12 May 2015, Lagos – MIXDED reactions have followed the advice given by Governor of the Central Bank of Nigeria, CBN, Mr. Godwin Emefiele, to the President-elect, Gen. Muhammadu Buhari, over the sale of about 30 per cent out of the 55 per cent stakes held by the Federal Government in Nigeria’s Joint Venture, JV operations with international oil companies, IOCs, to enable the new government raise funds for developmental purposes.
Some industry experts corroborated the CBN boss’s position on the possibility of generating about N14.9 trillion, which could be ploughed into providing the needed infrastructure development in the country amidst revenue decline. Although some pundits described Emefiele’s advice as ill-conceived and capable of putting the new administration in a difficult corner, but Mr.Odetola Seyi, an economic analyst based in the United Kingdom, UK, thinks otherwise.
He argued that the advice is the best the government could adopt in view of the rot and corruption that has characterised the downstream sector of the oil and gas industry. His words: “The huge attention placed on funding the downstream sector by the government recently, has further deepened the spate of corruption in the sector. The Federal Government has no business in owning stakes in oil business.
“The business of government should end in collections of taxes. Local refineries must be given the opportunity to buy crude oil like any other businesses while the government pays attention to the collection of tax as well as giving of tax credit and other investment benefit to the operators.” Odetola explained that the UK Government collects only tax from the companies, adding that this is what the country depended on from the oil industry, adding that the government has no stakes in any oil business.
“Government should focus more attention in the regulation of the sector, through ensuring that about 50 per cent of the crude oil explored is refined locally. “The regulation of the sector should be such that owners of oil blocks must also operate a refinery within the country. The country’s stake in the JVs must be sold as the stake in its present form has not impacted the revenue of the country,” he said.
He further noted that Nigerians should not be quick to condemn ideas just because the individual behind the idea is part of the present administration, saying that the CBN despite its forte in monetary policy could also offer advice across board to the government. Also contributing, the Director of Strategic Planning, Research Intelligent institute, Lagos State, Mr. Olubunmi Martins, said the CBN is permitted by Law and the mandate establishing it to do what its Governor proposed on the sale of Nigeria’s JV equity in a selected number of upstream assets.
He added that this may not necessarily mean that Nigeria will completely relinquish her interests in the downstream sector, or influence commercial inputs in the operations of such assets. He said, “The proposal sounds reasonable considering the negative impact on Nigeria’s inability to meet her JV obligations on projects development especially in the area of cash calls.” He however called for caution in implementing the advice, saying that the suggestion should be subjected to further analysis.
“Curiously though, why is the CBN Governor unwilling to submit this proposal to President Goodluck Jonathan who employed him?” On his part, the Managing Director/Chief Executive Officer, Global Analytical Consulting Limited, also an Economic Analyst, Mr Tope Fasua, challenged the CBN boss, and described Emefiele as an economic saboteur, adding that his advice to the incoming administration is not sustainable. According to him, it is not appropriate to sell the assets of the country, especially at a period when oil prices are low.
Speaking also, the Principal Consultant of Lonadek Oil and Gas Consultants, Dr.Ibilola Amao, maintained that the CBN should focus more on monetary policies, adding that the Monetary Policy Rate, MPR, should be structured with a view to optimizing the country’s hydrocarbon assets. She argued that rather than focusing on stakes in Public Private Partnership, through offsetting parts of the country’s asset in the downstream sector, Government should instead tackle corruption in the administration of her investments especially in the sector.
“Any well monitored asset by patriotic and honest Nigerians would do its 170 million population so much good,” she stated.
*Ediri Ejoh – Vanguard