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Sale of NLNG, Refineries, others attract more discordant tunes

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By Michael Eboh,

Amid near conclusion of decision by the federal government to sell some national assets over fiscal stress, more industry analysts have thrown more light on the issues involved.

A picture taken on September 16, 2015 shows workers trying to tie a pipe of the first refinery in Nigeria, which was built in 1965 in oil rich Port Harcourt, Rivers State. The Port Harcourt refinery is Nigeria's oldest, built in 1965, nine years after crude was first found under the marshy soil and creeks of the delta, where the Niger river meanders to the Gulf of Guinea. Refineries in nearby Warri and Kaduna in the north central region were built in the years that followed, while a new plant was added to the same site in Port Harcourt in 1989. In recent years, however, it became a byword for corruption, a murky, state-run body where billions of dollars in revenue apparently disappeared. AFP PHOTO
A picture taken on September 16, 2015 shows workers trying to tie a pipe of the first refinery in Nigeria…

Director General of West African Institute for Financial and Economic Management,  WAIFEM, Professor Akpan Ekpo,  has warned against the sale of the Nigeria Liquefied Natural Gas Company, NLNG, and other national assets, as doing so would not take the country out of the present economic woes, but would plunge the country deeper into the crisis.

Ekpo, an economist, a former Director of the Central Bank of Nigeria, CBN, was also former Vice Chancellor of the University of Uyo.  WAIFEM was established by the Governors of the Central Banks of The Gambia, Ghana, Liberia, Nigeria and Sierra Leone.

In an emailed response to Vanguard’s questions over the assets sale controversy, Ekpo disclosed that if the Federal Government decides to proceed with the sale,  Nigerian elites with their foreign collaborators would buy the assets to further their self interest, while thousands of Nigerians would be thrown into the labour market.

He said, “Selling government assets, oil or non-oil, will not take the economy out of the present recession. We have privatized government assets previously and it never worked. We unbundled the PHCN yet power supply remains epileptic. Nigerians need to know the assets to be sold. NLNG for example is not doing badly so why sell it?

“Previously privatized governments assets are littered all over the country. Selling of government assets would throw thousands of Nigerians into the labour market looking for jobs.

“Recessions are part and parcel of a market economy. What do you sell when another recession sets in? Selling government assets during a recession would only enrich few Nigerians at the expense of the working people.”

Ekpo argued that the present recession provides an opportunity to better manage the economy to minimize its adverse effects, adding that the economy needs structural reforms implemented through an economic development blue-print.

According to him, “the Nigerian economy has suffered for long from government failure and market failure, selling government assets would exacerbate the problem”.

Instead, he advised that government should borrow from external  and domestic sources to finance capital projects, provide states with conditional loans to pay backlog of salaries, hence, addressing both the demand and supply problems of the economy.

“The Nigerian Labour Congress, civil societies and stakeholders interested in the Nigerian project should resist any attempt to sell public assets acquired by public funds particularly when these assets are performing satisfactorily. Do not be surprised if there is a call to obtain an IMF facility. History is repeating itself,” he added.

However, speaking in the same vein, Mr. Adeola Adenikinju, Professor of Economics, Department of Economics  and Director, Centre for Petroleum, Energy Economics and Law at the University of Ibadan, advised the Federal Government to privatise the refineries or sell off a substantial amount of its stake in the entities.

According to him, these are assets that will not only increase government income but also in the medium term reduce the huge foreign exchange we spend on petroleum products imports.

He added that the Federal Government should scout for more of such assets and make them priority in government asset sales.

He said, “I support divestment of some of government assets especially at a time like this where there is serious liquidity crunch in the country. Government is unable to meet some of its basic commitments. The economy is contracting. There is a need for injection of fund, especially foreign exchange. Hence, just as some oil companies did in recent time, the country can also divest some of its assets.

“However, the critical factor is the process of divestment. How do we ensure we get fair and just values for the assets? How are we sure that the funds realised from the sale is efficiently utilized for the benefit of the Nigerian economy? These are not trivial issues.”

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