The lingering crisis involving the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Liquefied Natural Gas (NLNG) could damage the country’s economic interests, reports Ibrahim Apekhade Yusuf

“No  Agreement Today. No Agreement Tomorrow. No Agreement Now. Never! Never! Never! No Agreement Never…”

The lyrics above, created by the inimitable Afrobeat legend, Fela Anikulapo Kuti, perhaps captures the difficulty in reaching a resolution of the current dispute between the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Liquefied Natural Gas (NLNG) over whether or not the latter ought to pay 2 % cabotage surcharge, sea protection levy, 3 % freight levies for shipping undertaken by Bonny Gas Limited, a subsidiary of NLNG, whose conservative estimates is valued at over $ 400million to NIMASA from September 2007 till date.

NLNG is owned by four shareholders, namely, the Federal Government of Nigeria, represented by the Nigerian National Petroleum Corporation, NNPC (49%), Shell Gas BV, SGBV, (25.6%), Total LNG Nigeria Limited (15%), and Eni International (N.A,) N. V. S. a. r. l (10.4%).

Renewed hostilities

Though the crisis between NIMASA and NLNG has been festering for some time, it appears to have come full circle in the last few months.

Recall that on 3rd May 2013, NIMASA blocked the Bonny Channel preventing entry and exit of NLNG vessels, a development which led to series of meetings at the instance of the Federal Government which eventually ordered that the company should pay NIMASA its purported levies.

Even as the dust was yet to settle, just last week, NIMASA detained the three vessels belonging to the NLNG due to what it described as the latter’s failure to pay levies due to the Nigerian government.Justifying the Agency’s action in a statement signed by the Deputy Director, Public Affairs, NIMASA, Isichei Osamgbi, which reads in part, he said, “The Nigerian Maritime Administration and Safety Agency (NIMASA), has today (last weekend) in its enforcement of Nigerian laws, served detention notices/orders on vessels belonging to/chartered by the Nigerian Liquefied Natural Gas Company Limited (NLNG).

“This course of action was forced on NIMASA by the NLNG’s subsequent refusal or/and failure to abide by the outcome of the negotiated settlement arrived at through the mediation process it willingly instigated and subscribed to after reaching agreement with NIMASA on its outstanding debt and paying $ 20m out of it and its continued flagrant disregard for Nigerian laws.

“By its action, the NLNG has trivialised the mediation process and the position of the Federal Government of Nigeria whose Nigerian National Petroleum Corporation owns and holds 49 per cent of the shares in NLNG and which endorsed the agreement reached that NLNG should pay its taxes/levies and observe all its obligations under the laws of Nigeria in which it is operating.”

While giving an account of what led to last week’s blockade, Dr. Kudo Eresia-Eke, General Manager, External Relations, NLNG, recalled that: “Two Nigerian Maritime Administration and Safety Agency (NIMASA) boats, with 15 naval officers on board, ordered that one NLNG vessel, LNG Imo, and one chartered vessel, Torm Thames, remain at NLNG’s loading bay, whilst another NLNG Vessel, LNG Oyo, remains outside the Bonny Channel until further notice.”

Speaking exclusively with The Nation, as to why NIMASA issued detention orders on NLNG Vessels namely: LNG Enugu, Oyo and Imo respectively, the NLNG, through its spokesman, Eresia-Eke, “They (NIMASA) would know better. What we know is that a court injunction was served on them prior.”

On possible cost implications of detaining the NLNG vessels, the company said: “When the blockade is over we can then give you a reliable figure. But a certain loss is of the reputation of the country, and the implications of that for foreign investment flow into Nigeria.”

While commenting on insinuations that the Attorney General of the Federation/Minister of Justice, Mohammed Adoke had allegedly sought an out-of-court settlement for NIMASA/NLNG, the NLNG argued that: “The matter is in court necessarily, in need of judicial interpretation given apparent conflict of two Acts- the NLNG ACT, and the NIMASA ACT.”

The N3.2 billion, the company paid, Eresia-Eke insisted, “was part payment, made in protest clearly, but in deference to the Federal Government that directed payment, while going to court to seek a proper interpretation.”

He was however quick to add that: “We intend to follow the court processes, in line with the rule of law, until the matter is resolved.”

The Nation can authoritatively report that there appears to be no love lost between the parties in the dispute considering the fact that they are both lock in fierce legal battles of their lives.

Already, the NLNG has filed a suit against the AGF and Global Star, but never joined NIMASA in the suit, a development seen by legal analysts, as a technical flaw.

NIMASA Act says the agency requires at least one month notice to be joined in a suit, and this according to experts, has created a leeway for it.

Echoing similar sentiments, Mike Igbokwe (SAN) in a statement noted that NIMASA was not joined in the suite as such was not technically liable.

Crux of the matter

But how did things came to this sorry past? An innocuous question no doubt, but with no ready answers.

At issue is that the protracted dispute between both parties is as a result of perceived conflict in the enabling Acts of both organisations, namely the Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Act on one hand and Nigerian Maritime Administration and Safety Agency Act, Merchant Shipping Act and Coastal and Inland Shipping Act on the other hand.

NIMASA holds the view and very strongly too that its levies were applicable to NLNG, while the latter argued that they were exempted from such levies and charges by virtue of the NLNG Act.

It would be recalled that NIMASA had filed a suit against NLNG in 2010 claiming entitlement to these levies. Following preliminary proceedings, NIMASA filed an application to withdraw the suit, and on 3rd May 2013.

But in a volte face, NIMASA had reportedly resorted to self-help by blocking NLNG vessels from entering the Bonny Channel for days.

History of controversy

Investigation by The Nation revealed that the controversy over payment of cabotage and freight levies first came to the fore under the administration of Dr. Ade Dosunmu, who as the DG made all entreaties to NLNG to pay up to no avail.

His predecessor, Temisan Omatseye, who took over the case, was desirous of amicable resolution of the impasse such that he sought a judicial review of the NLNG Act at the court but may have stepped on toes in the process and that reportedly led to his exit as DG and he been on suspension in the last two years, sources said.

Findings by The Nation revealed that the matter hitherto under Justice Nyako of the Federal High Court, and later before Justice Rita Ofili-Ajumogobia of the Federal High Court, Lagos, was reportedly withdrawn.

The Nation reliably gathered from informed sources that the AGF who seemed not comfortable with the turn of events, had issued a directive to the management of NIMASA to have the case withdrawn without further delay in order to settle out of court.Informed sources further told The Nation that the AGF had made frantic moves to have the matter withdrawn in court by the NIMASA management under the former DG, Omatseye, since 2010 but could not have his way because the then management insisted that he had to follow the due process.

The Nation had reported exclusively that parties to the dispute in the instance of the Attorney General of the Federation and Minister for Justice, Mr. Mohammed Adoke (SAN) had sought an out of court settlement.

The litigation between the NLNG and NIMASA had been ongoing in the past few years. The Nation gathered that the NLNG management under the former Managing Director, Chima Ibeneche, had asked NIMASA to go to court to contest the NLNG Act, which granted the NLNG and its contractors a tax holiday and several other incentives.

However, following discussions with NIMASA and NLNG, both parties had agreed that the latter should carry out some projects in lieu of payment.

The communiqué issued at the end of the parley in 2009 tagged: “Proposal on Projects that will Assist the Development of the Safety Administration in Nigeria”, addressed 14 critical areas of need namely: purchase of two number surveillance helicopters at the cost of $ 18.0million; four number pollution monitoring, control boats at $ 20.0m; five number defender, bullet proof patrol boats at $ 30.90m; two number offshore patrol boats with fire fighting capability at $ 30.0m; funding of PICOMMS projects at $ 26.0m.

Besides, it was agreed that a sensitivity atlas mapping/charting of the Nigerian coastline would be embarked upon at the cost of $ 25.0m, as well as dredging/reinforcement of the jetties in Kirikiri channel, Pathfinder in Port Harcourt and Warri, in Delta state, just as mobile search and rescue clinic was going to take $ 5.0m.

However, following renewed negotiations, the parties couldn’t reach a consensus on the means and ways to implement the terms of the proposal.

Outsiders’ perspective

Mr. Peter Sunday Adebola, Managing Director, BGL Securities Limited, who has been following the issue had this to say.

Speaking exclusively with The Nation over the weekend, he said: “Without taking sides with either of the parties, one thing I know is that whatever the situation, companies must not evade taxes and the regulation should be in such a way that it is not ambiguous because most of our laws are full of ambiguity that you need somebody to come and interpret at one time or the other.

“It should be made very easy for people to understand. Unlike in the advanced economies, ordinary school leavers understand what the law is all about. But our own, you may even need somebody to interpret the laws for you to be able to understand. I think what is pertinent is that the regulatory framework should be easy and simple so that the partners in the Joint Venture Agreement will not do something in such a way that they are not going to circumvent the laws.”

Giving a legal perspective to the issue, a maritime lawyer, who would not be named and who has been following the developments argued that the AGF cannot form a committee to adjudicate on the crisis between the NLNG and NIMASA because they are both legal entities which can be sued.

“The AGF cannot adjudicate in the matter. It is the court that can adjudicate and nothing else. I think I sense a lot of mischief in the air. Without prejudice to what is happening right now, I think NIMASA appears to be in hurry,” the source said.

Expatiating, he said: “The question to ask is who is pushing NIMASA? It is true that the agency is in some form of financial crisis? The AGF can only step in if the case involves the Federal Government. “It was wrong for the AGF to have sought to broker truce knowing full well that the solution lies with the court.”

The company, the source informed, “May have no choice but to declare a force majeure and this will not augur well for the country.”

Implication on the economy

In the view of analyst, the potential implications of the current impasse between NIMASA and NLNG have dire consequences on the economy as well as the nation’s reputation in the international community.

The NLNG is reported to contribute at least 4 % of the country’s GDP. From available information, the agency stands to make at least $ 5million monthly from NLNG.

Raising a poser, the BGL boss said: “Do you know the amount of income that government is losing from all these other arrangements?”

Government, he emphasised, “Is losing a lot because you can see that there are leakages and people want to take advantage of that. So, the faster the issue is resolved, the better for the country.”

Way forward

In the contention of experts, one of the lasting solutions to this kind of issue is full automation of payment system.

The BGL boss shares the same sentiments. “Once the system is digitalised, you won’t even need to negotiate with anybody. Once the system is automated, there will be no need for dispute arising over payments of dues because the template will be available for anybody to see. That’s the way it is done elsewhere,” Adebola stressed.

Continuing, he said, “Just like the banks now, they will tell you, you’ll pay N3 COT for every N1, 000. At the end of the month, if you check your statement, it would have been generated electronically. With such a template, banks don’t need to explain anything to anybody because it is the operating template in the bank which you as a customer have to key into.”

But a lawyer and also a member of the Rule of Law Development Foundation, led by Joseph Dauda, who asked not to be named, said the only solution is for the court to adjudicate, this, he argued, is a quicker and better way to resolve the lingering impasse.

Pray, is someone listening?

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Posted in Nigerian Newspapers. A DisNaija.Com network.

Source: The Nation Newspaper

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