Court rules against NIMASA over dispute with NLNG on levies

A federal court on Tuesday ruled against the Nigerian Maritime Administration and Safety Agency, NIMASA, in its dispute with the Nigerian LNG Limited over levies.

Justice M.B. Idris, who ruled that the NLNG was not liable to make any payments to NIMASA, directed the maritime agency to refund any payment already made in respect of levies for the use of the Bonny Channel.

But the Director General of NIMASA, Dakuku Peterside, said the agency’s legal team was waiting for the certified true copy of the judgement before issuing an appropriate response.

Mr. Peterside questioned the court ruling, insisting the NLNG was not exempted from payment of statutory levies after its tax holiday ended many years ago.

The NLNG is one of the prime beneficiaries of the pioneer status policy by the federal government.

The NLNG’s tax holiday under Section 2 of the NLNG Act covered the period between 1999 and 2009, allowing the company to enjoy 10 years of tax waivers and other incentives for the investment in the project to harness Nigeria’s gas resources for exports.

Although the company was granted exemption from tax initially for five years, it was extended by another five years.

NIMASA had sued the NLNG in 2013 accusing it of liability to pay three per cent gross freight on its international inbound and outbound cargo, sea protection levy, two per cent cabotage surcharge on all activities carried out for and on its behalf, as well as other sundry claims.

NIMASA had accused the gas company of refusing to pay the levies as stipulated under the NIMASA Act, Merchant Shipping Act, and Coastal and Inland Shipping Act.

But NLNG disputed the charge, saying it was covered by the NLNG Act against the payment of the levies to NIMASA since the company’s LNG vessels were not involved in coastal trade or cabotage.

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

Although the maritime agency withdrew the suit in 2013, it later changed its mind, opting to block the Bonny Channel, preventing the entry and exit of NLNG vessels till further notice.

On June 22, three NLNG ships, namely LNG Enugu, LNG Oyo, and LNG Imo, were detained by NIMASA, barring them from accessing or leaving the company’s loading bay.

In 2013, NLNG filed a case against NIMASA at the Federal High Court seeking a judicial determination on, among other things, the legality or otherwise of the levies by NIMASA, and the blockade of the channel by its agents as a result of the dispute.

The NLNG had also sought an order restraining NIMASA from further blocking the channel.
But in his ruling, Justice Idris said NIMASA was wrong in blockading the Bonny Channel for the purpose of enforcing compliance against NLNG.

The judge said the NLNG was not subject to pay NIMASA the levies, as NLNG’s LNG vessels “are not involved in coastal trade or cabotage.”

But in its reaction to the ruling, NIMASA expressed dissatisfaction with the judgment, saying its legal team would study the certified true copy of the judgment before coming up with appropriate response.

Restating NIMASA’s right to the levies, Mr. Peterside said Section 2 (1) of NIMASA Act states: “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”.

He said Section 2(2) of the Act grants exemptions from levies to only “…warships and military patrol ships”.
“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,” he said.

He recalled that the same court had ruled in 2013 on the agreement by both parties that NLNG would pay outstanding levies as well as continue to pay all applicable levies in line with the NIMASA mandate.