Nigeria LNG lost $475m to levies war with NIMASA, says court ruling vindicates long-held stance

Nigeria LNG Limited (NLNG), a liquefied natural gas-producing company has claimed that it lost about $475 million to a protracted war with Nigerian Maritime Administration and Security Management Agency (NIMASA) over applicable levies.

NIMASA had blocked the company’s export from Bonny Island for 22 days for refusing to pay levies demanded by it, a situation, according to Babs Omotowa, immediate past MD/CEO of NLNG, accounted for the $475 million loss.

A federal high court in Lagos Tuesday, however has ruled that NLNG Limited was right in its refusal to pay levies demanded by NIMASA.

NIMASA had said NLNG was liable to pay three percent gross freight on its international inbound and outbound cargo, sea protection levy, two percent cabotage surcharge on all activities carried out for and on its behalf, as well as other sundry claims, all of which NLNG disputed.

But delivering his judgment, M.B. Idris, a judge, said NLNG was not liable to make the said payments to NIMASA, and that all such payments already made by NLNG to NIMASA should be refunded.

He said NIMASA was wrong in blocking the Bonny Channel for the purpose of enforcing the payments against NLNG.

Omotowa expressed delight over the ruling but said it would not restore the huge loss.

“Unfortunately, the victory will not restore NLNG’s $475 million loss arising from NIMASA’s blockade of its ships in 2013. 65 percent ($308.75 million) of this sum would have gone into the federal government’s purse in dividend and taxes,” he said.

“The blockade was the toughest and lowest period of my five-year tenure at the helm of Nigeria LNG Limited. It was indeed a very lonely and stressful period for Nigeria LNG Limited.”

In 2013, NLNG filed the case against NIMASA at the federal high court as it sought a judicial determination on the legality of levies imposed by NIMASA, and the blockade of the Bonny channel by NIMASA as a result of the dispute.

“An interim injunction granted in favour of NLNG by the federal high court was disobeyed by NIMASA, which again effected a blockade of the Bonny Channel for over a three-week period whilst the matter was pending, thereby preventing NLNG vessels and other vessels doing business with the company, from entry and exit through the channel,” according to a statement by Kudo Eresia-Eke, NLNG’s general manager, external relations.

 The federal high court judgement reinforces NLNG’s position that by the provisions of the applicable laws, the company is not subject to payment to NIMASA of the 3% gross freight as well as the sea protection levy, and that the 2% cabotage levy is inapplicable because NLNG’s vessels are not involved in coastal trade or cabotag.