NLNG to pay $1bn tax to FG for 2013
The Nigerian Liquified Natural Gas Company (NLNG) will pay $1 billion in corporate income tax (CIT) to government for the 2013 financial year, the company's Managing Director/ Chief Executive Officer, Babs Omotowa, has said.
Omotowa, who said that this payment would be made in 2014, is optmisitic that the NLNG would be in a stronger position to more than that amount in the in coming years.
The NLNG spoke during a visit by the Coordinating Minister for the Economy and Minister of Finance, Ngozi Okonjo-Iweala to the NLNG industrial plant in Bonny, River State at the weekend.
The proposed payment will be the by the company which had hitherto enjoyed tax holidays since commencement of production in 1999, as part of the Federal Government's incentive package provided for under the enabling Act to give the company solid footing
Omotowa told the visiting minister that the company's holds plant assets in excess of $11 billion, which makes it the fastest growing NLNG plant in the world.
He said, 'We have the NLNG Act which gave us some incentives, some of which have dropped off. And next year will be the first full year we will be paying Companies Income Tax and our current estimate is that we will be able to pay $1 billion in Tax to the government. That would be for $2013 tax and I think we would be paying over $1 billion in years to come.'
By January next year, Omotowa added, the company would have done 3,000 cargoes of gas out of which nearly 1,300 cargoes represent what would have have been flared, Omotowa said.
He also disclosed asset value of the company's plant now stands at over $11 billion, which is the fastest growing plant in the world.
Giving a rundown of the activities of the company to the minister, the NLNG boss said the assets of the gas company include 24 ships, totally owned by the company but excludes six new ships which has been awarded to two Korea firms- Samsung and Hyundai to construct. The six new ships are expected to arrive by 2015, he also announced.
According to him, about $1.3billion was borrowed to finance the construction of the ships as he assured that the company's balance sheet was strong enough to take care of the liability.
He said, 'With our strong balance sheet, that has not been an issue for us. Banks in Korea, international banks in Europe all were happy to join that financing.
'But we are also keen to drive Nigerian content, so a lot of things we are doing with Hyundai and Samsung also include a contract to buy several tens of millions of goods made in Nigeria that should be out on those ships like cables to some of the electrical things, furniture, everything that we think that we can make in Nigeria to use in their construction.'
Omotowa also said that the company had made significant impact in the local Liquified Petroleum Gas (LPG) market.
Since NLNG's intervention in the domestic Liquified Petroleum Gas (LPG) sector in 2007, he pointed out, the company has been able to grow daily demand for the product substantially from about 4,000 metric tonnes eventhough the Lola demand for the product is still low.
It currently supplies about 250,000 metric tonnes, representing about 80 percent of the total demand in the country which also represents just about 10 percent of the potential demand.
'We intervened in the LPG segment in 2007 during President Obasanjo's government who asked companies to support domestics LPG and we pride ourselves as being the only ones among all the companies that were called to support local LPG that has been doing that, no other company has come up,' he said.
It will be recalled that the during the face-oof between the NLNG and Nigerian Maritime and Satefey Administration (NIMASA) prices of LPG sky-rooted by over 100 per cent as the blockade of Bonny channels undercut supplies.
Omotowa asked for some incentives like subsidy on Kerosene and VAT incentives on LPG to boost the company's profitability,
He said, 'We think that this is an area that the government's continued support would be very helpful. The subsidy is one and, the issue of VAT whereby domestic LPG has VAT on it while imported one does not.
The company is also asking for a strong campaign by government for a switch from other unhealthy and environmentally hazardous cooking facilities like the wood to gas and kerosene cookers to encourage local gas production like was done Indonesia.'
, Okojo-Iweala in her response described the NLNG as an exemplary Nigerian company that had stood out as a great asset and an economically viable venture for the country.
'I came because I looked at your books an I have been impressed with the way you have been commercially successful. I think that this is a very important asset to the country. And I think that in the oil sector, this is an asset that has been here now and has a history for quite a number of years and yet we do not play it up as much as we should.
I think that for the Nigeria economy, this is a very big operation that we have here. $11 billion in assets is nothing to sneeze about and I think that given your projected Company Incomes Tax of probably $1 billion. This is a company that we need to pay attention to.'
She promised that the government would look into their requests for subsidy and VAT incentives.
'This is very is very important, a lot of value added. I have heard what you said on the two issues. We need to look at our policies for instance on the LPG side what you have said about the VAT on local production and imported coming in through the borders are free. We will look at that and see what needs to be done so that we would not have dis-incentives to our domestic industry. We will definitely take that up and we will get back to you.'
NLNG was incorporated as a limited liability company on May 17, 1989, to harness Nigeria’s vast natural gas resources and produce Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs) for export.
The company has two wholly-owned subsidiaries: Bonny Gas Transport (BGT) Limited, which provides shipping services for NLNG and Nigeria LNG Ship Manning Limited which provides personnel for all of NLNG's Vessels.
Nigeria LNG was incorporated in 1989. In November 1995, a Final Investment Decision (FID) was signed by the Shareholders to build a Liquefied Natural Gas Plant in Finima, Bonny Island in Rivers State.
In December 1995, a consortium of engineering firms comprising Technip, Snamprogetti, M.V. Kellog and Japan Gas Corporation (TSKJ) was awarded a turnkey Engineering, Procurement and Construction (EPC) contract for the construction of the Plant, the Gas Transmission System and the Residential Area.
Construction at the plant site commenced in February 1996 and on August 12, 1999 Train 2 was ready for start-up. Production of LNG commenced on September 15, Train 1 subsequently came on stream on February 27, 2000.