Don't Miss


Home   >   Business   >   Industries   >   Energy   >   NLNG loses $525m in face-off with NIMASA

NLNG loses $525m in face-off with NIMASA

By on July 23, 2013

The Nigeria LNG Limited, NLNG, the nation’s foremost liquefied natural gas, producer, may have lost about $525 million as a result of the ongoing dispute with the Nigerian Maritime Administration and Safety Agency, NIMASA, over levy.

Vanguard reliably gathered that for three weeks, NIMASA did not allow NLNG cargoes to export gas.

Before the dispute arose, NLNG was exporting a cargo daily to its customers. Sources told Vanguard that each cargo costs between $25 million and $30 million, and in the three weeks that the quarrel lasted, NLNG lost at least 21 cargoes of gas.

The development is coming as NLNG has agreed to pay the sum of $140 million in disputed levies to NIMASA, to end the three-week blockade of shipments from its export terminal.

A Federal High Court,  Lagos, had entered a consent order following the agreement of the two parties to settle amicably.

In the meantime, NLNG and NIMASA agreed the agency will immediately revoke the detention order for NLNG vessels and release them. The revocation will be subject to NLNG making the agreed payments. NLNG owes NIMASA a total $158million, out of which the firm has paid $20million.

The July 12 letter read in part: “Subject to NLNG continuing to make payment for all applicable NIMASA levies (three per cent NIMASA levies and Sea Protection levy), NIMASA undertakes not to detain NLNG-owned or chartered vessels.

“NLNG undertakes to pay outstanding levies attributable to the FOB and Cabotage vessels if they fail to make payment within three months of the date of this letter.

“Going forward, NIMASA is at liberty to collect these levies directly from the FOB and Cabotage vessels without further recourse to NLNG.” NIMASA “will immediately revoke the detention order on vessels and release them” on the payment of the fees, according to the terms of a settlement presented  to Justice Mohammed Idris of the Federal High Court in Lagos.”

Following the seizure of its cargoes, NLNG on June 28, declared force majeure, a legal clause allowing it to miss shipments, as the blockade lingered and more than 20 LNG tankers moored outside the Bonny Island loading bay.

The company, in which the Nigerian National Petroleum Corporation, NNPC, owns majority stake on behalf of the Federal Government, disagreed with NIMASA’s interpretation of its tax obligations, citing exemptions in the law establishing it.

But the maritime agency insisted that the tax breaks expired in 2004, leaving the gas producer owing many years in arrears.

NLNG is jointly owned by NNPC, 49 percent, ENI International 10 percent, Shell Gas 25.6 percent and Total 15 respectively.

 

 

[Vanguard]