General Manager, External Relations of Nigeria LNG Limited, Mr Kudo Eresia-Eke, and Head, Media Relations, Mrs Anne-Marie Palmer-Ikuku, recently paid a courtesy visit to the corporate head office of Qed.ng in Lagos. In an interview with a team which included Olumide Iyanda, Adedayo Odulaja and Umoh Ofofon, the GM highlighted some of the ways the company is helping to build a better Nigeria, pointing out why it is in the national interest that it should be allowed to operate in a climate of peace.
How big is the NLNG?
Nigeria LNG Limited is a national asset, in terms of business it is probably Nigeria’s number one business asset. It flies the country’s flag in international business, pays the highest tax on the continent of Africa and its contribution alone in 2014/2015 was about 14% of the entire budget. This is a company that has provided Nigeria revenues of upwards of $33billion over the years from an investment of $2.5billion. It’s a company that plays in the international field because what we produce in Nigeria is utilised by the world so it is basically a world class company. People from all over the world depend on our reliability, efficiency and professionalism. Even though it’s a high tech company, it is also a company that is run by Nigerians. Nigerians make up 100% of the senior management team. Many people ordinarily wouldn’t believe this, but this is the position and in terms of entire staff structure, 95% of us are Nigerians. So, all the making of the NLNG is by Nigerians.
It is a useful to know why this company is successful. Why has it not gone the way of others? What is it doing differently and how can other people learn from what NLNG is doing? It is in this sense that I interact with journalists, as a former journalist myself, for you to reflect, appreciate and define for yourself when you see issues about the company. Our business is of national interest, and sometimes that interest can be attacked from within or from outside. If you don’t have a good appreciation of the elements you are dealing with, you might miss it. One of the things for example, which is in the public domain, is the attempt by some persons to amend the NLNG Act. If you understand the genesis, it is easier to know what is at stake.
What is at stake?
What has happened was that before the ‘60s, Nigeria already struck crude oil and the flaring associated with it and the leaders of the time and two successive regimes after that had the insight that the gas flaring going on might come at a later time to harm our exportation. There was therefore need for a mechanism by which the flares can be consumed. But they had difficulty in bringing the company up for 30 years. It was difficult because it is like getting into soccer in the first day in England and going straight to the Premier League. This is Premier League business. The world must be able to depend on Nigeria and the reliability must be pin-point. Imagine that you live in a very cold part of the world and the energy you need to stay alive is required from Nigeria and then you sign a contract for 22 years for that flow and then suddenly you don’t have it. Your life is at stake. That is how vulnerable people are to company like ours that supply gas. So, investors didn’t believe that it was possible to build such a world class project in Nigeria given the perception of what was possible in Nigeria. The second reason, probably more important, is the belief that any capital invested here will be sunk because the investors would not have fair playing ground for them to be able to make profits and that their money would rather go somewhere else. Money is very shy; it doesn’t like trouble and always goes to a place where it is safe. These were the two main reasons why many investors invited pulled out, and not until about 1989 did the Federal Government try to give comfort to these investors and then enacted a decree which was called the NLNG Decree at that time in which they wrote out the contract the government had with prospective investors. I think this was what gave them confidence to bring in their money and invest in the country.
Now when the civilian administration came, they ratified this and it became a law because they also saw the values. One of the provisions of the law is that we were going to be tax exempt for a number of years. That provision has expired which is why we are now the highest tax paying company in Africa. But there were also provisions that there are certain laws within that they would comply with provided they were applicable to all the companies in Nigeria or within the region. They were trying to avoid situations where there would be particular laws that would be created to try to deny them of their proceeds. So those contracts and laws were further ratified by treaties which came with assurances and guarantees over successive regimes. There is also a provision within the Act that when you want to change the Act, please let us know because we are fellow investors and you can’t change it unilaterally; check with us because that’s how we also started the business, so we can discuss. But what is happening now is that people want to ignore the Act and just go ahead and make changes. The major one we are looking at now is the NDDC Act which they want to change so that NLNG can be paying 3% of its budget to the Niger Delta Development Commission.
Please note that the NDDC Act is a product of an attempt to ameliorate the conditions resulting from the production in the Niger Delta and notice that Nigeria LNG does not produce anything. So we are not part of the production basket and we ought not to even be mentioned when it comes to NDDC. NLNG merely buys gas. When you produce gas, we put a pipeline and buy from you then we cool the gas, reduce the volume and then we sell it. So, in terms of environmental degradation, we don’t get involved. Those who produce at the upstream are Shell, Chevron and others. The owners of NLNG are Shell, Total, Agip and of course the NNPC, and all these producers are already paying the NDDC levy. If they are paying that already, because they formed another company which buys gas, you now want to go on top of them again and charge another 3%? You can’t charge somebody on the upstream and come to the downstream to charge the same levy. But more importantly, and this is where national interest lies, we are busy today – from the President to the minister of state for Petroleum, all of us, those in government and even those outside – campaigning intensely that people should bring foreign direct investment to Nigeria. We are asking people from all over the world but what’s going to happen is that those who want to invest today will look at those who have invested already and see how they have been treated. Please note that Nigeria LNG has a very huge profile so obviously if you tamper with the promise made on NLNG, you might as well wave goodbye to any hope of FDI. So with our tiny voice, we are saying don’t harm the country but sometimes people are focused on that which they want so the interest of the country doesn’t matter to them.
What contributions do you make to the Niger Delta as a company?
Sometimes they argue that the Niger Delta is so undeveloped that they need more money to develop the region and we have said of all the companies operating in the Niger Delta, please point out one that has been more committed than the NLNG in developing infrastructure. We have worked on electricity; our host community, Bonny Island is probably where you have the greatest integrity with respect to supply of electricity. We have worked on pipe borne water, we have worked on roads no matter how difficult that terrain is. In terms of CSR generally, we have spent nearly $200million. Only recently, recall that Bonny has been on our consciousness because of the role it has played and for over 30 years, the federal government has been trying to connect Bonny to the mainland that will connect other important communities but they have not been able to do it for some reason or the other. Bonny has remained an island so we looked at it, did a valuation and we said what’s stopping it and they said it would cost about N120billion. We looked at it and said we can support government with half of that provided they are really ready to deliver the project and we have thrown it open that any government agency like the NDDC – this is what they should be doing – that is ready should partner with us but we have not seen any. Our commitment to development is unquestionable. Let us know if there is any company doing more than NLNG in the area of development in Niger Delta.
It is not about our not wanting to develop the Niger Delta, our only area of concern bothers on Nigeria being seen as having reneged on promises. We are mindful of reputation damage. You know reputation is built over years but it goes out in a second. Let me add that some countries that we have signed bilateral agreements with – France, Italy and Netherlands – are part of the shareholders of NLNG. The implication is that if you renege on assurances given over successive regimes, what’s going to happen is that they may sue you and if you go to the international court, they would look at the laws and like in this case, you may be liable and if fined, such fines are not easy to come by.
So if development is what is really at the heart of it all, we are ready to work with them and support them but we just don’t want it to be that Nigeria is reneging on promises enshrined in laws. There is nothing personal, we are all Nigerians and we know and can feel it when Nigeria is being harmed. For a number of years, the NLNG and the NDDC were in court because the NDDC took us to court just to make sure that we pay. They took us to the lower court, they failed. Same at the Appeal Court, they failed because the laws are there and proceeded to the Supreme Court with the same outcome. Having exhausted the gamut of options in the judiciary, they have resorted to the judiciary to change the rules of the game.
This is not the first time NLNG is having issues with a government agency. You recently expressed optimism that issues like that have been taken care of
In fairness to the government, when the National Assembly asked us to come for public hearing on this matter, the government was represented by the NNPC and said “don’t do this.” The highest law officer in the land, the Attorney General sent representatives saying the same thing so the government is aware and they also know that this is not something anyone should tamper with. They also know a lot of well-meaning people in the National Assembly do understand this but it is still good to enlighten the public where necessary. I maintain my optimism. I think we have a beautiful climate to work with but that doesn’t rule out the fact that there might be some interest driven by a parochial will and against national interest. So it is useful to let the facts be known.
You said the NLNG formula works to the extent that it is almost impossible to believe it is driven by Nigerians. Are you saying government which is highest shareholder never interfered with the company’s operations?
The people who created the company were wise because when they were trying to form the company initially Nigerian was supposed to have 60%. I believe they reflected on it because that would have meant NLNG would have been like a parastatal in that sense. They then decided to give out 11% so it fell to 49%. It was deliberate because they had the highest possible shares they could have while allowing the entity to still be a private company. This is what many policy moulders have seen and tried to advocate. That’s what they call the NLNG model by having the highest shareholding possible and still have a private company that functions with its own board, and is not hamstrung by bureaucracy. That is why we are against this jobbers trying to get involved one way or another.
How solid really is the company on account of its involvement in CSR?
If we are to talk about CSR we are not going to leave here today. We are now looking for a way to work with our host community to organize a foundation for development that we will pay N3billion into every year. The community is now poised to form what they call Bonny Kingdom Development Foundation which will have a Board of Trustees made up of nominees from the community and we also advised to have from the government as well as interested NGOs and international aid agencies. That will make us have a development foundation that will function transparently as there is a lot of funds out there that you will get funding from foreign foundations if they audit your books and find you above board. This will get off the ground hopefully sometime this year and begin to function. But already we have already made a commitment and drawn up a master plan on the development of the area in terms of education, tourism, industry and human capital for a 20-25 year period. So when the issues come up, with all these laid down in the Niger Delta, what we ask is: “Who really is more Niger Delta than NLNG?” That is a challenge for everyone including those who bear the name Niger Delta. You need to look at how people have used funds available to them.
By your own account, the issue with the NDDC has been around for a while irrespective of who is in government or the head of the agency
Exactly, but what has happened is that the fires got stoked again. After the Supreme Court – the highest court on the land – had ruled, everything went down. But because of the new appointments we had recently, we started seeing another method. The NNPC, the representative of government has spoken unequivocally and they align with the NLNG. It is a really delicate matter but some people are shameless. They do not understand it; no thorough thinking. But we are proud of what we have done and feel we should not let Nigerians down. We are like the Super Eagles. They thought we would fail but we are meeting all obligations and we will continue to do our best in regards to the principles that govern the way we do things at NLNG.
