*Recommends borrowing from IMF to shore up economy
21 September 2016, Sweetcrude, Abuja – The Revenue Mobilization Allocation and Fiscal Commission (RMAFC) has disagreed with business mogul, Aliko Dangote over a statement he made on the proposed sale of Nigerian Liquefied Natural Gas (NLNG) and other Federation Assets during an interview with a cable television, CNBC Africa.
In the interview, Africa’s richest man, Dangote, had suggested the sale of the NLNG in order to augment the current revenue shortfall as a result of economic recession.
RMAFC in a press statement made available to our correspondent in Abuja and signed by the Commission’s Acting Chairman, Mr. Shettima Umar Abba Gana, said it would be unwise for the federal government to dispose of its crown jewels that generate revenue and keep the Federation Account healthy over the long term.
The Commission also disagreed with the advice given by the CBN Governor, Mr Godwin Emefiele, that the Federal government stands to realise the sum of $10bn from the sale of these assets.
According to the Commission, the government could borrow the same amount from international lending organisations like the IMF, and use the revenue from these same assets to repay the loans over 10 to 20 years after which the federation would still retain the assets and continue to enjoy their regular annual dividend payments.
Also, the Senate yesterday asked the federal government to stop the blame game and get the nation’s economy out of recession, saying Nigerians were hungry. It also urged the government to raise capital from asset sales to shore up the nation’s foreign reserves and promised to receive any proposal from the executive arm, including Emergency Power
But in what looks like a discordant tune from the government agencies, RMAFC disagreed with Senate on the sale of Nigeria Liquefied Natural Gas (NLNG) and other Federation Assets being proposed as a way of augmenting the current revenue shortfall as a result of economic recession.
RMAFC argued that it would be unwise for the Federal Government to dispose of its crown jewels that generate revenue and keep the Federation Account healthy over the long term.
Citing the NEITI 2013 audit and financial report of Nigeria’s oil and gas industry, RMAFC disclosed that the sum of $12.9 billion was received by NNPC from the Nigeria Liquefied Natural Gas (NLNG) Company over an eight-year period which the Corporation did not remit to the Federation Account.
The audit according to the Commission also revealed that Nigeria Liquefied Natural Gas (NLNG) Company paid the sum of $1.289 billion as dividends for 2013.
RMAFC noted that “It is the considered view of the Commission that Nigeria’s Assets like NLNG and other strategic national resources should not be sold to meet a short-term financial obligation.”
However, it said it would consider any bill from the President, as long as it would help the nation out of recession.
It will be recalled that Mr. Godwin Emefiele, Governor of the CBN indicated in a media report that the sum of $10billion could be realised from the sale of these Assets.
The Commission is of the strong opinion that the same amount could be borrowed from the IMF and the revenue from these Assets could be used to amortise the loans over an agreed period. It should be noted that after the amortisation of the loans, those Assets would still be owned by the Federation in addition to their regular dividends and Revenue.
Addressing senators on the resumption of the Senate from recess yesterday, Senate President, Dr. Bukola Saraki, who threw government the challenge, said though the last administration failed to put things right in respect of the economy, the federal government should concentrate on how to solve the country’s economic problems than dwell on buck-passing.
According to Saraki, Nigerians are not ready to listen to where the problem emanated from, but solutions to it.
He said, “I remember trying to explain to my people that this kind of thing does not happen overnight, that the seeds for the condition that we suffer from today must have been planted by past administrations that refused to do what was necessary. I soon realised that my people are not so interested in how we got here or who to blame for our current situation. They only wanted to know that government has plans to get them out of this current predicament.
“To them, the only explanation that makes sense at the moment is that which puts food on the table, reduces the price of rice, garri, salt, sugar, meat and saves jobs. I must hasten to add in my own opinion that the executive must begin to take the following needful steps to show Nigerians, the international community and investors, both local and international, that we are ready to reform and do business.
“The Executive must re-tool its export promotion policy with export incentives such as the resumption of the Export Expansion Grant, EEG; and introduce export-financing initiatives. It must as a deliberate response, consider immediate release of funds to ensure the implementation of the budget for the near short term to inject money into the economy.”
Similarly, he noted, the agricultural sector and agro-allied businesses should be directly supported to boost value addition and job creation.
He said “While the government works on the medium to long-term plans, immediate strategies must be devised that would ease the suffering of the ordinary people across our country. In this case, particular attention should be given to our citizens in IDP camps.
“The images emerging from this zone of deprivation and hunger is no longer acceptable. The government should accelerate interim measures to provide social safety nets to our people and assuage current high level of misery in the land. Such intervention should seek to fully execute the social spending framework already provided in the 2016 budget.”
Saraki said: “On our own part, we must turn our attention towards a number of legislative priorities such as the Petroleum Industry Bills. We must ensure the passage of the PIB as soon as possible to stimulate new investment and boost oil revenue. As we all know, this bill is long in waiting and is very crucial for vital investment in the oil and gas sector. The impasse of not passing the bill is doing great harm to the industry and the Nigerian economy as a whole.”
The Senate President noted that “mortgages remain key for us in the National Assembly and we will immediately begin the process of accelerating bills aimed at reforming the sub-sector for growth and accessibility in a manner that deepens our people’s access to housing, jobs and economic activities that can inject fresh funds into this sector.”
He added that “There is the National Development Bank of Nigeria (est. etc) Bill 2015, which will provide long term, cheaper source of funds to the private sector.
“There are also the Nigerian Ports and Harbours Authority Act (Amendment) Bill 2016; National Road Fund (Establishment, etc); National Transport Commission Act 2001; Warehouse Receipts Act Bill 2016; Review of the Companies and Allied Matters Act (CAMA), Investment and Securities Act (ISA) and Customs and Excise Management Act; Federal Competition Bill 2016; and the National Road Authority.
“In my view, these bills and some of the other economic reform bills we will be considering in the coming days will be critical in the creation of a basic framework to free up capital and provide the opportunities to get us out of this recession.”
The government said earlier in the month it had approved loans from China, the World Bank, Japan and the African Development Bank, but Saraki said such talks were still ongoing with no deals yet.
“There is a big hole now in the fiscal deficit because that funding is not coming through. So we’ve got to look for alternative ways to fund that,” Saraki said in a joint interview with the Financial Times on Monday when asked about the loans,” he said.
The government has said it plans to borrow as much as $10 billion, with half of that coming from foreign sources, including a planned $1 billion Eurobond issue, to fund a budget deficit of 2.2 trillion Naira ($7.21 billion) and boost an economy hammered by low oil prices and hard currency shortages.
Saraki said that even if the loan talks succeeded, the amount raised would not be enough to plug the hole in public finances. “My take is that even if it does come through, it’s money too little, too late,” he said, referring to the loan talks.
“If we do things right, the confidence will come in,” Saraki said. Adding, if we carry on waiting for government revenues to go up, if we don’t do anything seen as thinking out of the box the recession could drag on longer. Nigeria’s 2016 budget was the largest in the nation’s history, but the oil price drop and Delta attacks have left the government scrambling for funds,” he concluded
The Commission advised that instead of selling off such vital assets which generate funds for the Federation, wealthy Nigerians should be encouraged to set up their own LNG projects, since Nigeria which ranks seventh in the world and first in Africa with natural gas reserves base totalling 188 trillion cubic feet (Tcf) as at May 1, 2015.
In addition, Nigeria’s natural gas is regarded as one of the best in the world as it has low hydrogen sulphide (H2S) or carbon dioxide (CO2) impurity levels.