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Mystery accounts: Senate frowns at LNG’s accounting system, set to halt Train 7

Posted by By AMOS DUNIA, Abuja on 2008/08/11 | Views: 1365 |

Mystery accounts: Senate frowns at LNG’s accounting system, set to halt Train 7


The Senate has expressed deep concern over the lack of proper account of income expected to accrue to the country from the six established trains of the Liquified Natural Gas (LNG) considered to be the largest in the world.

The Senate has expressed deep concern over the lack of proper account of income expected to accrue to the country from the six established trains of the Liquified Natural Gas (LNG) considered to be the largest in the world.

This is coming on the heels of determined moves by the National Assembly to review certain incentives earlier accorded the LNG as contained in the Act that set it up to enable more Nigerians benefit from the project that was said to have raked in so much foreign exchange into the country.

Chairman of Senate Committee on Gas, Senator Osita Izunaso who stated this during a chat with journalists at the National Assembly declared that until details of the revenue that accrued from the LNG six trains were accounted for, the Senate would not support the establishment of the proposed seventh train for the LNG.

He said: “The Senate will not support train seven of Bonny LNG. We will not support it until proper account of trains one to six is given to Nigerian people. So, we advise them to render proper account to the NNPC. We had raised the issue with the NNPC in the past and we expect that that should be done before they can contemplate this issue of train seven”.

Senator Izunaso explained that despite that only one LNG (Bonny) was functional, Nigeria still remained as the country with the highest export of LNG to America, Europe and other places, adding that Nigeria was unarguably the largest LNG in the World.

Izunaso noted that giving the success story of the LNG, it was already moving to train seven in less than 10 years of its establishment was already moving to train seven now having perfected train six.
“Other countries can boast of one train, two trains within a period of 10 years. But this is very lucrative. That is why they have moved up to train six and they are now planning to move to train seven. But we are asking that we want to see how Nigerians have benefitted from it,” Senator Izunaso said.
He further observed that when the LNG agreement was entered 10 years ago, they were accorded all manner of incentives as a means of wooing them to come into the business, adding, however, that as at today, such incentives can no longer stand the test of time.

“Much as they have 10 years to run, we will like to find out whether those incentives are supposed to cover for train one or two. But they have carried on up to where they are today.
And these incentives, if you open it up critically, are like dashing these people this gas and getting no money out of it for a country that is greatly blessed in gas resources like Nigeria. So, with respect to Nigeria LNG in Bonny, the Act must be amended to reflect the current global realities,” Senator Izunaso said.

Senator Izunaso also said that the Senate had raised certain fundamental issues concerning the economic viability of the issues with Olokola LNG, saying that the upper House of the National Assembly will work round to reduce the cost of that plant.

just as he noted that the current cost of the plant would not stand the test of time.
Senator Izunaso said: “There is an agreement currently to reduce that plant by thirty per cent. That has not been done and it has to be done. And what will they be doing? Because the Olokola LNG. It is unbelievable. It was conceptualized from the beginning as a free trade zone. For what? Why will it be a free trade zone? And what are their plans assuming that the Federal Government does not grant the free trade zone?”

He also said the Brass LNG was still being considered as there were still some very major issues about local content involving the indigenes in what they were doing, adding that the place the LNG was being built did not have a link road, stressing that there was no link road from Yenagoa to Brass.
“So, how do we connect to the people? So there are certain issues about Brass and we are yet to look at their final investment decisions.

We have not seen their FID. We have not seen their gas sales agreement because for an LNG to take off you must sell the gas ahead of time. We sold this gas 29 years ahead of time, so we must see the gas sales agreement because it is something you are selling 20 years ahead of time so if you don’t get it right now it means that you have injured yourself for the next twenty years,” Senator Izunaso said.

He noted that while the Act (Decree) setting it up in 1990 gave the LNG the incentives that included tax free, free trade zone among other things, they still had not been able to pay certain royalties and taxes that ought to accrue to the country, saying that if such were to be quantified, they amounted to a lot.

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Comments (3)

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Abieyuwa(Edo, Nigeria)says...

Otasowie means evening life is better than morning life. There is an error in your “evening life is better than evening life”?

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Naija g(Houston, Minnesota, US)says...

Sokari doesn’t mean joy. Joy is Biobela. Go to the village and ask the meaning of the name.

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Fay(Katy, Texas, US)says...

Actually translates to bravehearted.