Nigerian lawmakers disagree over amendment of NLNG Act

Nigeria's lawmakers and stakeholders are embroiled in a heated debate over the proposed amendments to the Nigeria Liquefied Natural Gas (NLNG) Act. The contentious amendment seeks to compel the NLNG company to allocate 3% of its total annual budget to the Niger Delta Development Commission (NDDC) fund. The disagreement has sparked a clash between the House of Representatives and the Petroleum Minister, with both sides presenting conflicting viewpoints on the issue. To shed light on this complex situation, Oyeyemi Oke, a Partner at AO2 Law, joined CNBC Africa for an in-depth discussion. Oke delved into the historical background of the NLNG Act, which was enacted in 1989. He highlighted a significant dispute that arose in 2005 between the NDDC and the NLNG regarding the applicability of the 3% levy. Ultimately, in 2011, the Supreme Court ruled in favor of the NLNG, affirming that the levy did not apply to the company. However, in 2016, the legislature proposed amending the act to subject the NLNG to the 3% levy, sparking the current controversy. Central to the debate is the conflict with the NLNG Act's second schedule, which guarantees certain fiscal assurances to the NLNG. One critical provision stipulates that any changes to the fiscal terms must be agreed upon by the NLNG shareholders and the Nigerian government. Oke pointed out that the lack of such an agreement poses a threat to policy reliability and could deter future investments in Nigeria. Moreover, concerns have been raised about the utilization of the 3% funds by the NDDC, given past reports of mismanagement within the commission. Oke stressed the importance of ensuring that any fiscal obligations are legally sound and aligned with existing agreements. While acknowledging the government's authority to enact such changes, he emphasized the need for compliance with established frameworks to maintain trust and attract foreign investors. Foreign investors play a crucial role in Nigeria's gas sector, particularly in light of the government's gas development policy aimed at fostering growth in the industry. However, any deviations from agreed terms could undermine investor confidence and hinder the country's ability to attract much-needed foreign capital. Oke highlighted the significance of upholding the sanctity of agreements to foster a favorable investment climate and avoid potential disputes. In conclusion, the debate over the NLNG Act amendments reflects larger issues of policy consistency, legal compliance, and investor confidence in Nigeria's energy sector. The resolution of this disagreement will not only impact the NLNG company and the NDDC but also have broader implications for the country's economic development and attractiveness to foreign investment.