Amid Posers over Spending, FG Rakes In $21.5bn from NLNG’s $44bn Dividend Payment in 25 Years

Emmanuel Addeh in Abuja

The federal government has received about $21.56 billion of the $44 billion dividends disbursed by the Nigeria Liquefied Natural Gas Limited (NLNG) in the last 25 years, the company’s ‘Facts & Figures’ for 2024 has shown.

NLNG was incorporated as a limited liability company to harness Nigeria’s vast natural gas resources and produce Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs) for the domestic market and export.

It is owned by four shareholders, namely: Nigerian National Petroleum Company Limited (49 per cent), Shell (25.6 per cent), TotalEnergies (15 per cent) and Eni International (10.4 per cent).

The document released by the NLNG further stated that in 2023 alone, the federal government got $1.2 billion as taxes from the company headquartered in Port Harcourt, Rivers state.

 “NLNG has paid dividends of over $44 billion out of which 49 per cent went to the Federal Government of Nigeria courtesy of the shareholding of NNPC Limited in the company.

“As a good corporate citizen, NLNG also contributes to national wealth and the economic wellbeing of states in which it operates, by paying all applicable taxes and levies, In 2023, the company’s corporate income tax, including tertiary education tax, paid to the Federal Government of Nigeria amounted to about $1.2 billion,” it stated.

However, the management of the accruals from the NLNG operations by the federal government has always been a subject of controversy.

As far back as 2009, the whereabouts of the $4.44 billion dividends, which accrued to the federal government in respect of its investments in the Nigeria LNG project was a subject of disagreement between the House of Representatives and the NNPC.

The controversy arose as a result of the investigation by the House Ad hoc Committee into the activities of the then Department of Petroleum Resources (DPR), NNPC and its subsidiaries.

Among others, there was also the issue of the last administration illegally diverting $1.05 billion (N378 billion at N360 to a dollar) at the time sourced from the NLNG dividend funds to secretly fund subsidy payment on petroleum products.

The current government has also had its fair share of controversy regarding its management of the NLNG funds, with the Bola Tinubu-led federal government hinting last year that it plans to use the dividends earned from the NLNG Limited to borrow money.

While analysts said that this would have helped prevent the naira from losing its value compared to the dollar, they also argued that implementing the securitisation strategy might affect gas production if it interferes with the company’s operations or available resources.

In addition, mismanagement of the borrowed funds by the Nigerian government, it is believed, could lead to a cash shortage for future projects and might diminish investor confidence.

The securitisation of the dividends simply involves using them as a guarantee for borrowing money. Essentially, the government, according to the report at the time, planned to use the expected future income from NLNG to obtain immediate funds.

But in terms of feedgas payment, the NLNG report stressed that Joint Venture (JV) feedgas suppliers from inception till date had hit about $36 billion, with 55-60 per cent of such payment going to the federal government via its shareholding in the NNPC.

With its plant construction, the company said it generated considerable Foreign Direct Investment (FDI) for the country, with its assets, including property, plant, and equipment worth about $20 billion with 51 per cent stake owned by international oil companies and 49 per cent belonging to the federal government.

In addition, since 2008, the company stated that it contributed about 4 per cent of Nigeria’s annual Gross Domestic Product (GDP), stressing that with the rebasing of the GDP in 2024, NLNG’s contribution to the GDP was put at about 1 per cent.

“NLNG provided over 12,000 jobs at the peak of construction of Trains 3, 4 and 5 respectively. Overall, the major sub- contractors employed over 18,000 Nigerians in technical jobs in the Base Project (Trains 1 and 2),” it added.

Through each Nigerian Content plan for its contracts, NLNG said it has promoted the development and employment of Nigerian manpower.

 In its host community, through the initiative to empower local contractors, it said the indigenous contractors have made human and capital investments in their companies thereby expanding their operating capacity.

The capabilities of local vendors, it said, have also been developed through mentoring and partnerships between more established Nigerian vendors and community vendors as 55 per cent of engineering activities and procurement are being carried out in Nigeria, by Nigerian vendors in Train 7.

From 1999 to 2023, the report stated that NLNG has converted 237.7 billion standard cubic meters or 8.39 trillion cubic feet of associated gas, to export as LNG and Natural Gas Liquids, thus making significant contributions to the nation’s income.

In this way, it stressed that it had contributed to reducing gas flaring in Nigeria from over 65 per cent in 2021 to less than 20 per cent.

“This has helped to protect the environment from the effects of gas flaring and has also enhanced government’s earning by the monetisation of this gas. The environment is further protected by the significant reduction in felling of trees for use as fuels for domestic cooking and heating.

“In addition, NLNG has contributed to a healthier nation by encouraging the use of cleaner energy through its domestic LPG supply programme which has also resulted in reduced expenditure on respiratory health issues,” it noted.

NLNG and its shareholders agreed on a ‘Nigerianisation’ scheme on September 1, 1997, which was revisited and updated in 2004. The objective of the scheme, which was to ‘Nigerianise’ the company’s workforce was achieved in 2012.

“The company is now run by a 100 per cent Nigerian management team and 95 per cent Nigerian staff. NLNG, therefore, contributes to the reduction of unemployment figures in Nigeria and the development of skills and competencies critical to drive Nigeria towards a vibrant economy,” it stated.

On one of its subsidiaries, NLNG Shipping & Marine Services Limited (NSML), the report said it remains the biggest single employer of Nigerian seafarers, training hundreds of sea-going officers, some to the level of captains and chief engineers.

For over 10 years, NLNG’s said its intervention in the supply of LPG otherwise known as cooking gas to the domestic market under the NLNG Domestic LPG (DLPG) Scheme has supported LPG supply, availability, and affordability, and has also stimulated the development of different parts of the DLPG value chain in Nigeria.

“NLNG supplies about 40 per cent of Nigeria’s domestic LPG demand and, is currently the highest single supplier of LPG into the domestic market, delivering circa 400,000 tonnes of LPG. 100 per cent of produced LPG volumes from NLNG is dedicated to the domestic market. The volume is expected to grow with commissioning of Train 7.

“This is in line with the vision to continually contribute to the growth in the sector and in helping to build a better Nigeria. The Company’s first domestic Propane cargo was also delivered in 2021,” the organisation stated.