WATCHING THE WORLD NIGERIA'S REVAMPED LNG VENTURE

With David Knott from London Nigeria's latest flirtation with democracy came to a halt Nov. 17. When the new ruler, Gen. Sani Abacha, seized power he announced his intention to set up a strict military regime to restore stability. Abacha had been defense minister in the previous military regime, led by Gen. Ibrahim Babangida whom he helped overthrow. Babangida had arranged a general election in June but declared the result invalid.

Dec. 6, 1993

3 min read

Nigeria's latest flirtation with democracy came to a halt Nov. 17.

When the new ruler, Gen. Sani Abacha, seized power he announced his intention to set up a strict military regime to restore stability.

Abacha had been defense minister in the previous military regime, led by Gen. Ibrahim Babangida whom he helped overthrow. Babangida had arranged a general election in June but declared the result invalid.

In August Babangida stood down in favor of a military-backed interim government led by Chief Ernest Shonekan. Shonekan had been a contender in the election, although the undeclared winner was Chief Moshood Abiola.

Shonekan's overthrow by Abacha surprised nobody, London's Financial Times reported. FT reported a banker as saying, "If you are going to rule Nigeria you have to have either a mandate from the people or a gun in your hand. Shonekan had neither."

INTERLUDE

The democratic experiment was filled with incidents. Workers organized general strikes after the presidential poll was aborted. Later, Shonekan's civilian government raised domestic fuel prices by 600%. That triggered riots in Lagos. Now Abacha's government has lowered prices to placate trade unions.

Meanwhile, oil production has hardly been affected. One reason was an agreement between trade unions and government that exploration and production would not be halted in the event of a strike.

FT also reported the government's Budget Monitoring Committee disclosed $1.5 billion of oil revenues was paid into special projects accounts in Babangida's time. Officials were denied information on how the accounts operated.

One account was said to have been set up to cover foreign exchange costs for the proposed Bonny Island LNG project, which ran out of cash again earlier this year (OGJ, Apr. 19, p. 36).

A U.K. Foreign Office official said the key to the future of the LNG project is whether a dedicated funding account will be set up and allowed to fill rather than run on empty.

NOW LNG HOPES

Britain's Foreign Office said it did not know the policy of the new Nigerian government toward the LNG project but believed foreign partners were now more hopeful of progress than for the last 2 years.

A spokesman for Nigeria LNG Ltd., the joint venture set up 25 years ago to develop the 54.5 billion Bonny Island export project, said it was not affected by the change of government. But a formal relaunch of the venture, said to be expected within 2 weeks, will see Nigerian government equity reduced and foreign partners' shares increased.

At present, Nigeria LNG partners are Nigerian National Petroleum Corp. 60%, Shell Gas By 20%, Ste. Nationale Elf Aquitaine 10%, and Agip SpA 10%.

Although negotiations are not complete, the most likely breakout of the relaunched Nigeria LNG is said to be NNPC 49%, Shell 24%, Elf 15%, Agip 10%, and International Finance Corp., investment arm of the World Bank, 2%.