CBN Governor Wants Buhari to Sell off 30% in Joint Ventures

The Central Bank Governor, Mr. Godwin Emefiele, has called on the incoming administration of General Muhammadu Buhari (rtd), to consider selling off 30 percent of the Federal Government’s majority stakes in joint ventures with multinational oil companies.

This is  to shore up government finances and raise funding for infrastructure development.

The suggestion is supported by two economists, Professor Sherrifdeen Tella and Dr. Bolaji Adesoye of the Department of Economic, Olabisi Onabanjo University, Ogun State,

The two economists, in separate interview with the Daily Times, stressed that off the government’s majority share in the joint ventures is long overdue.

Emeifiele gave the advice on Wednesday in an interview with the Financial Times, adding that he had asked officials of the apex bank to evaluate how much could be raised if the Nigerian National Petroleum Corporation (NNPC) substantially reduced its 55 per cent equity in the joint ventures with oil giants – Royal Dutch Shell, Chevron, ExxonMobil, Total and ENI, which pump about half of Nigeria’s 2 million barrels a day of oil production.

The CBN governor said he believed that $75bn is a realistic target, and that private equity groups could be encouraged to compete with the oil companies for acquisitions to ensure the price is competitive.

Some of the proceeds could be used to rebuild macroeconomic buffers, damaged by the collapse in world oil prices, but Emefiele said a greater portion should be invested in transport and energy developments that would “grow the economy and create jobs”.

He said: “If you sell down a 30 per cent stake, you could raise something substantial. It is an option they need to consider as a way of raising further funding,”

Emefiele added that he had commissioned the research and would present the idea to president-elect, Gen. Buhari, when he assumes office on May 29, 2015.

“It is an option now because our revenues have dropped and we don’t need to pile on more debt. The alternative is to look for ways of releasing value from some of the government’s assets,” he said, adding that petroleum profit taxes could be adjusted upwards to compensate for the state’s reduced stake in crude oil sales.

Reacting, Professor Tella said that there was nothing wrong with the suggestion.

He said: “The CBN governor knows our purse as nation maybe more than anyone else. If the purse is empty, then his advice is reasonable because especially for the in-coming administration, they need money to work. They have to start from somewhere. On the basis of this, there is nothing wrong with his advice.

“However, it is not the best advice when you are financially okay as a nation, but when you are broke, you need to look elsewhere. As CBN governor, he probably knows there is no money in the purse”.

On his part, Dr. Adesoye of the same department took a swipe at partnership arrangement initially entered into between Nigeria and multinational companies in the oil sector.

Adesoye said: “There should have been a drastic approach to this issue a long time ago. The joint ventures that we entered into with these partners are not profitable to us as a nation. All promises made to us were never fulfilled.

“For example, the so-called technocrats imported into the country are often junior to our indigenous people, but they receive fat remunerations. Value added within the joint ventures are not there. There are reports that some of these foreign partners even sponsor militancy among our people against their kith and kin. This cannot happen in developed countries. The truth of the matter is that the policy framework is wrong.”