A Review of the Nigerian Energy Industry

Oil Assets Sales: FG urged to consider indigenous firms to enhance listing

NSE10 March 2014, Lagos – To boost the nation’s capital market and reduce loss of billions of dollars by the federal government due to non-listing of oil and gas majors on the Nigerian Stock Exchange (NSE), capital market operators and financial analysts have urged the government to consider indigenous firms in the sale of oil assets.

According to reports, major oil exploration and production companies with asset value of about $89 billion list their shares outside the country. This has led to a great loss of revenue to the government and affected the growth of the Nigerian capital market.

Some of the oil and gas companies active in the Nigeria but are listed outside include: Afren Plc, Centrica, Eland Oil and Gas, Essar Energy, Heritage Oil, Lekoil Royal Dutch Shell, CAMAC Energy,  Sasol, Mart Resources Inc, Mira Resources  among others.

However, analysts said last week that this trend will change in favour of the country and capital market if oil assets are sold to Nigerians and some tax incentives given to the companies for them to list on the NSE.

Further assets divestment in the oil and gas sector is expected to create between $4 billion and $8 billion in value in the next two years and analysts said if Nigerians  firms are not considered the country would continue to rue its losses.

For instance,  the Managing Director of Crane Securities Limited, Mr. Mike Ezeh said if the oil assets are sold to indigenous investors, the probability of their listing on the Nigerian Stock Exchange (NSE) would be very high.

“As we expect further government and private divestment in the oil and gas sector, I believe indigenous firms should be given the opportunity to buy some of these assets. If this is done, the companies will be listed on the Nigerian bourse thereby deepening the capital market and sharing the profit among Nigerians,” Ezeh said.

Also speaking, another  and investment banker, Mr. Victor Ogiemwonyi of Partnership Investment Company Plc, said besides selling the assets to Nigerians, government should  also incentives such as lower tax rate to encourage listing on the NSE.

“We should also require public companies with licences that serve larger public to list their shares on the NSE for public participation after a stated number of years. Government should compulsorily make privatised companies especially, list a portion of their shares. Without these steps the stock market will not grow as fast as we want,” he said.

In his opinion, David Adonri of Lambert Trust and Investment Limited Company, the foreign companies should be made through legislation to list their shares.
“Foreign companies are only here for exploitation. They have no interest in sharing their wealth with Nigerians. Therefore, it is only through legislation that they can be compelled to list,” Adonri said.

Another  financial analyst and Chief Executive Officer of  Quest Advisory Services Limited,  Mr. Bayo Rotimi  new listings can only be achieved through the introduction of incentives such as tax rebates and waivers as well as a continuous commitment towards the enthronement of  transparency and accountability in the running of our capital markets.

“Bottom line is that private sector entities cannot be forced to list. The capital market regulators must continue to engage these companies, seek to understand their apprehensions and roll out programmes and policies that address those concerns frontally,” Rotimi said.

Some of the oil and gas companies active in the Nigeria but are listed outside include: Afren Plc, Centrica, Eland Oil and Gas, Essar Energy, Heritage Oil, Lekoil Royal Dutch Shell, CAMAC Energy,  Sasol, Mart Resources Inc, Mira Resources  among others.

– This Day

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