Nigeria LNG expecting court ruling on costly blockade

… Blockade costing $22 mln a day, quarter of Nigeria’s budget

LAGOS – Nigeria’s liquefied natural gas company (NLNG) is expecting a ruling on Friday on a tax dispute with the maritime security agency, whose blockade of its ships has cost $22 million a day for the past two weeks, according to an economist’s estimate.

Since June 21, the Nigerian Maritime Administration and Safety Agency (NIMASA) has barred LNG cargoes from entering or leaving the loading bay because it says NLNG is not paying a 3 percent levy, from which the NLNG argues it is exempt.

They were in court on Friday to try to resolve the dispute, both over the lawfulness of the blockade and the levies.

“There is a court session today, we are hoping they will rule one way or another,” NLNG spokesman Kudo Ereia-Eke said by telephone.

“By the end of the sitting today, we should be able to know the court’s position: whether they ask NIMASA to lift the blockade, and we hope also on the levies themselves.”

Nigeria LNGNigeria’s state oil firm owns 49 percent of NLNG with Shell holding 25.6 percent, Total 15 percent and Eni 10.4 percent.

LNG accounted for 9 percent of Nigeria’s exports in 2012, said economist Bismarck Rewane, CEO of Lagos-based consultancy Financial Derivatives, or roughly $8.1 billion a year, a quarter of Nigeria’s federal fiscal budget for 2013.

“That’s about $155 million a week, of which 51 percent belongs to the Nigerian government,” he said. “That is a lot of money to the Finance Ministry.”

NLNG declared force majeure on gas exports on June 28 because of the blockade.

Ereia-Eke declined to give figures for NLNG losses, and Finance Ministry officials were not immediately available.

NIMASA spokesman Isichei Osamgbi said the agency was seeking cumulative levies of $158 million.

“Our business is not to cause any crisis to the gas sector. We just insist on our dues. Why shouldn’t they pay the levies that are applicable to anybody?” he said.

NLNG argues that the act that established it makes it exempt, but Osamgbi said the exemptions expired after the first year of profit, following a 5-year holiday.

A shipping source said NIMASA already charges LNG tankers $600,000 per berth to load at the NLNG bay, four times higher than the average among the highest fees of any LNG port.

NLNG says a court order was issued on June 18 preventing NIMASA from blockading the port until a resolution was found, but the maritime agency denies that.

Buyers of Nigeria’s LNG include Spain’s Repsol, Italy’s Enel, Britain’s BG Group France’s GDF Suez and Portugal’s Galp.

“Customers of NLNG in Europe and Asia are starting to go into panic mode,” a trading source told Reuters.

You may also like...

Leave a Reply