Nigerian NewsDirect is opposed to plans by the National Assembly to review Nigerian LNG Act at a time of oil and gas revenue downturn, global competitive environment for invest-ment and spate of divestment by foreign companies operating in Nigerian economy. The review when passed into law will eliminate all incentives which encouraged shareholders of the company to mobilise $15 billion utilized in the construction of train I to VI.
The proposed review is hereby rejected and considered as anti-investment for the economy of Nigeria at a time the executive arm of the federal government is adopting various strategies including trips abroad led by President Muhammadu Buhari to boost Foreign Direct Investment (FDI). It is not only nauseating for National Assembly to nurse such plans to tinker with the Act of Nigerian LNG but such a review will worsen the fortunes of Nigerian economy currently facing challenges due to lack of confidence in the economy over inconsistency in policies and unstable exchange rate. Such a review is a misplacement of priority of the National Assembly while the executive is proposing external loan of $29 billion to finance infrastructure and rebuild areas affected by Boko Haram and militancy in the Niger Delta. We should not forget that the nation’s external reserves has dropped below $24 billion and exchange rate of Naira to Dollar ranges between N450 to N500 at the parallel market. The NLNG which began payment of taxes since 2009 paid over $1.6 billion as taxes to the government in 2015. The company which exported over $85 billion worth of LNG from inception remains a model of success story for Public Private Partnership (PPP) in Nigeria. It is also set to take Final Investment Decision (FID) which will help to attract another $25 billion Foreign direct investment in the construction of Train 7 and later FID for Train 8. These expansion projects are expected to create 30,000 construction jobs, reduce gas flaring and generate over $1 billion to $2 billion additional revenue to the country in taxes and dividend.
In an exclusive interview recently with this paper, the Managing Director of Nigerian LNG Limited Mr Tony Attah had warned that such review by the National Assembly would make Nigeria to lose expected investment associated with the Final Investment Decision (FID) of Train 7.
It will be recalled that ExxonMobil had divested 60 per cent equity in Mobil Oil Nigeria over anti-investment policies in the downstream sector and unstable exchange rate. In the aviation sector, several foreign airlines led by United Airline and Emirates among others had suspended flight operations in Nigeria. The 6th and 7th sessions of National Assembly failed to pass Petroleum Industry Bill (PIB) into law needed to encourage investment and after over one year in office, the 8th National Assembly is yet to debate PIB. It then becomes a concern what roles the National Assembly members are really playing to boost FDI even though they account for over N115 billion of the nation’s 2016 budget of N6.03 trillion.
In order to bring Nigerian economy out of recession, the legislators should propose laws that will encourage FDI. Diversification into agriculture and solid minerals are areas that will help the economy in medium term but oil and gas sector is still the shortest possible solution for Nigeria to be out of recession. Instead of discouraging FDI, the National Assembly should come up with laws that will enable successive administrations to save excess earnings and add value to the nation’s resources before export. They should also come up with laws that will support the private sector.
Review of Nigerian LNG Act should therefore be suspended by the National Assembly so that Nigeria will not pay huge amount as penalty in foreign currencies when there is not enough forex by the Central Bank of Nigeria to stabilize the Naira.