The declaration by the Federal Government that the economy is in a recession has sent panic and fears among the Nigerian elite who are advising the government to begin to sell its national assets to shore up the revenue base of the government.
However, the National Executive Council, led by Vice President, Prof. Yemi Osinbajo, has approved the sale of some assets, but yet to make public which of these assets to sell.
Moreover, the question on the lips of Nigerians now is that “why would you sell Nigeria Liquefied Natural Gas (NLNG) which is like a cash-cow to the government?.”
The Nigeria Liquefied Natural Gas (NLNG) Limited model is a very attractive one that bailed the Federal Government out of its financial troubles in the past.
The Nigeria LNG Limited was incorporated as a limited liability company on 17 May 1989, to produce LNG and Natural Gas Liquids (NGL) for export. NLNG is jointly owned by the Federal Government, represented by the NNPC (49 per cent), Shell Gas B.V owns 25.6 per cent, Total LNG Nigeria Ltd owns 15 per cent and Eni International owns 10.4 per cent.
Nigeria LNG Limited operates six liquefaction units (LNG Trains) producing 22 million metric tonnes of LNG per year (mmtpa). This amounts to roughly 10 per cent of the world’s LNG consumption. Trains 1, 2 and 3 have production capacities of 3.2 mmtpa, whilst trains 4, 5 and 6 have capacities of 4.1 mmtpa each. The final investment decision on the train 7 has not yet been made.
The NLNG becomes the toast of the elite when it was revealed recently that the company paid $1.6 billion as dividend to the Federal Government. Furthermore, the company said it has paid $32billion to the Federal Government, Joint Venture and other stakeholders since 2007 till date as dividend. The company paid $2.2billion as corporate income tax to the Federal Government in 2015.
The call was first made by Aliko Dangote who said in an interview with CNBC Africa, that “If I had challenges in my company, I would not hesitate to sell assets, to remain afloat, to get to the better times, because it doesn’t make any sense for me to keep any assets and then suffocate the whole organisation.
“What we need to do now in my own thinking, we have a lot of assets to sell. We can sell part of the joint venture; part of the shares. You know government normally owns 60 percent. We can sell in an open tender to the Chinese. We can change the term and make it an operating one, just like what we have in NLNG. We also have another asset I think we don’t really need.”
Senate President, Bukola Saraki, supported the call for the sale of national assets. “The measures should include part sale of NLNG Holdings; reduction of government share in upstream oil joint venture operation; government stake in financial institutions, and the privatization and concessions of major/regional airports and refineries,” he said.
Leading the argument against the proposed sale of the NLNG is the Petroleum and Natural Gas Senior Staff workers of Nigeria (PENGASSAN). The labour union warned that it will shut down the country if the Federal Government should carry out its plan to sell national assets to augment revenue shortfall as a way out of the current economic recession.
PENGASSAN, described the plan to sell the national assets as a self-destructive move to Nigeria, said that the plan meant to solve short term financial obligations is targeted at handing over our collective common wealth to a few individuals and further impoverish the rest of our country men and women.
PENGASSAN cautioned the Federal Government to be wary of such plan as the association will not sit back and watch national assets, especially those in the oil and gas industry such as NLNG that has become a huge revenue earner for Nigeria, refineries and shares in the upstream oil and gas JV operations being shared among those in power and their cronies.
“Any attempt to sell these national assets will be met with stiff resistance from the association, as PENGASSAN will galvanize every support including that of our sister union and labour centres to shut down this country by ensuring that every activity in the oil and gas sector is brought to a complete halt.”
“Some opportunists in the clothes of businessmen and short sighted politicians had earlier advocated for the sales of the public assets such as the Nigerian LNG, four state-owned refineries, Nigeria’s stakes in Africa Finance Corporation (AFC), the nation’s airports and reduction of government’s shares in upstream oil joint venture operations and this was approved by the National Economic Council (NEC),” it stated.
Reacting to the recent approval of the sale of the national assets by the NEC comprising of the Federal Executive Council and the state governors, the PENGASSAN National Public Relations Officer, Comrade Emmanuel Ojugbana, argued that “how anybody can plan to sell the assets, such as the NLNG and shares in the upstream oil and gas JV operations, which have been generating revenue and are still generating revenue for the country to date?
“They should tell us what will happen after the recession if we have sold the assets to greedy individuals. Will the country go cap in hand begging those individuals who bought the assets and borrowing from them?”he said.
Another industry and expert who preferred anonymity posited that “instead of selling an asset that paid $1.6billion as dividend, “the federal government should approach the World Bank and borrow fund that it will use to finance capital projects by using future dividends from the NLNG as collateral.
“This was the way they misled past administration when they insisted that the future will take care of itself and shared all our excess revenue from crude oil sales. If the investors think LNG business is a viable business, they should build their own LNG business or approach the Olokola LNG and Brass LNG for further investment because these LNG companies are still work in progress. They are always interested in striving and established businesses and not ready to build new ones.”
The Chief Executive Officer (CEO), HIP Investment and Trust Ltd., Mr. Rotimi Adebiyi, said it is in order to sell government stake in some assets during financial crisis.
According to him, “Why not sell. We are in a recession. Government should sell some assets to raise cash and finance building of infrastructure. We need to pump money into the economy in other to get out of the recession.
“Take a look at Oando Plc, they just announced selling of Oando Gas and Power to Helius. This will help them to finance other projects. I think the Nigerian National Petroleum Corporation (NNPC) should also be privatized and even the refineries. Look at Saudi Arabia’s Aramco, it is raising Initial Public Offer to the investors. It means the national oil company is privatized. The same with Gatwick Airport, it is not owned by the British Government. It is owned and managed by private investors.
“Though, I don’t believe in outright sale of these assets, especially the Nigerian LNG (NLNG), because NLNG has remitted huge taxes and dividends to the country which runs into billions of dollars. But part sale of government’s stake in these assets will be good for the country.”