By Omoh Gabriel, Babajide Komolafe, Franklin Alli & Favour Nnabugwu
THE call for the sale of NiNigeria’s national assets to raise funds to plug the hole in the dwindling revenue of the country is generating divergent views with many saying no to the idea while some private sector operators are throwing their weight behind the sale.
Eminent economist and Managing Director Financial Derivative Mr. Rewane Bismarck said that the Nigerian Liquefied Natural Gas NLNG is a cash cow that should not be sold. Speaking to Vanguard, he said “I believe in the sale of national assets in a strategic manner. That is you sell and go into a simultaneous repurchase agreement so when the prices go up you can buy it back and pay a carrying cost. But I am against selling the NLNG because it is a cash cow.
“You sell a non strategic asset at this time but even if you sell the strategic assets which are the Joint Ventures, you cannot even lock down. So we must have a simultaneous option to repurchase when the prices improve”.
A top Insurance operator who does not want his name in print said that “the whole idea of sale of National Asset should be looked at quantitatively”. He said “the question to ask is how much the nation will realise from the sale and what hole is the fund from the sale meant to plug”. He said: “Those calling for the sale should ask themselves, will the money realised help to solve the problem at hand?” According to him, “there are a lot of structural problems facing the economy, if not solved holistically would make things worse after the sale proceeds must have been used up. He said “the call is a short term approach to solving a problem that requires long term solution”.
But Manufacturers Association of Nigeria, MAN yesterday was categorical in its position of the issue saying MAN “wholly supports the call for sales of national assets by the Federal government”. Speaking to Vanguard on the matter MAN’s President, Dr. Frank Udemba Jacobs said “Dangote spoke our minds. We are not saying government should sell its share completely in NLNG. NLNG is worth $15 billion so they can sell part of it and still maintain some level of ownership.
“That is what we are saying and by so doing we generate money to beef up our foreign reserve and engender confidence of the investing community both domestic and international in the economy.” He continued “Aliko Dangote spoke our minds. We believe we need to sell some assets to beef up our foreign reserve .It has gone so low and if we begin to spend from it, before long we won’t have any foreign reserve at all but if we can sell off some of these assets and then open up the economy through liberalisation of the foreign exchange, people will have confidence to bring in their dollars and move them out whenever they want.
“At present, government has 49 per cent stake in NLNG. We think they should reduce that stake and that is the only government oil and gas business that is doing very well because 51 percent is owned by private sector. So if we can do the same in other oil and gas selected projects, like the joint venture businesses, I think there will be more efficiency in those companies”
Abuja Chamber supports call for sale of national assets if…
The Abuja Chamber of Commerce and Industry (ACCI) commenting on the issue said it supported the call for the sale of some of the country’s national assets if the sales will be properly channeled into reviving the economy.
President of the Chamber, Mr Tony Ejinkeonye who spoke to Vanguard in Abuja said, “Africa’s richest man, Alhaji Aliko Dangote and other prominent Nigerians have called on the Federal Government to sell some national assets, instead of borrowing to get the country out of recession. This is quite apt”.
Ejinkeonye said, “We truly support the call for the sale of the country’s national assets only if transparency is Key in the entire process. If the right people acquire the assets, it will be better for the country and Nigerians by extension. “If we must sell the assets, it must be in line with the existing privatisation policy of the country. The Nigeria Liquefied Natural Gas Limited is one of the assets those who are canvassing the sale listed. And that is the most viable oil asset we have. We are not against the sale of some of our national oil assets or reducing our holdings in them as long as it is properly done in the interest of the country and for the betterment of Nigerians”, he added.
The ACCL president said, “if the assets can be privatised with core investors that have the experience and the wherewithal to run those assets, we will avoid a repeat of the bad experience of the past. Therefore, Alhaji Dangote’s recent suggestion for government to sell some national assets instead of borrowing either internally or externally in order to get the country out from the present economic recession was apt.
“Furthermore, the proceeds may be reinvested to save idle production outputs and hence sustain the production activities which in turn will increase purchasing power of Nigerians.” Ejinkeonye said timely and rational decision was of essence to achieve the desired aim.
The Nigerian Association of Chambers of Commerce Industry Mine and Agriculture simply said “There is nothing wrong in selling national assets that are no longer useful or efficiently operated by Federal Government.
“The FGN has released N400 billion into the economy for capital projects. They promised injecting another N350 billion into economy this week. This is a good move as it will cause money to flow around, contractors will return to sites and jobs will be created and infrastructure getting better. The next stage is to encourage the Private Sector to resume production through reduction of bank interest rates. Unfortunately the CBN is not helping matters by still keeping the MPR at 14% thus encouraging high cost of borrowing”.
Dangote prefers sale of FG assets to IMF loan
It will be recalled that Alhaji Aliko Dangote had suggested that the Federal Government sell assets to remain afloat and get back to better times, instead of going for foreign loans.
According to him, it does not make any sense to keep assets and then suffocate them.
Dangote stated this while speaking with CNBC Africa, advising against an International Monetary Fund (IMF) loan and called for revenue mobilisation through other means.
He said: “The only way for us to get out of this recession is to make sure we move into action quickly by diversifying the economy quickly. I think the real challenge is now for us to have the political will in terms of selling some assets. I think it is an easier route than going to IMF or World Bank to borrow, because what we need to do is to beef up reserves”.
CBN Governor also support assets sale
The Governor of Central Bank had last week said that government could raise $40 billion from asset sale. Speaking to the News Paper Proprietors Association of Nigeria, Godwin Emefiele said: “Also in the short run, we can sell assets. You will recall that as at April 2015, I had an interview with Financial Times of London during which even before the government came on board, I had opined that there was need for the government to scale down or sell off some of its investments in oil and gas, particularly in the NNPC and NLNG as at that time when the price of oil was around $50-$55 per barrel.
We actually commissioned some consultants that conducted the study and at the end of that study we were told if we sell 10% to 15% of our holding in the oil and gas sector that we could realise up to $40bn.
Revenue Commission faults Dangote’s call for sale of NLNG, other Federation Assets
But almost immediately The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) came out openly to disagree with Aliko Dangote on the sale of Nigerian Liquefied Natural Gas (NLNG) and other Federation Assets he proposed for sale.
In a statement signed by the Commission’s Acting Chairman, Shettima Umar Abba Gana, RMAFC argued that “it would be unrealistic for the Federal Government to dispose of its crown jewels that generate revenue and expect to keep the Federation Account healthy over the long term.
“It is the considered view of the Commission that Nigeria’s Assets like NLNG and other strategic national resources should not be sold to meet short-term financial obligation”, they said.
Central Bank Governor Godwin Emefiele had recently indicated that the sum of $10bn would be realised from the sale of these assets.
“RMAFC advised that instead of selling off such vital assets which generate funds for the Federation, wealthy Nigerians should be encouraged to set up their own LNG projects, since Nigeria ranks seventh in the world and first in Africa with natural gas reserves base totalling 188 trillion cubic feet (Tcf) as at May 1, 2015. In addition, Nigeria’s natural gas is regarded as one of the best in the world as it has low hydrogen sulphide (H2S) or carbon dioxide (CO2) impurity levels.
Ike Ekwerenmadu, deputy Senate President, and George Akume, an All Progressives Congress (APC) senator form Benue State, cautioned against the sale of the assets. According to them, no country resorts to selling its assets as a way out of economic recession. “UAE does not even allow you close to oil wells let alone sell them,” Ewerenmadu said. “For a country like Saudi Arabia, its budget each year is run by investments from oil revenue.
Other countries are investing; I am sure we will not be fair to the next generation if we sell off our assets.
If we must sell, we have to sell the non-performing assets so that people can turn them around and create employment”, he added.
Commenting, Akume advised Nigerians to refrain from calling for assets sale.
He said that the country should focus on recovering stolen funds. “If we want to sell our oil assets at this time when the price of oil crashed, how much are we going to realise?” he asked.
He pointed out: “We are making a mistake here; what we are doing is to ensure that those who are within the bracket of the stolen dollars will still come to buy.” Akume said the country should rather focus on industrialisation through agriculture.