By Kennedy Mbele

The Niger Delta Development Commission (NDDC) was established some 16 years ago to provide for the sustainable development of the Niger Delta and to tackle the ecological and environmental challenges in the region.

The  establishment followed the acknowledged protracted neglect of the Niger Delta in general and the petroleum producing communities in particular, especially in the light of the daunting natural ecological difficulties in the region due to its peculiar delicate terrain, on the one hand, and, the other hand, the cumulative environmental devastation imposed on the communities in the region as a result of oil and gas operations over the past 60 years.

At inception, government did not lose sight of the fact that the NDDC must be adequately funded to enable it deliver on its mandate. Consequently, the NDDC Act made provisions for the funding of the Commission that will involve government and oil and gas companies.

Whereas government is bound to make yearly budgetary allocation to the NDDC, Section 14 (2)(b) of the Commission’s enabling Act provides that gas processing companies operating in the Niger Delta should pay to the NDDC Fund three per cent of their annual budgets.

16 years after, there is evidence that the NDDC has reasonably tried to deliver on its mandate. But could it have done more to provide for the sustainable development  of the Niger Delta and to tackle the ecological and environmental challenges in the region? Answering that question objectively must take into cognisance the adequacy of the funding of the interventionist agency. Year in, year out, budgetary allocations have been made in favour of the NDDC. But most of the time, the Commission does not receive the budgetary allocations from government in full.

To further compound the problem, many gas processing companies that ordinarily should complement government’s efforts to fund the Commission by contributing three percent of their annual budgets to the NDDC Fund observe the agency’s enabling Act mostly in the breach. Some of the companies post more than half  a trillion Naira  profit annually but would rather not pay the three percent  of their annual budgets to the NDDC Fund, to develop the region which gives them so much petrol-dollars, hiding under  one tenuous excuse or another. To redress the situation, the NDDC Management initiated moves to get one of the defaulting companies, Nigeria LNG  Limited, to comply with the Commission’s enabling law. That the company is, by far, the leading operator in the gas industry and, at the moment, the only natural gas liquefaction (and other allied operations) body in Nigeria is not in doubt. It has remained one of the biggest and most profitable industrial ventures in Africa, posting profits in excess of N500 billion annually. Nigeria LNG has operated since 1999. That is one year before NDDC came on stream. But the Nigeria LNG may be the worst defaulter of the NDDC Act as it has failed to pay its statutory contributions to the NDDC Fund since 2000. Now, imagine the financial worth of the Nigeria LNG calculated from the standpoint that the company earns profits in excess of N500 billion annually, and juxtapuse it with how the three percent of its annual budgets for 16 years contributed to the NDDC Fund would have significantly affected the meeting of the NDDC’s mandate to accelerate the development of the Niger Delta and tackle the ecological and environmental challenges.

Upon demand by NDDC to pay its dues, Nigeria LNG Ltd based its refusal to pay on the following two grounds:

I.That it, NLNG Ltd, is not a ‘gas processing company’ in the context of the NDDC Act.

II.That NLNG Ltd is not subject to any new laws, taxes, dues or other obligations enacted or prescribed in Nigeria after 1993, except such laws, taxes or obligations are generally applicable to All companies registered in Nigeria, this being a special exemption granted in perpetuity to NLNG Ltd by virtue of Section 9 of and Clauses 2,3,6 and 15 of the 2nd Schedule to the Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Act 2004, previously Decrees Nos. 39 of 1990 and 113 of 1993 (herein also called the “NLNG Act”)

It later added a third reason for its refusal to pay: That NLNG Ltd does not have an “annual budget”as envisaged by the NDDC Act, from which it would be expected to pay three per cent.

Enforcing compliance

To enforce compliance, NDDC sued NLNG Ltd at the Federal High Court, Port Harcourt Division (Suit No. FNC/PH/CS/313/2005). In its judgment, the Federal High Court held that NLNG Ltd is a “gas processing company” within the meaning of the NDDC Act. The court also pronounced that the offensive provisions of the NLNG Act were unconstitutional but declined to grant a formal order to that effect, on the grounds that NDDC did not in the reliefs it claimed ask specifically for a declaration that the said provisions are unconstitutional.

NDDC appealed  the aspect of the Federal High Court’s decision declining (on grounds of procedural technicality) to declare the offensive provisions of the NLNG Act unconstitutional. NLNG Ltd cross-appealed. At the instance of NLNG Ltd’s  lawyers, and without the knowledge of NDDC, a special panel of five (instead of the usual three) justices of the Court of Appeal was constituted, consisting mainly of justices from other divisions of the Court of Appeal outside the Port Harcourt Division in which the appeal was filed. NDDC’s appeal was dismissed by the panel.

NDDC subsequently filed in the Supreme Court a notice of appeal against the Court of Appeal’s  judgment and, in line with the rules of the court also filed an application for extension of time within which to file its appeal (having filed the notice of appeal a few days out of time). NLNG Ltd’s lawyers filed a counter affidavit opposing this application for extension of time. While NDDC’s lawyers were awaiting a hearing notice from the Supreme Court for the application, they received instead an order of court dismissing the application, without hearing NDDC’s lawyers.

Option

Meanwhile, the only option left to get Nigeria LNG Limited to fulfil its obligation to the NDDC is a repeal or a review of its enabling Act to bring it in conformity with the nation’s Constitution.

The obnoxious text of the Nigeria LNG Limited (Fiscal Incentives, Guarantees and Assurances) Act should be modified to conform with Section 315 of the Constitution by deleting or omitting from the NLNG Act Section 9 thereof and Clauses 2,3,6 and 15 of the 2nd Schedule thereto.  And better still, measures should be taken to compel the NLNG to forthwith pay the NDDC its outstanding statutory contributions and to continue thenceforth to comply with Section 14 (2) (b) of the NDDC Act. The NDDC took a bold step in this direction when it backed the bill for the amendment of the NLNG Act in 2008 during the 6th session of the House of Representatives. The result of that effort was that the House Committee on Gas Resources fostered an attempt at amicable resolution of the arrears of statutory contributions due from the NLNG to the NDDC.

A joint committee of both NDDC and NLNG was consequently set up, which met several times in both parties’ head offices in Lagos and Port Harcourt respectively. The joint committee, following further work by a joint technical sub-committee of both parties, went on to nominate and preliminarily scope out a number of projects that may be “jointly” executed as a first step towards resolving (at least part of) NLNG Ltd’s arrears of dues at the time. In furtherance of that move, NDDC’s Management approved the report of the  joint committee. However, NLNG Ltd’s Management never reverted to NDDC on that settlement initiative. The consideration of the amendment bill was also not concluded by  in the 6th session of the House of Representatives.

Renewed moves

The NDDC Management, under the leadership of Mrs Ibim Semenitari, has only recently renewed moves to compel  the NLNG to perform its statutory responsibility to the NDDC when it presented a memorandum to the House of Representatives Committee on Gas Resources at the public hearing on ‘A bill for an Act to amend the NLNG (Fiscal Incentives, Guarantees and Assurances) Act Cap N87, Laws of the Federation of Nigeria, 2004’.

Whereas the NLNG Act violates the laws, public policy and our national interest, NDDC’s interest in better served when the unconstitutionality of the provisions of the Act, which the Act purpurts cannot be amended (by the National Assembly) except with the prior consent of NLNG Limited and each of its shareholders, is addressed.

The ball is the court of our senators and House of Representatives members to free the NDDC funds from the NLNG obnoxious law.

They should carry out this responsibility expeditiously to up the ante of the transformation of the Niger Delta through effective funding of the NDDC interventionist mandate.