Nigeria’s Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has cautioned against the outright sale of critical national assets as contained in the Economic Recovery and Growth Plan (ERGP) where it was proposed that government should reduce its equity in the Nigeria Liquefied Natural Gas (NLNG) and Federation’s Joint Venture oil and gas assets.
RMAFC notes that the persistent clamour for the sale of the Federation’s oil and gas assets has continued unabated in spite of its earlier advice against such.
In a statement by Mr. Ibrahim Mohammed, RMAFC’s Spokesperson, the Commission advised against the sale of NLNG on the basis of the fact that it has been managed efficiently, profitably and paying dividend to its Shareholders, including the Federation.
For instance, in July, 2015, about N412.6 billion was paid as dividend to the Federation while in December, 2015, $400 million was also paid.
Consequently, the Federation would continue to benefit from the annual dividend as well as from the capital appreciation in value of this asset over time.
“The persons supporting its sale and those clamouring to buy are aware of the benefits they would make from such transactions”.
As a way forward, the Commission recommends that instead of the outright sales of its crown jewels, Government should consider borrowing the equivalent sales value of the assets since the loan could be repaid from the dividends that would have been lost if the assets had been sold, as the dividends would have gone to the new buyers of the assets.
After the repayment, the country will benefit from the investment of the loans that were borrowed while the dividends from the assets will thereafter return and be paid into the Federation Account; Converting the existing Joint Ventures to Incorporated Joint Venture Companies (IJVs) as is the case with NLNG without diluting the Federation’s equity holdings in the IJV; Providing incentives to encourage Local and Foreign investors interested in these assets to consider investing in the construction of new Gas to Liquids, Petrochemicals, Fertilizer and Liquefied Natural Gas Plants and awarding new Marginal fields and Oil Blocks to Prospective Investors as the Nigerian Federation stands to derive maximum returns from its investment in the oil and gas assets.
“In the long run, these industries will create huge business activities within the oil and gas value chain and in so doing, create the much-needed employment opportunities and business linkages for Nigerian businesses. The expanded economic activities will no doubt improve Government revenues.”
