Nwaoboshi: NDDC Now Better Positioned
In a chat in Asaba, Delta State, Senator Peter Nwaoboshi, representing Delta North, spoke to Omon-Julius Onabu on sundry national issues. Excerpts:
Many believe you amply demonstrated your concern for the Niger Delta region by initiating the NDDC Amendment Bill. What actually prompted you to initiate the bill?
You may recall, the Niger Delta Development Bill was promulgated in 2000 and it was one of the first bills that the then President, Chief Olusegun Obasanjo, refused to assent to and the National Assembly had to override him; and, it became an Act of the National Assembly and, therefore, it became a law.
When I became the Chairman of the Niger Delta Affairs in the Senate, I went through the bill. First, there was the problem of NDDC being under-funded and there was no sufficient fund to run it. The federal government owes NDDC almost N1trn as I speak with you. NDDC runs a deficit, in terms of their exposures, of over N1.2 trillion. That is their debt profile and the federal government is not paying, (though) they are supposed to pay over a period of some years.
When you go through the law, you will see that they were supposed to pay 50 per cent of the Ecological Fund due to memberstates. That is, 50 per cent of that Ecological Fund that is due to member-states is supposed to be paid to the NDDC but as I speak with you now, not one kobo has been paid from the Ecological Fund to the NDDC.
Another source of revenue is from the oil and gas processing companies. Now, if you go to the oil companies, the law says that they should pay three per cent of their total annual budgets to NDDC. When I came in and we looked at this problem of under-funding, (we found out that) they were not able to meet their obligations.
We now asked ourselves, if the NDDC was going to get 50 per cent of the Ecological Fund, which is due states in its mandate area, get three per cent of the total annual budget of the oil and gas processing companies and also the federal government is to pay a particular percentage to them, then there is no reason why it should be under-funded. So, the question was what is really happening? Why is it that they are not being paid and why all these problems?
So, we said let us find out why all these are happening. It was in the process that we found out that no oil company gives NDDC their actual budget and so the three per cent was just whatever the oil companies decide to give to the NDDC. In fact, some of them were even arguing that it is three per cent of the real budget, not even three per cent in terms of their annual budget, that is, what they spend. That is not the ideal thing.
When we looked at all these, we said let us do a public hearing to find out truly why the NDDC is in this debt problem. We went further to discover that the Liquefied Natural Gas (LNG) or even the other gas companies, none of them had paid one kobo for the past 17 years and we asked why, after all, the law is clear. In the process, we discovered that LNG said that they went to court with NDDC and the late Justice Nwodo of the Federal High Court gave judgment in their favour (of LNG). They also went to the Court of Appeal and then they proceeded to the Supreme Court.
Due to the fault of the legal team, they didn’t meet up the period to file their documents and the Supreme Court struck out the appeal on technical grounds, meaning, in effect, that the NDDC lost. So, when we invited the LNG, they just came with the Supreme Court judgment and said ‘we have a judgment at the Federal High Court, we have a judgment at the Court of Appeal and since we have all these judgments in our favour, we are not going to pay’. As a lawyer, I asked for a copy of the judgments, I went through the full judgments and I said ‘Okay, we have a way out of it.’
In fact, my brothers in the lower chamber, the House of Representatives, started the process of amending the LNG Act and, in the process, the LNG started going round the whole country, using all their connections and all of them were putting pressure. They went everywhere, to the then Acting President, Yemi Osibanjo, from there to went elsewhere, (and even) foreign countries got involved, almost everybody got involved and they were now putting pressure on the National Assembly as if they (National Assembly) was just out to spoil the source of revenue for Nigeria. But the House of Representatives went ahead to amend the LNG Act, removed their waivers and some of the incentives given to them.
But I felt that was a very long journey and it was going to attract many issues and I said ‘let us just amend that particular section.’ Having looked at the judgments of the Court of Appeal, the Supreme Court and the Federal High Court, I knew where the problem was and said what we want is to amend this section and, in the process, that was how we decided to bring more revenue for the NDDC. That’s it.
When did the journey to amend the Act actually begin?
In fact, there are two amendments to the NDDC Act that has been passed by the Senate. One is more comprehensive. In that one for example, if you look at the representation in the Niger Delta Development Commission, it says one member from the oil-producing areas of the state. That has caused a lot of problems as to how you define an oil- producing area.
Do you define it vis-à-vis the local government area or do you define it vis-à-vis the senatorial district, or vis-à-vis the state? It is an issue and so, many problems came up when we were going to clear some nominees of the President and people said we should use states, some said we should use senatorial districts and some others said it should be local government areas.
But I and most of my colleagues said that it should be local government area that produces the oil and that’s how we disqualified the people from Abia, the Ondo nominee and of course that of Imo withdrew. Therefore, to remove that ambiguity in the law, we had to go through the amendment and many other sections we needed to amend. But this issue of revenue became very important, because you cannot set up a commission like that and they are always crying for funds.
The journey started when we discovered all these flaws. We said let’s deal with these issues. So, we started from the beginning, when we discovered these flaws but to deal with this particular section, we started sometime about one year ago. We had to even invite the gas companies, held series of meetings with them and they made their own case and eventually, we held series of meetings with their boards. We even invited their whole board, they met with us; we met with the leaders, they also met with the Senate President and all of them and we continued talking. You can see that when we brought in the Bill to the Senate for second reading, no single person opposed it and when it went to the House of Representatives, it was not opposed by anybody and the President, within a period of two or three weeks, signed it into law.
What, in your view, are the long and short term effects of this particular Act that has been amended in terms of the development of the Niger Delta area?
It’s going to give them more revenue and let me say that I must thank the President because the Act was signed on the last working day of the year and it means that the Act took effect from last year, 2017. The moment it was assented to it became a law. So, the LNG has to pay for 2017; they just have to pay.
In the process of negotiation with the oil companies when the bill came, the gas companies also became interested and they saw that there was no way that they would not be asked to pay something. They threatened that they were going to go to court and we said ‘okay, you can go to court.’ But we now had to discuss with them on the issue of feed gas. When you look at the bill, you see feed gas. ‘Minus the cost of feed gas’ that was a compromise we struck with the gas companies. Let me explain what they mean when they are talking about and when they say ‘after deducting the feed gas’.
One of the things they were canvassing for is to avoid what they see as double taxation. Shell, for example, is a major shareholder of LNG. Now, Shell is saying that ‘if am paying three per cent of my annual budget to NDDC and you are also asking me to pay three per cent from the gas I produce – because it’s from that budget I produce all these things – when I have given you three per cent of my annual budget, that would be unfair’. To Shell that would be double taxation.
Then, all the other shareholders in the LNG, who are major oil companies, said they would not accept it (double taxation). Essentially, they said if you are going to ask us to pay three per cent after we have paid another three per cent of our annual budget as oil processing companies; if after that you ask us to pay three per cent for gas processing, it will be double taxation and, if you are going to do that, we will go to court.
Eventually, we said let that area of processing be removed, which is called the feed gas, but after that they should pay the rest. The feed gas is about 40 per cent and then the other is 60 per cent. When we looked at it, we said we will remove the feed gas for them, but, at least, they should pay something after 17 years. That is the reason.
Talking about the law, the issue of implementation needs no overemphasis. What have you done at the National Assembly, in terms of oversight responsibility, to ensure compliance?
They will (pay). First of all, we cannot oversight them yet because the law has just gone into effect. The NDDC has to put in the necessary machinery to get their money. If for any reason, NDDC reports or we find out during any of our oversight visits or calls that the gas processing companies fail to pay, the other law that is coming and, which of course, has been passed by the Senate and which was also sponsored by me, gives a percentage as fine for non-payment as and when due.
I think there is another comprehensive law, where we are amending all the inadequacies and all the things we found out as the shortcomings in the original bill. It’s about six chapters, six sections we are amending. In that place, we took cognizance of what you are asking about now. If they fail to pay, there is a penalty for that. But I don’t think that LNG will not pay, given the level of negotiations and, of course, they have seen the popular feeling of the people that they must pay.
You have also said the NDDC has an exposure of over N1.2trn. What are you doing as Senate Committee Chairman to help them recover the money and also to probably reach-out to the federal government in terms of the huge debt overhang you talked about?
First we invited the Accountant-General of the Federation, because for example, I have told you that they are not paying the 50 per cent of the Ecological Fund due to member states. We have got the Accountant- General, he has said his own side, we have got the Permanent Secretary in (charge of) the Ecological Fund and we invited the Auditor- General of the Federation. In fact, we have invited almost everybody that is involved but we know that if we calculate that, even at that, we would be able to get something for 17 years.
Apart from that, we have gone to the extent of inviting the Minister of Budget, because they don’t budget. It used to be about N70bn (provision) to the NDDC. They will just sit down and allocate whatever they want to allocate to them (NDDC) outside of the law and even out of that N70bn, they may not even get up to N40, N50 or N60 billion at the end of the year. It’s not only in this government; it has been on. Let me not say it is Buhari’s government alone; it has been on since 2000.