A Review of the Nigerian Energy Industry

RMAFC advises govt against selling stakes in oil joint ventures

Oil production platform
Oil production platform

Oscarline Onwuemenyi

03 May 2015, Sweetcrude, Abuja – The Revenue Mobilization Allocation and Fiscal Commission, RMAFC),has advised against sale of the nation’s equity in the Joint Venture (JV) Partnership with the International Oil Companies, IOCs.

The Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonja-Iweala and the Central Bank Governor, Mr. Godwin Emefiele had called on the incoming administration of General Muhammadu Buhari, to consider selling off 30 per cent of the Federal Government’s majority stakes in Joint Ventures (JV) with multinational oil companies to shore up government finances and raise fund for infrastructural development.

But, according to the RMAFC, the action would be unwise, adding that the country in the long run stands to lose rather than gain in the proposed transaction. The chairman of commission, Elias Mbam, in a chat with newsmen in Abuja, said the equity crude from the JV which forms most of the revenue from oil to the Federation Account will be lost completely, if sold.

He added that the equity share is an asset of the Federation and not that of the Federal Government. It is owned by the 3-tiers of government. No tier of government has the right to sell the asset.

A statement by the commission’s spokesman, Ibrahim Mohammed, obtained by our correspondent in Abuja, quoted the chairman saying that “It is the considered view of the commission that no part of the Nigeria’s JV Assets or any strategic national resources for that matter should be sold to any entity to meet short-term financial obligation.”

He advised governments at all levels to take advantage of the shortfall to embrace economic diversification with a view to reducing the over dependence on oil revenue.

The RMAFC boss advised that instead of Nigeria to let go its shares, the Federal Government should in the alternative consider granting marginal oil fields to Nigerian oil companies to develop so as to increase their production quota and boost the Federation’s revenue base.
Currently, the Nigerian National Petroleum Corporation (NNPC) on behalf of the Nigerian government holds at least 55 per cent equity in the joint ventures with Shell, ExxonMobil, Chevron, Total, Nigerian Agip, and Pan Ocean.

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