Global Law Experts Logo

Find a Global Law Expert

Specialism
Country
Practice Area
awardsr

Awards

Since 2010, the Global Law Experts annual awards have been celebrating excellence, innovation and performance across the legal communities from around the world.

AMENDMENT OF THE NLNG ACT: MATTERS ARISING FOR LARGE SCALE INVESTMENTS IN NIGERIA

posted 7 years ago

Introduction 

As the Nigerian House of Representatives hinges towards the passage of the amendment of the Nigeria LNG (Fiscal Incentives’, Guarantees and Assurances) Act (the “NLNG Act”), through a legislative instrument currently styled, “A Bill for an Act to amend the Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Act” (the “Amendment Bill” or the “Bill”) several issues have been thrown up both by the antagonists and the proponents of the Amendment Bill. Simply, the Bill seeks to amend the NLNG Act by expressly subjecting the Nigeria LNG Limited (“NLNG” or the “Company”) to pay 3% of its total annual budget to the Niger Delta Development Commission (“NDDC” or the “Commission”). This piece takes a cursory look at the NLNG Act, the Amendment Bill, the brewing investment dispute and the reality of statutory and contractual protections for large-scale investments in Nigeria.

 

The NLNG and the NLNG Act:

 

To appreciate the issues, a brief historical background on the NLNG and the NLNG Act is needed.

 

Prior to 1989, Nigeria was without any large-scale business capable of harnessing its vast natural gas resources. This was due to the capital-intensive nature and high technological requirements for any such business or project. NLNG rose up to this challenge when it was incorporated on May 17, 1989, as a private company, with the liabilities of its shareholders limited by shares. NLNG’s 4 shareholders are the Federal Government of Nigeria (FGN) which owns 49%; Shell (25.6%) Total (15%) and Eni (10.4%). Today, NLNG produces liquefied natural gas (“LNG”), natural gas liquids (“NGL”), liquefied petroleum gas (“LPG” or cooking gas) and boasts to have helped reduced Nigeria’s gas flaring profile from 65% to below 25%. The NLNG’s asset base was estimated at US$13billion as at October 2016, almost 120% of Nigeria’s 2016 budgeted expenditure – excluding debt servicing; claims to have paid taxes of about US$5.5bn.

 

In 1990, the Nigerian government enacted the NLNG Act to – confer pioneer status on the NLNG; exempt it from certain taxes, customs duties, other levies and the provisions of the Pre-Shipment Inspection of Imports Act; and provide guarantees and assurances to the NLNG and its shareholders. Section 7 of the NLNG Act provides the wide-reaching tax exemptions, while the Second Schedule provides the FGN’s guarantees, assurances and undertakings to the NLNG and its shareholders. Significant among this is the undertaking that the fiscal regime under the NLNG Act shall not be amended in any way except with the prior written agreement of the FGN, NLNG and the NLNG shareholders.

 

The NDDC and the Amendment Bill:

 

The NDDC was created by the Niger-Delta Development Commission (Establishment etc) Act No, 6 of 2000 (“NDDC Act”) with the mission to facilitate the rapid, even and sustainable development of the Niger-Delta region in the areas of its, economic prosperity, social stability, ecological regeneration and political peace. Section 14 of the NDDC Act requires the NDDC to establish and maintain a fund (the “NDDC Fund”), from which the NDDC shall defray all its expenditure. Specifically, Section 14(2)(b) requires to be paid into the NDCC Fund, 3% of the total annual budget of any oil producing company operating onshore and offshore the Niger-Delta area and expressly included gas processing companies.

 

NDDC’s attempt to enforce Section 14(2)(b) of the NDDC Act against NLNG informed the 2005 litigation whereby NDDC sought the Court to declare that NLNG was contemplated by the provisions of Section 14(2)(b) of the NDDC Act. The dispute was resolved in favour of the NLNG at all levels of the Nigerian courts. The court held that the NLNG Act is a special Act and the NDDC Act, even though also a special Act, will not apply to the NLNG in the absence of any express mention of the NLNG Act.

 

It is safe to assume that it was this state of events that led to the Amendment Bill, whereby its operative provision states that:

 

“Notwithstanding Section 7 or any other provisions of this Act [NLNG Act], the Nigeria Liquefied Natural Gas Limited shall pay 3% of its total annual budget to the Niger Delta Development Commission (NDDC) Fund, as required by Section 14 Subsection (1) and (2)(b) of the NDDC establishment Act, 2000.”

 

 

Matters Arising from the Amendment Bill:

 

The Amendment Bill is a Bill of the House of Representatives (the “House”), which means that even after it is passed by the House, it will still journey to the Senate. From the Senate, it will require the assent of the President and if vetoed by the President, it will require a favourable vote by the joint session of the House and Senate for it to become law. While this, often lengthy legislative process continues, it is immediately significant to highlight Paragraph 2 of the Second Schedule to the NLNG Act. It provides a condition precedent to the amendment of the fiscal terms of the NLNG Act – there must be a prior written agreement among the FGN, the NLNG and the NLNG shareholders. In the absence of such agreement, an attempt to amend the fiscal terms of the NLNG Act, for example by the Amendment Bill, will amount to a breach of the provisions of the NLNG Act and accordingly an illegal act. An Act of the National Assembly cannot be borne by an illegal means. The legislature is subject to its own laws.

 

The logical process of negotiations before an agreement may not be smooth, but then that should be expected – the FGN with a majority shareholding of 49% cannot unilaterally seek to upstage the economics with an additional (fiscal) cost of 3% of the annual total budget of the NLNG. Something may have to give. It is within this context that Paragraph 22 of the Second Schedule becomes relevant as it provides the mechanism for the resolution of any dispute of a substantial matter. Failure of the FGN, NLNG and the other NLNG shareholders to agree on any new fiscal terms, though an agreement to agree, should be a substantial matter worth evoking Paragraph 22. So also should be any unilateral action by the FGN, through its legislative arm, to circumvent Paragraph 2 of the Second Schedule.


Protection for Large Scale Investments in Nigeria:

 

Not all large-scale investments may be as lucky as the NLNG to have a statutory basis. Even at that, the pronouncements of the Nigerian Courts and some municipal laws give a good basis to for legal protections recognized in public international law.

 

Such good basis includes Nigeria’s bilateral investment treaties (“BIT”). Currently, Nigeria has BITs with Bulgaria, China, Egypt, Ethiopia, Finland, France, Germany, Italy, Jamaica, Korea Republic, Netherlands, Romania, Serbia, Spain, Sweeden, Switzerland, Taiwan, Turkey, Uganda and the United Kingdom. Nigeria’s typical BIT contains common substantive protection provisions both for the investment and investees (protected nationals). Significant among these are, the:

 

a.            fair and equitable treatment of investments plus an obligation not to impair by unreasonable or discriminatory measures, the operation, management, maintenance, use, enjoyment or disposal of investments by protected nationals; and

 

b.      “umbrella clause”, pursuant to which Nigeria agrees to observe any obligation it may have entered into with regard to investments by protected nationals; for which there are authorities (judicial and statutory) to suggest that the “umbrella clause” elevates the breach of private contracts to the level of a breach of an international treaty.

 

Section 26 of the Nigerian Investment Promotion Commission Act, 1995 (“NIPC Act”) provides the requirement for settling all investment disputes between the FGN or any Government in Nigeria on the one hand and any investor or investment recognized under the NIPC Act. Such disputes are required to be resolved, in the first instance, by mutual discussions. Where no settlement is be reached by mutual discussions, then:


a.      Nigerian investors may institute arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1988;

 

b.   Foreign investors may institute arbitration within the framework of the relevant BIT or multilateral agreement.

 

c.   Arbitration may be instituted in accordance with any other national or international mechanism for the settlement of disputes agreed to by the parties.

Conclusion:

 

Nigeria as a gas province has not been able to optimally monetize its gas. One of the reasons attributable to this is policy reliability. Investments cannot be made in an environment where the rules of the game are changed mid-way. This is why laws and contracts exist, they give frame to policies. Nigeria has good laws and often well-drafted contracts to protect large-scale investments. The opportunities of disputes, regardless of the costs, should be an avenue to strengthen the investment climate with the exactitude of adjudicatory pronouncements. The promise of arbitration and its statutory sanctioning should mitigate the current challenges with the slow litigation process. In any event, business should at least continue while disputes are being resolved.

Author

Find the right Legal Expert for your business

The premier guide to leading legal professionals throughout the world

Specialism
Country
Practice Area
LAWYERS RECOGNIZED
0
EVALUATIONS OF LAWYERS BY THEIR PEERS
0 m+
PRACTICE AREAS
0
COUNTRIES AROUND THE WORLD
0

Join

who are already getting the benefits
0
Sign up for the latest legal briefings and news within Global Law Experts’ community, as well as a whole host of features, editorial and conference updates direct to your email inbox. Naturally you can unsubscribe at any time.

Online Casino Reviews

  • Freeroll Poker Tournaments For Real Money
  • Australian Online Casino Real Money
  • Best Slot App To Win Real Money
  • Online Casino Real Money Australia
  • Best Paying Online Pokies
  • Wizard Of Oz Online Slots
  • All Slots Casino Mobile
  • Best Online Poker App Real Money
  • Best Online Casino To Play Roulette
  • Is Online Casino Legal
  • Online Casino That Accepts Paypal
  • Play Roulette For Real Money
  • Slot Apps To Win Real Money
  • Real Money Slots Online Usa
  • Safe Online Casino
  • Wizard Of Oz Slots
  • Real Online Pokies Nz
  • Biggest Online Casino In The World
  • Online Casino Pay With Paypal
  • Online Casino That Accept Paypal
  • Online Casino Canada Real Money
  • 3 Card Poker Online Real Money
  • Online Slots Real Money Canada
  • Best Online Poker Sites For Real Money
  • Real Money Poker App Android Usa
  • How To Make Money From Online Casino Bonuses
  • Real Money Poker App Iphone
  • How To Play Blackjack Online For Real Money
  • Best Slots To Play
  • Top 10 Online Pokies
  • Best Poker Apps Real Money
  • Online Casino Legal
  • Best Payout Online Casino Uk
  • Win Money Online Slots
  • Online Poker Nj Real Money
  • How To Win Online Slots
  • Casino Gaming License
  • Play Real Pokies Online
  • Blackjack Sites For Real Money
  • Real Money Casino Games For Android
  • Best New Online Slots
  • Flaming 777 Slots Games
  • Online Blackjack With Live Dealers
  • How To Play Online Slots
  • Facebook Casino Games Real Money
  • Online Casino With No Minimum Deposit
  • How To Beat Online Slots
  • Online Casino License
  • The Big Payback Slots
  • Royal Vegas Online Casino Withdrawal
  • Online Casino Minimum Deposit 5
  • Online Pokies Real Money Australia
  • Las Vegas Usa Online Casino
  • Real Money Poker App Android
  • Wheel Of Fortune Slots
  • Game Of Thrones Slots
  • Online Poker Real Money Usa Legal
  • Best Online Casino European Roulette
  • Blackjack Online Real Money Paypal
  • Online Video Poker Real Money Usa
  • How To Create An Online Casino
  • Lucky Nugget Online Casino Mobile
  • How To Withdraw Money From Online Casino
  • Platinum Play Online Casino Download
  • Online Casino For Usa Players
  • Best Online Casino Usa Real Money
  • Online Roulette Real Money Usa
  • Best Real Money Poker Sites
  • Android Slots Real Money
  • How To Start An Online Casino Business
  • How To Start An Online Casino
  • How To Start An Online Gambling Site
  • Best Online Casino For Blackjack
  • Play Baccarat Online For Money
  • Online Pokies New Zealand
  • Best Slots To Play At Golden Nugget
  • Slots Of Vegas Online Casino
  • Best Online Pokies Site
  • How To Beat Online Roulette
  • New Zealand Online Pokies
  • Online Poker Mobile Real Money
  • Which Online Slots Payout The Most
  • Is Online Casino Legal In India
  • Online Casino Software For Sale
  • Best Online Casino For Craps
  • Hard Rock Casino Slots
  • Win Real Money Online Pokies
  • Online Casino With Highest Payout Percentage
  • Poker Apps With Real Money
  • Online Roulette Real Money Review
  • Full Tilt Poker Real Money
  • Online Casino 5 Dollar Minimum Deposit
  • Online Roulette With Real Money
  • Best Online Roulette For Real Money
  • I Migliori Casino Online Italiani
  • Best Payout Online Slots
  • How To Play Baccarat Online
  • Play Casino Card Game Online
  • Play Blackjack Online For Real Money
  • Best Paying Online Slots
  • Casino License Cost
  • Online Poker Real Money California
  • Safe Online Casino Australia
  • Online Roulette Australia Real Money
  • Online Poker Real Money Texas
  • Online Roulette Real Money Paypal
  • Online Slots Australia Real Money
  • Golden Nugget Online Casino Review
  • Casino Games To Win Real Money
  • Online Pokies Australia Real Money
  • Online Gambling Blackjack Real Money
  • Win Real Money Playing Slots
  • How To Win Roulette Online
  • Aristocrat Pokies Online Real Money
  • Hollywood Casino Online Slots
  • Play Online Keno For Real Money
  • What's The Best Online Casino
  • Triple Double Diamond Slots
  • Play Roulette Online With Real Money
  • Roulette Online For Real Money
  • Play Roulette Online Real Money
  • Best Online Pokies Real Money
  • Big Red Pokies Online
  • How To Win At Online Blackjack
  • What Is The Best Online Roulette Site
  • Real Money Online Pokies
  • Spin To Win Slots
  • Ruby Slots Online Casino
  • Wheel Of Fortune Online Casino
  • Spin Palace Flash Casino Online
  • Online Poker Real Money App
  • Online Casino With Paypal Deposit
  • How To Win At Online Roulette
  • Can You Win Real Money On Slot Apps
  • Is Ignition Casino Safe
  • Online Casino Blackjack Real Money
  • Online Casino Win Real Money Usa
  • How To Make Money Online Casino
  • Online Casino Real Money Reviews
  • Slot Games To Win Real Money
  • Jackpot City Online Casino Download
  • Online Pokies Real Money
  • Casino War Online Real Money
  • Online Casino No Minimum Deposit
  • Play Wheel Of Fortune Slots Online
  • Best Online Casino Game To Win Money
  • Online Casino Without Wagering Requirements
  • Online Slots For Real Money Usa
  • Legal Online Casino Australia
  • How Do Online Slots Work
  • Best Online Casino For Us Players
  • Online Play Casino Roulette Game
  • Online Blackjack Real Money Australia
  • Real Casino Games Real Money Online
  • Online Slot Machines Real Money Paypal
  • The Best Online Casino For Roulette
  • What Online Casino Pays Out The Most
  • Start Your Own Online Casino
  • Legal Online Casino
  • Online Live Roulette Casino Game
  • Playing Blackjack Online For Real Money
  • Online Penny Slots Real Money
  • Best Online Blackjack For Money
  • How To Win Online Roulette
  • Real Money Poker Sites Usa
  • Best Time To Play Slots
  • Online Keno For Real Money
  • Best Payout Online Slots Uk
  • Online Slots Real Money Reviews
  • Best Online Pokies Nz
  • What States Allow Online Gambling
  • Best Real Money Poker App
  • Online Slots To Win Real Money
  • Real Money Slots App Iphone
  • Jackpot City Flash Casino Online
  • Ignition Casino Legit
  • All Star Slots Casino
  • How To Play Online Casino
  • Real Time Gaming Slots
  • Online Video Poker Real Money
  • How To Play Roulette Online For Money
  • How To Win On Online Slots
  • Age Of Gods Slots
  • Online Real Casino Money Games
  • Best Online Slots To Play
  • Online Poker California Real Money
  • Is Jackpot City Casino Legit
  • How To Win At Online Slots
  • Play Poker For Real Money
  • Safe Online Pokies Australia
  • Best Way To Play Slots
  • How To Play Casino Online
  • Play Online Roulette For Money
  • Online Casino Australia Real Money
  • Which States Allow Online Gambling
  • Play Keno Online Real Money
  • How To Win Online Blackjack
  • Online Blackjack With Real Dealers
  • How To Open Online Casino
  • What Are The Best Online Slots To Play
  • Big Win Casino Slots
  • Spin Palace Online Casino Australia
  • Best Slots To Win On
  • Casino Slots Win Real Money
  • Slots Magic Online Casino
  • Blackjack Online For Real Money
  • Slot Machine App Win Real Money
  • Online Casino Not Paying Out
  • Slots That Pay Out Real Money
  • Online Pokies Australia Reviews
  • Online Casino Minimum Deposit 1
  • Jackpot City Online Casino Review
  • Live Dealer Baccarat Online Casino
  • Online Casino Apps For Android
  • Online Casino Paypal Deposit Australia
  • Online Casino With Live Dealer
  • How To Play Blackjack Online
  • Slots To Win Real Money
  • Wheel Of Fortune Online Slots
  • Play Quick Hit Slots Online
  • Can You Count Cards In Online Blackjack
  • Palace Of Chance Online Casino
  • How To Play Roulette Online
  • Good Slots To Play
  • Which Online Casino Pays Out The Most
  • Heart Of Vegas Casino Slots
  • Best Online Casino For Canadians
  • Australian Online Pokies Real Money
  • Mohegan Sun Online Casino Nj
  • Online Casino Live Games Best Uk
  • Best Online Casino Australia Reviews
  • Play Pokies Online Real Money
  • Best Online Casino For Usa Players
  • How To Win Online Casino
  • Play Blackjack For Real Money
  • Best Slots On Bovada
  • Online Keno Real Money Usa
  • Online Slots Real Money Paypal
  • Best Poker Sites For Real Money
  • Safe Casino Sites
  • The Best Online Slots
  • Play Keno For Real Money
  • Real Online Pokies Australia
  • Queen Of The Nile Slots
  • Mummys Gold Casino Online Casino
  • Play Keno Online For Real Money
  • Best Poker Websites Real Money
  • Lucky Nugget Online Casino Download
  • Best Online Casino For Roulette
  • Play Roulette For Money Online
  • Video Slots Mobile Casino
  • Best Time To Play Online Slots
  • Best Real Money Online Poker
  • Play Blackjack Online With Friends
  • Play Baccarat Online For Real Money
  • Is Silver Oak Casino Legit
  • Big Fish Casino Real Money
  • Can You Win Real Money On Caesars Slots
  • Game Of Thrones Slots Casino
  • Best Online Slots Payout Percentage
  • Play Online Pokies For Real Money
  • Play Pokies Online Australia
  • High 5 Casino Real Slots
  • The Best Online Pokies
  • Online Pokies That Accept Paypal
  • Heart Of Vegas Slots
  • How To Play Online Roulette
  • Best Poker App Real Money
  • Best Online Casino Fast Payout
  • Best Slots At Wind Creek Casino
  • Online Casino 10 Minimum Deposit
  • Play Roulette Online For Money
  • Us Real Money Poker Sites
  • How To Win In Online Casino
  • Best Online Pokies Australia Review
  • Where To Play Roulette Online For Real Money
  • How To Beat Online Casino Slot Machines
  • Highest Payout Online Slots
  • Best Paying Online Casino Slots
  • Golden Tiger Online Casino Review
  • Online Casino With Live Dealers
  • Play Roulette Online For Real Money
  • Best Slots To Play At Casino
  • Slot Machine Games Win Real Money
  • Most Popular Online Casino Games
  • Casino Slots App Real Money
  • Online Casino Real Money Canada
  • Online Real Money Pokies
  • Online Roulette Game Real Money
  • Online Casino Roulette Real Money
  • Best Place To Play Roulette Online
  • Online Casino Book Of Ra Paypal
  • Online Blackjack With Real Money
  • Play Online Blackjack For Real Money
  • Is There A Slot Machine App For Real Money
  • Royal Vegas Online Casino App
  • Best Casino Slots To Play
  • Most Popular Online Slots
  • Best Way To Win At Slots
  • Slots You Can Win Real Money
  • Play Roulette Online Real Money Usa
  • Online Casino Real Money Paypal
  • Online Casino Australia Legal
  • Treasures Of Troy Slots
  • Online Casino For Us Players
  • Where Can I Play Blackjack Online For Real Money
  • Online Casino Paypal Book Of Ra
  • Online Roulette For Real Money
  • Best Online Blackjack Real Money
  • Poker App For Real Money
  • Jackpot Magic Slots Facebook
  • Best Online Casino Real Money Usa
  • Best Online Casino New Zealand
  • The Four Kings Casino And Slots
  • How To Play Slots Online
  • Best Online Pokies Australia
  • Usa Online Slots Real Money
  • Real Money Casino Android App
  • Online Slot Machines That Pay Real Money
  • Online Pokies Real Money Nz
  • Online Pokies Real Money App
  • Play Igt Slots Online
  • Best Casino Slots To Win Money
  • Online Casino Business For Sale
  • Play N Go Slots
  • Poker Apps For Real Money
  • Lucky Slots Real Money
  • All Slots Online Casino
  • Best Online Pokies Real Money Australia
  • Online Pokies Win Real Money
  • Best Online Casinos For Roulette
  • Pay Slots For Real Money
  • Best Online Poker Real Money
  • Slots App Win Real Money
  • Play Online Roulette For Real Money
  • Is Ignition Casino Legit
  • Wheel Of Fortune Slots Online
  • Lotsa Slots Real Money
  • Video Poker Online Real Money
  • Online Slots Usa Real Money
  • Play Blackjack Online Real Money
  • Jackpot City Online Pokies
  • Video Slots Online Casino
  • Is 888 Casino Legit
  • Online Slot Games That Pay Real Money
  • Prepaid Visa Card Online Casino
  • How To Stop Online Gambling
  • Best Slots To Play Online
  • Online Blackjack For Real Money
  • Slot Apps For Real Money
  • Mobile Slots Win Real Money
  • Newsletter Sign Up

    About Us

    Global Law Experts is dedicated to providing exceptional legal services to clients around the world. With a vast network of highly skilled and experienced lawyers, we are committed to delivering innovative and tailored solutions to meet the diverse needs of our clients in various jurisdictions.

    Social Posts

    See More:

    Contact Us

    Stay Informed

    Join Mailing List

    GLE