Hon. Douye Diri is a member of the House of Representatives representing Yenagoa/KolokumaOpokuma Federal Constituency of Bayelsa State. He is also a member of the House Committee on Oil and Gas. In this interview with ADELEKE ADESANYA, he argues that states across the nation should manage their natural resources for development while they contribute to the Federal Government’s purse according to their capability. Excerpts:
Reports say that the House of Representatives is at loggerheads with the Nigerian Liquified Natural Gas company over the amendment of its act, which will compel it to remit 3 per cent of its annual budget. Can you clarify this?
On the amendment of the NLNG Act, if you look at section 7A and B of the act, in relation with Section 14 of the NDDC Act, it provides that all oil and gas producing and processing companies are to pay 3 per cent of theirtotal annual budget to NDDC. But this has not been the case with NLNG, which came into being about 1990 and was given a pioneer tax holiday for ten years. From 1990 till now is about 27 years. So, even after that, they have not been keyed into the act establishing the NDDC. Every other company is complying, but NLNG has not, because we have not been able to do that amendment. But now, the amendment has been proposed, and deliberation is going on on it in the House of Representatives to correct that.
Some people say this move is like a witch-hunt of the NLNG…
(Cuts in) Let me tell you, there are three things involved-the Constitution of the Federal Republic of Nigeria, Section 1 subsection 1 to 4, which gives the authority of law making and amendment to the National Assembly. The second thing involved is the NDDC Act and the third one is the NLNG Act. According to the NDDCAct, Section 14,sub section 2A and B, specifically B, 3% of the total annual budget of any oil producing company operating offshore and onshore in the Niger Delta area, including gas processing companies, should be remitted.
And NLNG is a gas processing company; so, they are not excluded.
There are arguments that NLNG is a private company, so it may not fully yield to all these rules. What can you say about this?
NLNG is not a fully owned private company, the Federal Government owns over 40 per cent, very close to 50 per cent shares of NLNG, and there is no way the company will be a totally private owned company. For better relationship with domiciles where you are working, it follows that if you do this, somehow you are on social corporate responsibility and also adding to the development of the area you are operating.
NLNG has enjoyed tax holiday for 10 years and this means that as a pioneer gas company, they were given some incentives so that they could be well established. They have not been paying some taxes and import duties and those 10 years have long lapsed
Is this amendment of the act being pursued because of the current economic situation?
What we are proposing is an amendment of the NLNG Act. It is a bill for an act to amend the NLNG Act Fiscal Incentive Guarantee and AssurancesAct Cap 87, to empower the NLNG to meet its statutory contributions to the NDDC for other matters connected therewith. NLNG has enjoyed tax holiday, as I said earlier, for 10 years and this means that as a pioneer company, they were given some incentives so that they could be well established and to attract them to come in. So, they have not been paying some taxes and import duties and those 10 years have long lapsed and we are now talking about 27 years and we are saying those things they were enjoying for 10 years, which have now extended to about 27years, will need to go into the Act. Nigeria is now in recession and we need some of those taxes and import duties, all of them, to take us out of recession.
But they are arguing that with this delayed amendment, you would most likely be chasing investors away from this particular sector?
Well I don’t see that happening. When you give tax holiday for about 10 years, those holidays are continuing, certainly, competition from any other will be constant.
Take for instance, I read in a newspaper that international institutions such as the world bank, IMF and others are easily becoming worried and warning against unnecessary tax incentives, wasteful giving and they went on to say that a joint venture between NNPC, Shell, TOTALand ENI are to exploit Nigeria’s huge reserves of gas. It is Nigeria’s major company in the Liquefied sector of gas and NLNG has since been enjoying tax breaks it was granted. This means it has been enjoying tax breaks. Meanwhile, it was also said that Nigeria recently lost around N3.3billion as a result of the extraordinary tax breaks granted to NLNG.
Every part of the country, every state, is richly endowed, but everyone believes that atthe end of the month, they should go to Abuja and share money
But last year when the country went into recession and was looking for funds, it was the same NLNG that came to the rescue…
(Cuts in) Well, what we are saying is that the Constitution of the Federal Republic of Nigeria can only be amended by the National Assembly. Where you have the NDDC Act that clearly states that the gas processing companies should contribute 3% to the NDDC fund, which is not implemented by the NLNG, this is wrong. What do you think is the rationale for paying this 3% of their by NLNG? Well, the rationale like you and I know is that the country depends on oil and gas, and you know that if the agitations and the militancy continues there, you all saw what happened recently that the militancy was picking up again until the Vice President went round the states and it dropped. To me, if it is meant for the development of the states, I don’t see anything curious about this.
So with all this, what percentage are we looking at?
Well, I have not looked at it. Our concern as legislators is that there is a law that will help the development of the host community and region. That law should be applicable across all oil and gas companies.
When you are talking about the Niger Delta, the NDDC has also been there for long. Would you say that the NDDC is not living up to its mandate?
That’s a different issue. When they are asked if they have done well, the blame doesn’t go to only those who are currently managing it. NDDC is not a state government affair. It was established by an act of parliament of the Federation. It is being monitored and supervised by the Federal Government; before now, the office of the Secretary to the Government of the Federation. But from last year, they have been moved to the office of the Minister of Niger Delta Affairs.
So, the success or failure of NDDC, particularly, may not be shared by the government of the Niger Delta. It should certainly be placed at the doorsteps of the Federal Government, whether it is actually monitoring, supervising and if the implementation of the Federal budget is being done, but it actually doesn’t exclude the state government also, because if the NDDC is not performing, the state government will talk about it. NDDC itself will tell you that’s because their resources are not coming.
How do you think this situation can be properly managed?
For me as a representative of the state, I am not one who believes in the intervention of agencies. I believe the destiny of the people should be in their own hands and the Federal Government has no business coming in to collect all the money and giving intervention ist agencies. Ideally, the states are supposed to appropriate their own powers under a Federal system and only pay tax to the Federal Government. So, that way, the community will see national oil companies as partners in business so that way there will be peace and security. But where we have a Federal Government that has turned itself to a unitary state that collects all the funds and grants a partner 13 % and bring in intervention agencies that are also being led by the nose, directed and controlled by the Federal Government; that is where the problem comes. That is what I feel. If you allow me, the only way for us to move forward in the oil and gas industry is for us to give back the proceeds to where every other resources are found. It could be limestone, gas or oil. Wherever it is found, pay even if it’s 50% of tax to the Federal Government and you, with the other resources you have collected, so that the communities take some part, the local government and state government, too, also take some part out of it so that at the end of the day, they will own these things and see them as their own.
The usual practice where the FG collects everything and at the end of every month, we all come to Abuja to do what they call FARC, Federation Allocation Committee, coming to share money is not the best. That is the bane of the Federation.
How do you think the situation should be rectified?
Well, you are looking at perfection, a situation where Nigeria will be better off, where we own this country. You know we all pretend to love Nigeria, but when we are in position let us do good to move our country from one height to the other. But this is not done. If you want to do it, you will get criticisms based on religion, sentiments and all that. So, what I am proposing is the ideal. I believe that every part of the country, every state is richly endowed, but everyone believes that at the end of the month, they should go toAbuja and share money. States should be left to manage their resources and contribute to the Federal purse on monthly basis.
