NLNG to Pay $1bn as Company Tax in 2014

NLNG to Pay $ 1bn as Company Tax in 2014

18 November 2013  

• Okonjo-Iweala says its performance impressive

The Nigeria Liquefied Natural Gas Limited (NLNG) is to pay over $ 1 billion as Company Income Tax (CIT) to the federal government in 2014, even as it moves to take delivery of six more ships to consolidate its operations.

With $ 1.3 billion already sunk into acquiring six fully-built vessels from Samsung Corporation and Hyundai of South Korea, the company’s Managing Director, Mr. Babs Jolayemi Omotowa, said when delivered in 2015, the number of ships in its fleet would come to 30.

Omotowa, who made a presentation when the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, visited the NLNG plant in Finima, Bonny Island, Rivers State, at the weekend, said as one of the fastest growing companies in the world with six trains already, the company would be recording about 3,000 cargoes next year.

While expressing the company’s desire to add more trains in the production line, he said over $ 1 billion would be paid into the coffers of the federal government in 2014, making it one of the few companies with such CIT record in the country.

He said with the commencement of operations in 1999, the company had been able to cut down gas flaring from as much as 65 per cent to about 20 per cent presently, adding that this would be further reduced to the barest minimum as more trains are added.

Omotowa stated that with about 95 per cent of its personnel as Nigerians, the firm was creating jobs and desirous of building capacity as well as vigorously pursue its local content drive. He said one of the areas where the company’s local content drive had received practical expression was in the current contract it awarded to two Korean companies to build six ships, adding that the terms of the contract was for them to source some of the materials from Nigeria. “We are constructing six brand new ships in Korea and the total cost of construction is $ 1.3 billion. We are training Nigerians in the process. We will train over 600 Nigerians and 100 of them will give advanced training too and 30 of them we will actually go to Korea to learn more about ship-building so that they will participate in the construction of ships.

“We are hoping to develop the capacity so that in future when we have dry docks and have other ship-building capacity in Nigeria we have Nigerians who can do the work. They are being trained in ship-building. The ship-building industry in Nigeria is being developed. There are dry docks being built in Nigeria. There are shipyards being built in Nigeria. When they come back, they will be able to build the skills; they will be used in those ship-building industry,” he said. Omotowa called on the federal government to check the smuggling of low quality liquefied petroleum gas (LPG) from Niger Republic, saying it was a serious disincentive to the NLNG in particular, investors and the country in general.

He also advised the federal government to consider the removal of subsidy on kerosene, adding that with that, investment in LPG would receive a boost, which in turn would revolutionise the use of cooking gas in Nigeria.

“LPG, which is cooking gas, is a very clean gas which is healthy for both the environment and for people. As a country, we could use a lot more LPG than we do. Unfortunately, in Nigeria, because kerosene is being subsidised, the price of LPG has not been attractive to people. The problem is that the use of kerosene is an alternative to wood; there has been issues about the environment and health issue. So, the removal of subsidy will help cooking gas to be used, which will be cheaper and more environmentally-friendly,” he said.

On Okonjo-Iweala’s visit, Omotowa said it was an inspiring one, adding: “She has come to see what we are doing and to see 100 per cent the Nigerian management. 95 per cent those who work here are Nigerians. So, she has come to visit the plant and to see for herself. This plant has been a pride to Nigeria. Internationally, the plant is recognised all over the world as one of the best plants in the world. So, she has come to see that and to offer us support. We are inspired by her visit.”

He said in the next five years, the company would continue to record stellar performance. “The organisation is recognised in the world for its performance. So we will continue to do that. We are growing as well. We are building six new ships and we are also working hard on our growth project. So we are looking to grow the organisation, grow the plant and continue to deliver more value for Nigeria. We are keen to be seeing the value that we bring to Nigeria. So, over the next five years you will see more of that,” he said.

In her remarks, Okonjo-Iweala, who described the NLNG as an asset to Nigeria and a shinning example of a successful company where the federal government, the major stakeholder, gave the company plaudits for taking advantage of its tax holiday to grow an enviable balance sheet. “I came after looking at your books and saw that you have been commercially viable and successful. The Nigeria LNG is an asset to the country,” she said, adding that not much was in the public domain in spite of the very impressive performance of the company.

She admonished the management to strive to secure long-term offshore contracts, adding that with the United States of America joining the league of oil and gas exporters, it was imperative for the NLNG to explore other major importers. She promised that the federal government would look into the concerns of the company vis-a-vis smuggling of LPG into the country from neighbouring countries in order not to allow some kind of disincentive to investors.

Not Ready to Buy or Sell Your Equipment?

Join our international network of oilfield buyers & sellers! 
We respect your privacy as well as your time and that's why we only send our newsletter no more than TWICE A MONTH.
Two emails per month (maximum). No ads. No affiliate links.