Recently, the Central Bank Governor, Mr. Godwin Emefiele, called on the incoming administration of General Muhammadu Buhari (rtd), to consider selling off 30 per cent of the Federal Government’s majority stakes in Joint Ventures (JV) with multinational oil companies to shore up government finances and raise fund for infrastructural development. Emeifiele hinged his advice on the fact that over $75 billion is a realistic target for the deal, and that private equity groups could be encouraged to compete with the oil companies for acquisitions to ensure the price is competitive. He was of the opinion that if the Nigerian National Petroleum Corporation (NNPC) could substantially reduce its 55 per cent equity in the joint ventures with oil giants, including the Royal Dutch Shell, Chevron, ExxonMobil, Total and ENI, which pump about half of Nigeria’s 2 million barrels a day of oil production, the country would be better for it. In this special report, Sylvester Enoghase, Phillip Oladunjoye, Emma Okwuke, Bamidele Ogunwusi, Abel Orukpe and Saheed Bakare, examine if the President-elect, Buhari should go ahead with the deal of raising more fund to rebuild the macroeconomic buffers damaged by collapse in global oil prices.
Nigerians are reacting to the proposal by the Central Bank’s Governor, Mr. Godwin Emefiele’s proposal to the incoming administration of Muhammadu Buhari to consider selling off 30 per cent of the Federal Government’s majority stakes in Joint Ventures (JV) with multinational oil companies to shore up government finances and increase funding for infrastructure development.
To some, selling off part of the joint venture stakes would help solve Nigeria’s infrastructure challenge. They want the government to go ahead and do as advised but noted that the incoming government has every right to reject the advice.
An economist, Mr Gabriel Abani, said that the incoming government should sell its shares in these oil giants to other private investors so as to use the money earned from the sale to fund revival of Nigeria’s decaying and non existence infrastructure.
He said that with Buhari on the saddle, earnings from the sale of Nigeria’s stakes in the Joint Venture with multi- national oil companies will be judiciously utilised.
Abani added that he would not have supported the sale of Nigeria’s equity in these oil companies if the advice the CBN governor had given was for the President Goodluck Jonathan led administration. This is because, there is no guarantee that such funds will be accounted for, as the money may find their way into private pockets.
According to him, “There are no infrastructure and even the available ones are either not functioning or are decaying but with the Buhari incoming government, I am very confident he would use the money judiciously if he eventually take the advice of the CBN governor”.
The economist also adviced the incoming government to weigh Emefiele’s advice before taking it, wondering why the same governor did not give the Jonathan led government this same advice.
He said the apex bank governor should have given the President Goodluck Jonathan led government advice he is giving Buhari now, wondering if the governor was reserving the advice for the incoming government.
“The CBN governor has given his advice and it is left for the Buhari led incoming administration to weigh the advice and decide whether to take it or jettison it” he said.
On his part, the former General Manager, Corporate Communications, Air Nigeria, Mr Francis Ayigbe, said that although the infrastructure in the country are facing several challenges, but said that the incoming government must weigh the advice of the apex bank governor very well before taking it.
He said that he would have objected to the sale of the Federal Government’s equities in the multi-national oil company if the implementation was to be carried out by the current administration.
The former Air Nigeria spokesman explained that the reason for the objection to sell the 30 per cent shares being that the money that would accrue to the government from the transaction may end up somewhere else instead of the infrastructure that it was originally meant for.
He added that the money from the sale of equities that should have been used to develop the country’s ailing infrastructure would be diverted thereby defeating the purpose of the sale.
Ayigbe however expressed happiness that the CBN governor is advising the Buhari led incoming administration to sell the 30 per cent equities in the multi-national oil company to finance infrastructure development.
He noted that knowing Buhari’s antecedents, he is quite sure if eventually he takes the CBN boss advice, he would ensure that the money that would be generated from the sale would not find its way into private pockets.
According to him, “If the governor of CBN had given this advice to the current government, it would buy it but whether the government would use the money that it would get from the sales of the shares will be used to provide infrastructure for the people of Nigeria is what I cannot bet on”.
He said “But now that the CBN governor has given the incoming government led by Buhari advice to sell the 30 per cent equity shares the Federal Government has in the joint ventures with multi-national oil companies, I can tell you that this money will be used for the purpose it was meant for; provision of infrastructure for Nigerians. The Buhari we all know will not allow the money that would accrue to the government from the joint ventures to be diverted or tampered with”.
Also speaking, the General Manager of Fountain Property Venture, Mr Akin Adesanya, said that it is a good idea if only the incoming government will take the advice, adding that reducing the Federal government’s majority share in JV’s is long overdue.
He added that selling federal government’s shares in the joint ventures is not the issue but that the major challenge is whether the money from the sales would eventually be used for the original purpose that it was meant for.
Adesanya said that there have been several instances where monies meant for a particular project is either diverted or find its way into private pockets and that nothing has happened to those who were responsible for the diversion.
The property manager appealed to the incoming government to take a critical look at the advice of the apex bank governor and decide whether to take the advice or reject it, adding that even when the Federal Government decides to sell 30 per cent of the share it has in the Joint Ventures (JV) with multi-national oil companies, it would still be left with some shares in the JV to rely on.
He called on the incoming administration to focus on infrastructure such as power, public transportation; especially rail transport, roads, water supply and schools among others.
“If the Buhari led government decides to take the CBN governor’s advice, the money should be used to provide infrastructure for Nigerians. It should not allow those in the government with him to divert the funds because if that happens, there will be no difference between the incoming government and the current government. The government should look at infrastructure such as power, transportation, water supply, schools and other basic infrastructure” he said.
However, some experts, who spoke to Daily Independent, said that what Emefiele has said is just an advice, adding that the incoming government is not bound to take the advice but that it is high time the government reduces its equities in these joint ventures.
They argued that the best person to tell Nigerians the status of their purse is the CBN governor, adding that there is nothing wrong in the advice he has given the incoming government.
They argued that the Buhari led government needs a lot of money to carry on, as there are so many expectations from the populace.
“The CBN governor knows the amount of money in our treasury and as the custodian of the nation’s treasury; he should know better, hence the advice. The Buhari led administration needs money to kick start the projects they promised the people when they were campaigning to win votes .So for the incoming government to execute these projects they need sound advice from people like the Central Bank governor, whose position and advice should not be ignored”
“However, if the economy was in a good condition, the CBN advice would not have been relevant but the current economic situation with fall in global oil prices, the incoming government should take another look at it because, the CBN governor is speaking from a position of what he knows as the governor of CBN.”
A Financial Analyst, Mr Robinson Isoah said he doubts if the JV is beneficial to the Federal Government. “The Federal Government’s equities in the joint ventures should have been addressed by past governments because as far as I am concerned they are not beneficial to Federal Government and by extension Nigerians and the economy.
“The joint ventures that we entered into with these multi- national oil giants are not profitable to us as a country. For example, some of the promises made to us were never fulfilled by these companies. Again, the so-called technocrats imported into the country most cases cannot compete with those in Nigeria but they receive fat remunerations as expatriates. This cannot happen in developed countries such as United States, Canada and United Kingdom. The joint venture equity should be addressed because I don’t expect Federal Government to have more than 10 per cent stake in the deal .Again, the Federal Government should take a second look at Emefiele’s advice,” he said.
The Managing Director, Finum Aviation Services, Engr Kyari Shery in his contribution stated that the Federal Government has no business being in business. He said there is nothing wrong in what the Central Bank Governor has said.
The CBN governor, he said must have spoken knowing that there is no money in Nigeria’s treasury to execute the projects which the incoming government had promised to execute. He said what Emefiele is simply saying is that the Buhari led government should use the stake to raise money.
Kyari added that since the CBN governor said that he has commissioned the research and that he would present the idea to president-elect Muhammadu Buhari when he assumes office on May 29, 2015, Nigerians should wait see.
He said that Nigeria being Africa’s biggest economy is reeling from the collapse in the world price of oil which contributes around 70 per cent of state earnings and that as such the incoming government would need a lot of finance to manage the economy.
According to him,”the CBN governor only gave an advice to the incoming government led by Buhari on how to raise funds to provide infrastructure such as power, transportation and others. The incoming government has every right to either take the advice or ignore. But let us not forget that the CBN is speaking from a position of authority. This means the incoming government should take a look at the advice and decide whether to take it or reject or look at other sources of raising funds”.
According to him, “the government has the right to ignore the advice of the CBN governor to sell 30 per cent stake in the joint venture deal it has with multi-national oil companies if it feels there are other sources of raising funds for infrastructural development in the country”.
He advised the incoming government to cut down some of the frivolous spending that characterised the current administration, adding that by doing that the Buhari led government would have saved some funds that would have been used for things that would not benefit Nigerians
Source : Independent