Everest Amaefule, Abuja
The Revenue Mobilisation Allocation and Fiscal Commission has warned the Federal Government against the proposed sale of national assets, especially the Nigerian Liquefied Natural Gas.
In a statement signed by the Head, Public Relations, RMAFC, Ibrahim Mohammed, the commission said that it was not wise for the government to sell an entity from which it made N412.6bn and $400m in 2015.
It stated that it was better for the government to borrow the worth of the NLNG since the gas company had the capacity to yield enough returns to service such a loan.
The Economic Recovery and Growth Plan proposed that the government should reduce its equity in the NLNG and Joint Venture oil and gas assets.
However, the RMAFC noted that the clamour for the sale of the federation’s oil and gas assets had continued in spite of its earlier advice against it.
Mohammed said, “The commission advises against the sale of the NLNG on the basis of the fact that it has been managed efficiently and profitably, and it has been paying dividends to its shareholders, including the federation.
“In July 2015, for instance, about N412.6bn was paid as dividend to the federation, while in December 2015, $400m was also paid. Consequently, the federation will 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.”
Mohammed added, “As a way forward, the commission recommends that instead of the outright sale of its crown jewels, government should consider borrowing the equivalent sale 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.”
Other measures suggested by the RMAFC to the Federal Government to shore up its finances included converting the existing joint ventures in oil operations to incorporated joint venture companies as was the case with the NLNG without diluting the federation’s equity holdings in the IJVs.
It also proposed providing incentives to encourage local and foreign investors interested in the national 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.
“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,” Mohammed said.
According to the commission, the federation stands to derive maximum returns from its investment in the oil and gas assets.
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