A Review of the Nigerian Energy Industry

Govt advised to sell oil assets to indigenous investors

Diezani Alison-Madueke, Petroleum Minister

11 March 2014, Lagos –  Capital market operators and financial analysts have called on the Federal Government to sell oil assets to Nigerians and also offer some tax incentives that will enable the economy benefit from the huge billions of dollars the country is losing through oil companies operating in the country but are not listed on the Nigerian Stock Exchange, NSE.

Information gathered has shown that companies currently active in upstream oil and gas sector of the petroleum sector, with assets value of about $89 billion list their shares outside Nigeria. “The listing of companies’ shares outside the country does not only deny Nigerian investors the opportunity to share in the profit made from Nigerian oil resource, but also affect the economic development of the country. It is expected that assets divestment in the oil and gas sector would create between $4 billion and five billion in value in the next two years,” operators noted.

Speaking against this background, financial experts and capital market operators have advised the federal government to take some proactive steps that would forestall past mistakes of handing over virtually all oil assets to foreign companies to the detriment of indigenous investors.

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.”

Speaking in the same vein , leading stockbroker and investment banker, Mr. Victor Ogiemwonyi of Partnership Investment Company Plc, said apart from selling the assets to Nigerians, government should also give 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 to list a portion of their shares. Without these steps, the stock market will not grow as fast as we want,” he said.

Another investment banker and financial analyst, Mr. Bayo Rotimi of Quest Advisory Services Limited,  said, “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. “


– Peter Egwuatu, Vanguard

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