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NIMASA, LNG at loggerheads over unpaid N24bn freight rate

By Godwin Oritse
THE Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Liquified Natural Gas (NLNG) Company are at loggerhead over th latter’s alleged blatant refusal to pay its statutory three percent freight rate put at over N24 billion.

LNG Vessel
LNG Vessel

While NIMASA is claiming that the gas company is owing the Federal Government through the agency accumulated freight rate on gas export, NLNG insists they have a tax holiday of ten years which will expire in October 2009.
An official of NIMASA told Vanguard that the NLNG has deliberately refused to pay the money that has accrued over the years, adding that the gas company has deployed all means to avoid the payment.

The NIMASA official who did not want his name in print explained that an enabling Act empowers the Agency to collect the rate, while NLNG claims that the company is exempted from such payments owing to a tax holiday granted by the government.

NIMASA however points out that the tax holiday for NLNG expired in September 2007 being the 10th year since it commenced gas production, while NLNG insists that the tax holiday will end in October 2009 being the year it first exported gas.

Speaking to Vanguard in defense of his organization, Mr. Ifeanyi Mbanefo, the media and communication manager of the NLNG said that NIMASA cannot blame his company for their failures, adding that the Agency is looking for cheap money.

Asked if the 3 per cent freight rate will be part of the taxes the company will pay at the expiration of the tax holiday, Mbanefo said that the company will study the law, adding that if the rate is part of the payable taxes, it would pay.

“We will do as the law says, I do not make the laws, NIMASA does not make the laws, the National Assembly is reviewing all laws about oil and gas industry, but laws that target particular people are the ones the shareholders of this company are against. People do not create one business and create another one to feed it. It does not work, it does not even make sense.

“You do not have a good register, that is where NIMASA should start from, we should look at what NIMASA ought to do that it is not doing, they are looking for cheap money, I am sorry to say that, the money they would not work for. This Federal Government has given the shareholders a guarantee that will not change the rules mid-way.

“NIMASA is very wealthy, you cannot do port, you cannot do anything without getting to them, but they fritter away their money.

“We are exempted and they are asking the National Assembly to reconsider, this is an acceptance of the fact that they know that we are exempted. Forget all the claims they are making because the claims have to be checked out.

“They complain that we have twenty-four vessels all flying foreign flags. Yes, we have to fly foreign flags because we do international business. If we fly Nigerian flag we cannot do it, it is obvious to everybody in this industry and that is where they should start. Why are we making very shallow analysis,” he queried.

In a Memorandum the management of NIMASA submitted to the House of Representatives Committee on Gas Resources, the maritime regulatory agency requested the Committee to reconsider the tax and levy exemption currently being enjoyed by the NLNG.

Part of the Memorandum reads “In the light of the foregoing, we commend the gracious initiative of our honourable members in this regard and kindly request you to reconsider the tax and levy exemptions currently enjoyed by the NLNG and ensure henceforth they pay income tax and other statutory levies especially the NIMASA’s 3% levy to enable the Agency effectively carry out its multifarious functions of promoting maritime safety and the development of indigenous commercial shipping”.

The Memorandum which was signed by Mr. Matthew Egbadon, Director of Legal services of NIMASA disclosed that available records shows that the company has long exceeded the average sales price of gas.

NIMASA’s Memorandum to the Committee agreed that although the law exempts NLNG from paying taxes, the levy holiday period granted NLNG will only last for 10 years from the production day and terminates at the first anniversary date after the first five years of when the cumulative average sales price of liquefied natural gas reaches $3 per million of British Thermal Unit/MMBTU.

“It is on this premises that the Federal Government through NIMASA is poised more than ever to position the country as a respected maritime nation and to be able to do this, it must promote the development of indigenous commercial shipping through fleet expansion which can truly be achieved by offering financial assistance to indigenous operators through the statutory established maritime fund, which is funded partly from the 3% levy. The agency therefore needs the support and cooperation of other stakeholders to make this a reality.

Moreover the NLNG as a company of high repute should not be seen to be shirking its responsibilities especially as it has the financial capacity to pay this levy and other statutory levies and taxes.


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Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.