The Nigerian Liquefied Natural Gas (NLNG) paid N413 billion as dividend to the federal government in 2013.
TheNiche learnt that the dividend payout constitutes a large bulk of the government’s N713.7 billion rescue package for states to pay salary arrears.
This contradicts earlier reports that $1.7 billion of the fund was drawn from the $2 billion Excess Crude account (ECA).
N413b paid by NLNG
Federal and state employees are owned salaries ranging from two to 11 months.
Among the states are Abia, Bauchi, Benue, Edo, Ekiti, Enugu, Gombe, Kogi, Imo, Ondo, Osun, Oyo, Plateau, Rivers, and Kwara.
President Muhammadu Buhari came up with multiple rescue packages totalling N713.7 billion. Part of the fund, N413 billion, was dividend proceeds due to federal government as a shareholder of the NLNG.
As shareholder, the government is entitled to a share of the profit, and of course, loss of the company, too.
NLNG consistently pays about $1 billion monthly to government.
Its website shows that it has paid about $18 billion on gas purchases from oil companies of which the government owns about 60 per cent.
Overall earnings from NLNG, which is about 70 per cent, comprises 49 per cent in dividend yield and 30 per cent as company income tax.
In 2013, NLNG paid N200 billion to the government as tax, the highest ever paid by any company.
Holdings in NLGN
NLNG was set up in 1989 to tap huge liquefied natural gas deposits in the country. The government, through the Nigerian National Petroleum Corporation (NNPC), holds majority 49 per cent stake; Shell (25.6 per cent), Total (15 per cent), and ENI (10.4 per cent).
With six gas trains completed and a seventh under construction, NLNG hopes to raise production to about 30 million metric tonnes (mmt) per annum from the current 22mmt.
Nigeria is the world’s sixth largest gas exporter, behind Qatar and Singapore, but hopes to move up the ladder when production improves with the completion of the seventh gas train.
Good example
Analysts say NLNG is a good example of how much oil and gas can contribute to the growth of the economy if properly structured.
They all agreed that the NNPC ought to contribute as much but for the structural deficiencies in its management.
The analysts urged Buhari to restructure the NNPC after the NLNG model, commercially viable entity without interference by equities holders.
NNPC could be like NLNG
Ecobank Development Corporation Head of Research (Nigeria), Dolapo Oni, said if the NNPC is given a similar structure to run from a purely commercial perspective, it would be able to deliver greater value than NLNG.
“The NNPC should be able to contribute more value but I think it is a structural issue. In comparison, NLNG has exported about $25 billion worth of gas in about 15 years. That is about the oil exports of the NNPC in one year alone,” he recounted.
Oni explained on a television programme that NLNG’s contribution to local content development is as significant as its financial input.
Last year alone, he recalled, the company helped Nigerian companies to earn about $10 million from exporting locally developed products to ship building firms in South Korea.
Besides, information emanating from NLNG disclosed that about 600 Nigerians will be trained for gas shipbuilding in South Korea.
Oni noted that NLNG has its challenges that impact its export revenue (tax issue with NIMASA that blocked exports for almost four months, for instance,) just as the NNPC has with oil theft, but NLNG has well based on its good structure.
Odilim Enwegbara, a development economist, added that the fund the federal government released to states is not a bailout as news reports suggested.
According to him, the package involves part of the money the states would have received later in the months but had to be given to them ahead of time to help pay salaries.
Other analysts hold a similar view.
Approvals by Buhari
The Finance Ministry and the Central Bank of Nigeria (CBN) have pegged the amount needed to settle all outstanding public workers’ pay at about N250 billion.
The differential takes care of federal workers, also owed for months.
Buhari was said to have approved, first, the sharing between the federal and 36 state governments of $1.7 billion (N402 billion) of the $2 billion from the NLNG.
There were reports that the $2 billion in the ECA was tampered with.
But Abuja insisted that the ECA fund is intact.
The three-pronged relief package for workers also involved a CBN special intervention fund that will offer financing to the states. The package, between N250 billion and N300 billion, is a soft loan.
Buhari also approved a debt relief programme to be designed by the Debt Management Office (DMO), which will help states restructure N660 billion bank loans and extend the life span of such loans while reducing their debt-servicing expenditures.
This third option will free up more money being used for debt servicing, and all the packages will boost the purchasing power of Nigerians and improve the economy.
