The Nigerian Liquefied Natural Gas (NLNG) yesterday declared that funding for its $15 billion Train 7 investments faces imminent impediment from threats to its Incorporated Joint Venture (IJV) model.
The IJV, which granted the gas multinational the capacity and autonomy to successfully approach the international capital market to source funds unlike the less flexible upstream unincorporated JVs, is about to be changed through the amendment of the NLNG Act, Managing Director of the company, Tony Attah, said.
The NLNG, Attah said during an oversight visit of the Senate Committee on Gas, needed all the necessary support to be able to go to the market to raise $15 billion for Train 7 investment, which is ca-pable of generating 18,000 jobs.
Unfortunately, the NLNG boss said, according to a statement issued by the company’s General Manager, External Relations, Dr. Kudo Eresia-Eke, the business model made possible by the NLNG Act “is currently being threatened by a proposed amendment by the National Assembly.”
He also pointed out that Nigeria LNG’s pipelines have suffered 19 disruptions in 2016 alone.
The company, he however noted, has helped to reduce gas flaring from 65 per cent at the com-mencement of its operations to about 20 per cent today, removing the country from the top of the list of erring nations, with a real chance of further improvement, if given the enabling operating environment including the actualisation of Train 7.
Attah said Nigeria LNG is faced with severe challenges, including operations of multiple regulatory agencies, pipeline security issues, citing 19 recorded pipeline disruptions this year alone as example.
He also alluded to the problem of double taxation, which is capable of impacting the company’s competitiveness and compromising its ability to maintain its position as the world’s 4th global largest gas supplier.
On LPG supply to the domestic market, the NLNG MD said the structure is threatened, as the system encourages tax-free importation of LPG while NLNG supply is subjected to Value Added Tax (VAT), thereby frustrating the company’s effort to support and grow the local LPG market for which it already sets aside 250,000 metric tonnes annually.
The Chairman Senate Committee on Gas, Bassey Albert Akpan, however, promised that his committee would do all in its power to sustain the NLNG legacy and encourage the entrenchment of the NLNG business model in other parts of the Nigerian economy.
Speaking after a business presentation by NLNG’s General Manager Production, Mr. Tayo Oginni, the Senate Committee Chairman said: “I am particularly happy with what I have seen and heard today, and I will be glad to have your comprehensive presentation slide to share with other members of the Upper Chamber to get them better informed.
The Senate resisted calls for the sale of government equity in Nigeria LNG because we believe that Nigeria LNG is the most successful oil and gas venture in the country.”
Akpan said a business like NLNG, which has succeeded over decades, should be encouraged and assured that the company has the senators buy-in on the proposed Train 7 expansion programme, which will potentially add an estimated 18,000 new jobs, while reinforcing the company’s position as a major player in the global energy market.
He noted that to achieve this “we must be able to sustain our output to be able to sustain our profitability.”
He said the visit provided a clear picture and understanding of the trends and issues involved in the business.