Nigeria: The NLNG story”.
Attah in his presentation to the forum, remarked that the NLNG Act provided incentives, assurances and guarantees which significantly encouraged investment in the project, adding that experience has clearly shown that countries cannot hope to legislate investments into existence without addressing issues relating to accompanying incentives, guarantees, and assurances.
“These incentives made it attractive for the international investors and financiers to invest even during a period Nigeria was perceived to be a pariah state. Those investments grew and they resulted in an inspirational Nigerian success story that the company is today, with assets now worth over $13 billion.”
Attah’s presentation took a position on the undesirability of some current developments, 18 years after the major breakthrough which NLNG represents, where certain stakeholders in the country continue to make attempts to undermine the Act. He added that the courts have been firm on the provisions of the Act in instances where court cases were instituted by third parties to compel company to pay levies.
“These attempts are apparently continuing outside the courts, but we are hopeful that the country’s leadership will protect its commitment through the Act as well as avoid the portrayal of the country as one that does not honour agreements.”
He also drew attention to the fact that these enablements have allowed Nigeria LNG to be able to generate $85 bn in revenues, pay $5.5 bn in taxes as well as to commit more than $200m to corporate social responsibility projects especially in the areas of capacity building and infrastructure development.
“The ownership mix, with the Nigeria Government, through the National Oil Company owning just 49%, and having international companies owning 51% has brought tremendous benefits. Most importantly, it has allowed significant funding through international banks required for the construction of both the plants and the ships. Secondly, such a mix has ensured that the international companies bring to bear on the company, international standards and best practices.
Thirdly, with a significant shareholding, the government, through NNPC, has been able to drive the national agenda for social and nationalistic causes such as the Nigerianization plan. That plan has directly resulted in a corps of well-trained Nigerian professionals, many of whom have had the opportunity to understudy and eventually succeed expatriates over a period of time,” he said.
Attah added that as an independent Incorporated Joint Venture, Nigeria LNG enjoys the benefits of an independent Board of Directors comprising of nominees from the Shareholders. With the governance structure, decisions are taken faster as they are not subjected to the usual bureaucratic bottlenecks that are seen in the upstream sector, and funding is not an issue as the company is able to fund all its operating expenses and capital expenditure, only subject to board approval.
The joint venture model where the upstream companies obtain funding through an appropriation process at the legislature does not apply to NLNG.
“This independence, coupled with minimal government interference has enabled the company to function properly as a business concern and enabled it to surpass expectations,” he added.
Attah pointed out further, that as a result of the a mix of these key success factors, NLNG is helping to build a better Nigeria, has contributed significantly towards the flares out programme of the Federal Government by helping to reduce flares from about 65% to less than 20% simultaneously monetising natural gas that would have been otherwise flared. As a result He said the export earnings have been a veritable source of foreign exchange for the government.
“Through our shipping arm, Bonny Gas Transport, we have reinvigorated the shipping industry and provided avenues to local manufacturers, in line with the local content focus of the company, to export needed locally made, but internationally competitive products such as paints, cables, wires, etc. for the building of six new ships in South Korea at a cost of $1.6 bn, an initiative which led to more than $10 million worth of export business opportunities for several Nigerian companies and training for about 600 young Nigerians both in Korea and Nigeria, in various aspects of shipbuilding technology “.
“Our intervention in the supply of some 50% of cooking gas to the country has continued in pursuit of strategies and initiatives aimed at deepening the usage and availability of cooking gas in Nigeria from annual demand levels of about 400,000 to about 2.4 million metric tonnes. This is also aimed at preserving the environment by reducing the rate of deforestation and greenhouse gas emissions as a result of continued dependence on firewood as the major source of cooking fuel.”