The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has advised against outright sale of Federal Government’s equity stake in Nigeria Liquefied Natural Gas (NLNG) and other key assets as contained in the Economic Recovery and Growth Plan (ERGP).
ERGP is Federal Government’s economic blueprint document launched last year by President Muhammadu Buhari aftermath of economic recession.
RMAFC, in a statement by its spokesperson, Ibrahim Mohammed, noted 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.
The commission, for the umpteenth time, advised against the sale of NLNG on the basis that it has been managed efficiently, profitably and paying dividend to its shareholders, including the federation.
Justifying its stance with evidence, the commission noted that in July 2015, about N412.6 billion was paid as dividend to the federation while in December 2015, $400 million was also paid.
It said 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,” the commission said.
As a way forward, RMAFC 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 blocs 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,” it added.