30 April 2015, Abuja – The Revenue Mobilisation, Allocation and Fiscal Commission has urged the President-elect, Maj.Gen. Muhammadu Buhari (retd.), not to sell the country’s equity in Joint Venture partnerships with International Oil Companies.
In a statement made available to our correspondent in Abuja on Wednesday, the Chairman of RMAFC, Mr. Elias Mbam, described the reduction of Nigeria’s stake in the ventures through equity sale as unwise in view of the fact that the country stood to lose rather than gain revenue in the proposed transaction.
The Governor of the Central Bank of Nigeria, Mr. Godwin Emefile, had reportedly urged Buhari to consider selling about 30 per cent of the nation’s stake in the ventures in order to raise funds required for immediate infrastructure development.
The Nigerian National Petroleum Corporation, on behalf of the government, holds about 55 per cent equity in the joint venture operations with multinational oil corporations, including Shell, ExxonMobil, Chevron, Total, Agip and Pan Ocean.
The government’s wholly-owned exploration company, the Nigerian National Petroleum Development Company, an arm of the NNPC, has not lived up to expectation as it is not yet a force to be reckoned with despite the huge exploratory business in the country that is dominated by the IOCs.
According to Emefiele’s proposal, Nigeria stands to generate about N14.9tn for critical infrastructure development if it sells about half of its holdings in the JV operations.
However, Mbam said the outright sale of the federation’s equity holdings in the JVs would directly impact negatively on the Federation Account.
According to him, the equity crude from the JVs, which forms most of the revenue from oil to the Federation Account, will be lost completely should the government sell off its equity in the joint ventures.
He further argued that the equity shares were assets of the federation and not that of the Federal Government as they were owned by the three tiers of government, adding that no tier of government had the right to sell them.
“It is the considered view of the commission that no part of Nigeria’s JV assets or any strategic national resources for that matter should be sold to any entity to meet short-term financial obligation,” Mbam said.
He advised governments at all levels to take advantage of the shortfall in oil revenue to embrace economic diversification with a view to reducing the over dependence on oil revenue.
“Because of the volatility of prices and the fact that hydro carbon resources are exhaustible and non-renewable, it has become imperative for Nigeria to develop the non-oil sector to provide the much-needed revenue for infrastructure development and provision of basic services,” the RMAFC boss said.
Mbam stressed that the vandalism of pipelines and illegal oil bunkering should be stopped so as to enable more profitable Joint Venture production to increase so as to generate more revenue to the Federation Account.
He advised that instead of Nigeria to let go its shares, the Federal Government should consider granting marginal oil fields to indigenous oil companies to develop in order to increase their production quota and boost the federation’s revenue base.