We are used to regulators changing the rules whenever they feel like it. But this judgment draws a line in the sand. It tells investors — whether you’re building a gas plant or a fintech startup, that statutory guarantees actually do mean something… It also sends a clear message that enforcement power is not a license to override legislation. Coercive force cannot be used to rewrite or evade statutory limits — and yes, that includes gunboats.
The first time I met Dr Babs Omotowa, the former CEO of Nigeria LNG, I was struck by how calm he seemed. It was surprising because, if you’ve read his book, From Storeroom to Boardroom, then you would know that the man has weathered storms that would make most CEOs crumble.
He wrote about a company that was battling market forces, while fighting for its soul against the very government that set it up. He described a resilience that I frankly found hard to believe until a close examination of the recently decided case of NLNG v. NIMASA, which, in part, prompted this article.
The “Sacred Vow”
To get why this case matters, you have to go back to the beginning — 1989.
When the Nigerian government wanted to build the NLNG plant, it knew it needed billions in foreign cash. To get industry giants like Shell, Total, and Eni to sign the cheques, the government did more than just shake hands; it passed a specific law: the Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Act.
The name says it all.
Under Section 2, the Act provided specific tax relief periods, but more importantly, the Second Schedule laid out “Guarantees and Assurances” that were meant to outlive the initial tax breaks.
Specifically, Paragraph 6 of the Second Schedule promised that these guarantees “shall not be suspended, modified, or revoked during the life of the venture except with the mutual agreement of the Government and the shareholders.”
Essentially, it was a statutory promise: “If you invest your billions, we promise you consistency, fairness, and most of all, stability.”
The Conflict
For years, this plan actually worked. NLNG continued operating and recording incredible profits year after year, to the benefit of not only the corporate stakeholders but the government as well. For all intents and purposes, the Act was being abided by, and all parties involved were content with it.
And then NIMASA came knocking.
The Nigerian Maritime Administration and Safety Agency (NIMASA) pointed to its own establishing act (the NIMASA Act 2007) and demanded that NLNG pays two major levies: a 3 per cent gross freight levy and the 2 per cent Cabotage surcharge, alongside other minor levies. NIMASA’s logic was straightforward: “As long as you sail on our waters, you will pay our levies.”
As expected, NLNG pushed back. They pointed to Paragraph 3 of the Second Schedule of their Act, which states that the company shall not be subject to “new laws, regulations, taxes, duties, imposts, or charges of whatever nature which are not applicable generally to companies incorporated in Nigeria.”
Since these specific maritime levies were effectively targeting them in a way that contradicted their incentives, NLNG argued they were exempt.
To be fair to NIMASA, their argument wasn’t entirely without merit. They contended that once NLNG’s initial tax holiday expired, the company should contribute to the maritime safety and infrastructure costs that every other operator pays for, effectively arguing that perpetual exemptions create an uneven playing field. From their perspective, funding the safety of the very waters that NLNG vessels traverse is a sovereign necessity, as much as a valuable potential source of revenue.
The Blockade
Usually, these disputes drag on in boring boardroom meetings, where executives from both sides are present, with a plethora of well-paid lawyers and negotiators in tailored suits trying to one-up each other. In this case, however, NIMASA decided to take it a step further.
In 2013, in addition to its demand notice, it deployed security contractors to physically blockade the Bonny Channel. This prevented NLNG’s chartered vessels from entering or leaving.
Yes, this actually happened: Government agents blocking a government-backed company (where the NNPC holds 49 per cent) from exporting gas. It definitely was not a good look, as it portrayed the image of a regulator trying to bully a budding company into submission, costing the nation millions in lost revenue and damaging corporate reputation.
The Courts Step In
Following this very audacious move by NIMASA, NLNG decided to take the agency to the Federal High Court.
The Court looked at the hierarchy of laws. On one hand, you have the NIMASA Act (a general maritime law). On the other, you have the NLNG Act (a specific law for a specific project).
The Federal High Court ruled in favour of NLNG. It held that the specific guarantees in the NLNG Act override general maritime laws in the absence of express legislative repeal.
But then, as it often happens in our legal system, the matter was escalated to the Court of Appeal, which subsequently set aside the High Court judgment on procedural grounds, specifically regarding fair hearing, and ordered a retrial.
It was back to square one for both parties.
The Supreme Court Ruling
It took until January 2026, but as always the Supreme Court finally had the last word. And it didn’t mince words.
In a unanimous decision, the Court upheld the supremacy of the NLNG Act. It affirmed that the “Assurances” in the Second Schedule were binding statutory obligations.
The Court held that the government cannot promise exemption from “imposts or charges” in 1990 and then use a 2007 agency law to collect those very same charges without explicitly amending the original Act.
To its credit, where the case could have gone on for another ten years of trial (which it could have done), the Supreme Court invoked its special powers to settle it right there. It granted all of NLNG’s reliefs.
The blockade was illegal, the levies were inapplicable, and the promise stands.
Why does this matter?
Because in Nigeria, “policy somersault” is practically a national sport.
We are used to regulators changing the rules whenever they feel like it. But this judgment draws a line in the sand. It tells investors — whether you’re building a gas plant or a fintech startup, that statutory guarantees actually do mean something.
It also sends a clear message that enforcement power is not a license to override legislation. Coercive force cannot be used to rewrite or evade statutory limits — and yes, that includes gunboats.
‘Mide Alabi is a lawyer. He writes from Lagos and can be reached at [email protected]
