News Agency of Nigeria (NAN)

NLNG floors NIMASA over levies

Aerial view of Nigeria Liquefied Natural Gas (NLNG) plant at Bonny Island in Rivers State

By Sandra Umeh

A Federal High Court in Lagos on Tuesday held that Nigeria Liquified Natural Gas Ltd (NLNG) was right in refusing to pay levies demanded by the Nigerian Maritime Administration and Security Agency (NIMASA).

The dispute between both parties arose as a result of perceived conflict in their respective enabling Acts – Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Act and Nigerian Maritime Administration and Safety Agency Act.

There are also Merchant Shipping Act and Coastal and Inland Shipping Act regulating NIMASA’s operations.

NIMASA had said that its levies were applicable to NLNG, while the latter had argued that it was exempted from such levies and charges by virtue of the NLNG Act.

NIMASA had then filed a suit against NLNG in 2010 claiming entitlement to the levies.

After preliminary proceedings were taken and concluded, and the matter was ready for hearing, NIMASA filed an application to withdraw the suit, and on May 3, 2013, resorted to blockage of the Bonny Channel.

NIMASA had averred that the NLNG was liable to pay three per cent gross freight on its international in-bound and out-bound cargo and sea protection levy.

It also claimed that NLNG was to pay two per cent cabotage surcharge on all activities carried out for and on its behalf as well as other sundry claims.

All of these claims were disputed by the NLNG which also filed a case against NIMASA.

It sought a court’s determination on the legality of levies sought to be imposed by NIMASA, and the blockade of the Bonny Channel by NIMASA as a result of the dispute.

In its pleadings, the NLNG said that it lost 475 million dollars while NIMASA blocked Bonny Channel.

Delivering his judgment, the judge, Justice Mohammed Idris, held that NLNG was not liable to make the said payments to NIMASA.

The judge therefore ordered that all such payments already made by NLNG to NIMASA should be refunded.

He also ruled that NIMASA was wrong in blocking the Bonny Channel for the purpose of enforcing the payments against NLNG, and ordered a refund.

The Director General of Nigerian Maritime Administration and Safety Agency (NIMASA) Dr Dakuku Peterside has expressed the Agency’s dissatisfaction with the judgment of the Federal High Court by Justice M. B. Idris, delivered today in the case between NIMASA and the Nigeria Liquefied Natural Gas, (NLNG).

Consequently, Dr Dakuku has stated the Management’s intention to appeal the judgment. He noted that “the Agency’s Legal team are waiting for the certified true copy of the judgment which we will study and respond as   appropriate”.

It would be recalled that NIMASA had in 2013 requested the NLNG to pay all statutory Levies accruable to the Agency, including the 3% levy on gross freight on inbound and outbound international cargo, 2% Cabotage levy and Sea Protection levy stating that the NLNG was not exempted from payments of statutory levies after its tax holiday ended many years ago.

Section 2 (1) of NIMASA Act states that “This Act shall apply to ships, small ships and crafts registered in Nigeria and extended 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”. The only vessels exempted from levies under the NIMASA Act are “…warships and military patrol ships”. (Section 2 (2).

NIMASA has portfolios of statutory revenues that it collects from shipping companies/ship operators, manning agents and seafarers. This the agency pays into the coffers of the government. It is within these funds generated that the agency uses to develop and police the maritime sector. NIMASA does not receive any government allocations.

The  Court had in 2013 ruled on the agreement by both parties which stipulated that NLNG would pay outstanding levies and also to continue to pay all applicable levies in line with the NIMASA mandate.