Goodluck Jonathan vindicated in the controversy surrounding the retention of dividends paid by the Nigeria Liquefied Natural Gas (NLNG) Company Limited to the
Nigerian National Petroleum Corporation (NNPC).
It has emerged that the initial directive to retain its 49 per cent share of dividends was actually given by former President Olusegun Obasanjo when he was in office.
See how the truth is finally coming, and Oshiomhole and his fellow idiots were coming out to say the monies have been looted.
The All Progressives Congress (APC) had recently called on President Buhari to probe the whereabouts of the dividends paid to the NNPC by the NLNG, as well as the taxes paid to the FIRS Federation Account prior to the latest payment in June 2015 alleging that over $4 billion dollars are missing in past dividends paid to the NNPC by the NLNG.
PLEASE READ BELOW:
How Obasanjo Ordered NNPC to Retain NLNG Dividends to Fund New Trains – A Thisday Report
• Concerns mount over sharing of $7.3bn in dividend account
Following the controversy surrounding the retention of dividends paid by the Nigeria Liquefied Natural Gas (NLNG) Company Limited to the Nigerian National Petroleum Corporation (NNPC), it has emerged that the initial directive to retain its 49 per cent share of dividends was actually given by former President Olusegun Obasanjo when he was in office.
Arising from this is another brewing controversy as to whether the dividends belong to the Federation Account for sharing amongst the three tiers of government, or just to the federal government, in this case the NNPC.
The previous management of NNPC when Obasanjo was in office had argued successfully that while the taxation revenues of NLNG belong to the Federation Account, the dividends belong to NNPC, which needed the dividend payments to reinvest in the new trains of NLNG.
It was on this basis that Obasanjo ruled in their favour and the Jackson Gaius-Obaseki-led NNPC then ring fenced the dividends in a special (investment) account and used it to successfully reinvest in NLNG Trains 3 to 6 without recourse to the federal government, according to officials familiar with the transaction.
But with the state governors seeking more revenues, they are today insisting that they were short changed by the Goodluck Jonathan administration in not paying the dividends to the Federation Account for sharing amongst all tiers of government.
In reinforcing the narrative of state governors, the Nigerian Extractive Industries Transparency Initiative (NEITI) also recently disclosed that NNPC had failed to remit $11.6 billion to the Federation Account, which was paid by NLNG and called on President Muhammadu Buhari to recover the amount.
NLNG was set up as a joint venture company comprising NNPC with 49 per cent equity, Shell, which serves as its operator – 25.6 per cent, Total LNG Nigeria Limited – 15 per cent and Eni – 10.4 per cent, as its shareholders.
However, it is not clear if NNPC’s equity in NLNG was paid for by the “federation” or the “federal government” as this was done during the military regime of the late General Sani Abacha when it was basically a command unitary government.
A Final Investment Decision (FID) was taken on NLNG by its shareholders in November 1995, while the construction of the gas transmission system, and second and first trains were completed in September 1998, August 1999 and February 2000 respectively.
Since then, it has built four more trains between November 2002 and December 2007 to bring the total number of trains to six.
The base project (Trains 1 and 2) which cost $3.6 billion, was financed by NLNG’s shareholders. The third train (expansion project), including additional storage, cost $1.8 billion and was funded by shareholders as well as reinvested revenue from the base project.
The NLNG Plus project (Trains 4 and 5) cost $2.2 billion and was funded with a combination of internally generated revenue and third party loans amounting to $1.06 billion.
Train 6 (NLNG Six project) cost $1.748 billion and financing was handled by shareholders, bringing the total cost of building six LNG trains to $9.348 billion.
The FDI for Train 7, however, has still not been taken despite efforts by NLNG to get the federal government to give NNPC the green light for the next train.
But THISDAY checks revealed that NNPC currently has some $7.3 billion dollars in the investment account with which it intends to fund its share of NLNG Train 7, Brass LNG (in which over $1 billion has already been invested) and OK LNG, which is still troubled by economic and investment hurdles.
But governors at the last National Economic Council (NEC) meeting determined that the dividends belong to the Federation Account and must be shared amongst all tiers of government.
It is not clear what the final decision of Buhari will be but oil industry experts and NNPC officials have cautioned that should the funds be shared and spent, there will have no funds to reinvest in gas at a time when the future of oil revenues is uncertain and oil prices are at an all time low.
Providing insight on Obasanjo’s directive, a retired senior executive of NNPC confirmed that the corporation was asked to retain the dividends paid by NLNG in order to meet its share of investment after FDIs had been taken to build subsequent trains of NLNG.
“As you are aware, from the Abacha days, Nigeria was already having problems funding its share of cash calls for the joint venture oil contracts with the oil majors.
“So in order to avoid a situation whereby NLNG’s expansion was impeded by the same problem, Obasanjo directed that we retain the dividends paid by the company for its expansion programme,” he said.
He added that the former president’s directive was implemented to the letter because it was in the interest of Nigeria to continue to harness its gas resources, as gas is the future, and today it is saving the country in the depressed crude oil environment.
“Besides, Nigeria is more of a gas producer than an oil producer, so we deemed the directive as a life saver for NLNG and Nigeria’s future,” he explained.
Officials of NNPC also confirmed THISDAY’s investigations that the corporation currently has about $7.3 billion from NLNG dividends but the money has been kept aside for investment in NLNG Train 7, Brass and OK LNG.
Another official also expressed concern that at the last NEC meeting, the governors had insisted that all funds from NLNG should be paid into the Federation Account, adding: “If we do not reach a compromise with the governors, when we have to fund our share of Train 7 and other LNG projects, we will encounter the same difficulties we encountered with the JV cash calls, but we believe the issues will be resolved as NNPC becomes more transparent with its operations and opens its books to scrutiny.”
Given its pioneer status in 1999 when it commenced production, NLNG was granted a tax holiday for several years by the federal government and did not start to pay taxes until 2014.
According to the information on its website, in 2014, it paid N220 billion (about $1.375 billion using N160/$ as exchange rate) to the Federal Inland Revenue Service (FIRS) while its second tax payment of $1.6 billion was in June this year and shared by the three tiers of government in July. It was this payment in July that opened the eyes of state governors to NLNG’s revenue and are thus seeking more than the tax revenue from the company.
NLNG tax payments so far make it the highest taxpayer in Nigeria and sub-Saharan Africa.
In terms of dividends to its shareholders, the company has paid $30 billion between 2004 and 2014, putting NNPC’s share of dividends at $14.9 billion to date