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NIMASA: NLNG’s demand of N101b an affront to judicial system

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NIMASA: NLNG’s demand of N101b an affront to judicial system

Unread postby Wsj » Fri Oct 20, 2017 9:48 am

Despite the decision of the Nigerian Maritime Administration and Safety Agency ( NIMASA ) to challenge the judgment of a Federal High Court declaring its collection of some money from the Nigeria Liquefied Natural Gas (NLNG) Limited as illegal, the liquefied gas giant is asking for a refund of $315 million, writes EMEKA UGWUANYI.

The Nigerian Maritime Administration and Safety Agency (NIMASA) has appealed the judgment of the Federal High Court, Lagos in the matter between Nigeria Liquefied Natural Gas (NLNG), Attorney General of the Federation, Global West Vessels Specialists Ltd and NIMASA.

The agency filed the appeal with an application to stay the execution of the judgment and restrain NLNG, pending the determination of the appeal. The appeal – and stay – was filed even before receiving the Certified True Copy of the judgment 14 days after it was delivered in line with legal provisions. This proactive step of the Agency was taken to forestall any negative action, yet the NLNG ignored this court action and commenced a media trial.

In the grounds of Appeal by NIMASA’s legal team, the agency complained that the learned trial Judge erred when in breach of NIMASA’s constitutional and fundamental right to fair hearing refused to consider and pronounce on its arguments, on the issues for determination and its counter claim filed in opposition to the amended originating summons.

It also complained that the learned trial Judge erred in law in entertaining and granting the reliefs contained in NLNG’s amended originating summons wrongly used to commence the proceedings without converting it to a writ of summons, ordering pleadings and calling on the parties to lead oral evidence to prove their cases since their affidavits were irreconcilliably in conflict.

The legal team noted that the above grounds led to the error of the court which occasioned miscarriage of justice to NIMASA.

NIMASA stated that the demand of N101 billion from it as the judgment debt by the NLNG, after becoming aware of the agency’s appeal is wrong and considered an affront to Nigeria’s judicial system. NLNG should allow the law take its full course and stop the media trial of a dispute that is before the court.

According to the Director-General of the agency, Dr. Dakuku Peterside, “We feel there is an orchestrated publicity campaign to wrongly sway public opinion on the judgment. We therefore wish to reiterate that all levies and dues NIMASA collects are in line with the Act setting up the agency which is later in time to the NLNG Act, which makes the payment of NIMASA’s statutory levies enforceable on all NLNG vessels”.

NLNG last week issued a demand notice for the sum of $315,598,823.29 judgment debt to NIMASA.

The sum, it said, represents the payments made under protest to the Agency by NLNG since 2013, as well as direct and shipping losses incurred by NLNG due to the initial two-day blockade of the Bonny Channel by NIMASA in May 2013.

The General Manager, External Relations, Kudo Eresia-Eke, said the development followed the decision on October 3, 2017 by the Federal High Court, Lagos that 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 forthwith.

The court presided over by Justice M. B. Idris further held that NIMASA was wrong in blockading the Bonny Channel for the purpose of enforcing the payments against NLNG.

Eresia-Eke said: “The Federal High Court ruling transcends being simply a legal victory for NLNG. It must be viewed for what it really is: A resounding message from Nigeria to the global investment community. The message is that we can be trusted to keep our sovereign word and that Nigeria remains open for business, partnership and investments.”

NIMASA had alleged that NLNG was liable to pay three percent gross freight levy on its international inbound and outbound cargo, Sea Protection Levy, two percent cabotage surcharge as well as other sundry claims, all of which NLNG disputed.

NLNG, in 2013 filed the case at the Federal High Court against NIMASA, seeking a judicial determination on, among other things, the legality or otherwise of the levies sought to be imposed on NLNG by NIMASA, and the consequent blockade of the Bonny Channel by NIMASA and its agent as a result of the dispute.

NLNG had also sought a court order restraining NIMASA from further blockade of the channel. An Interim Injunction granted in favour of NLNG by the Federal High Court was disobeyed by NIMASA, which again blockaded the Bonny Channel over a three week period while the matter was pending, thereby preventing NLNG vessels and other vessels doing business with the Company from entry and exit through the Channel.

On the day the judgment was given, Peterside expressed the agency’s dissatisfaction with the judgment of Justice Idris.

Six years before the crisis blew open in 2013, the leadership of NIMASA ‘pursued’ the NLNG Limited for levies, which Africa’s premier LNG company saw no legal basis for.

In June 2013, after NIMASA blockaded its vessels from taking liquefied gas to its customers overseas, NLNG ran to the court again.

Before that, the Federal Government set up a mediation committee in May 2013, with the then Attorney-General of the Federation (AGF) and Minister of Justice Adoke Bello as the panel’s legal adviser. An agreement was reached that NLNG should pay the outstanding levies from September 2009.

It paid $20 million in protest and approached the court for a judicial interpretation of the dispute.

On September 19, 2013, the court started a process for the ‘proper interpretation’ the relevant sections of the enabling laws of both parties.

NIMASA did not just keep quiet after NLNG returned to court in a suit in which NIMASA was not joined as a party. The Nation learnt NIMASA was not joined because its Act says it must be given prior notice before being a party in a suit.

The second 2013 blockade by the waterways police led to the NLNG agreeing to pay NIMASA $140 million. It said the payment was in protest. The filings in court make interesting reading for anyone interested in the uses and abuses of power, the dilemmas caused by ambiguous laws and the tactics parties have been compelled to employ to outsmart each other. They also show the need for laws not to be written in ambiguous language.

The NLNG/NIMASA saga began in 2007 when the maritime regulator expected NLNG to start paying levies. By NIMASA’s calculation, NLNG’s tax holiday lapsed in 2007. NLNG saw no sense in NIMASA’s claim. As far as it is concerned, the Act setting it up exempts it from NIMASA’s levies. NIMASA says it has always acted in line with its enabling law.

Section 15(a) of the NIMASA Act 2007 stipulates: “The agency shall be funded by monies accruing to the agency from the following sources: 3 per cent of gross freight on all international inbound and outbound cargo from ships or shipping companies operating in Nigeria to be collected and paid over to the agency to meet its operational cost.”

Section 2(2) of the Act states that exemptions are only granted to “war ships and military patrol ships”.

NIMASA says NLNG vessels do not fall within those exempted from the levies and that the tax holiday granted it was time-bound.

The NLNG Act 2004 predates the NIMASA Act 2007. Section 7(7) of the NLNG Act 2004 states: “No export duties, taxes, or other duties, levies, charges, or imposts of a similar nature shall be payable or imposed on the exports of liquefied natural gas or other hydrocarbons produced by the company.”

To add to the confusion, paragraph 3, Schedule 2 of the NLNG Act states: “Neither the company nor its stakeholders shall in any way be subject to new laws, regulations, taxes, duties, imposts or charges of whatever nature which are not applicable generally to companies incorporated in Nigeria.”

Yet, according to NIMASA Act 2007, it has right to collect levies from ships and small ships “registered in Nigeria and also to ships, small ships and crafts flying a foreign flag in the exclusive economic zone, territorial and inland seas, inland waterways and in the ports of the Federal Republic of Nigeria”.

It also collects levies from shipping companies/ship operators, manning agents and seafarers on the government’s behalf. It is with these funds generated that the agency develops and polices the maritime sector. NIMASA does not receive any government allocations, said a source.

The incentives granted NLNG, said NIMASA, are not meant to be in perpetuity. The agency points at Section 2 of the NLNG Act which limits the tax holiday of the company to 10 years or when the cumulative average sales price of the liquefied natural gas reaches $3 in million metric British Thermal Units (MMBTU).

NIMASA said its market intelligence shows that as at January 2004, which was the fifth anniversary of the production of the NLNG, the milestone for the expiration of the exemption period had been surpassed by 200 per cent.

By July 12, 2013 when the NLNG agreed to pay to NIMASA, the company said it has lost over N76 billion ($475 million).

With NIMASA’s challenge of Justice Idris’ judgment, another chapter in battle has just begun. It is not clear when it will another.

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Re: NIMASA: NLNG’s demand of N101b an affront to judicial system

Unread postby vanhealn » Thu Sep 20, 2018 3:21 pm


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