Financial expert advises govt on sale of NLNG asset


President Muhammadu Buhari

Kunle Kalejaye 05 October 2016, Sweetcrude, Lagos – Financial analyst and Managing Director, Cowry Assets Management Company, Mr. Johnson Chukwu, has called on the Federal Government to undertake a critical analysis of the planned sale of its stake in the Nigerian LNG Limited, NLNG, and some other national assets.

Speaking with SweetcrudeReports in Lagos, Chukwu said if the government was going ahead with the sale, “there must be clarification from one asset class to another asset class and clarification of an asset class that creates economic activities”.

“Today, the country earns about $1.5 billion dividend annually from government’s 51 percent stake in NLNG. If you want to value Nigeria’s share in the company using the dividend payment method and using 20 times multiple, you will be talking of the country’s investment in NLNG being about $20 billion.

“If we are going to realise $20 billion from selling our stake in NLNG – remember the government still has the capacity to tax the company – and government is going to invest the $20 billion in critical infrastructure that has the capacity to expand economic activities, then I will support that sale.

“If the sales is just to inject liquidity into government purse for distribution to the three ties of government, I will absolutely oppose the sale of government 51 percent stake in NLNG because it simply means what we are doing is like taking the chicken that lays the golden eggs, killing it and extracting all the eggs,” he said.

Chukwu explained that if $20 billion is realised from the sale of NLNG’s asset, the money should be exclusively used to build the Lagos-Kano standard gauge rail which is about $8.3 billion and the Lagos-Calabar standard gauge rail.

“If we devote this money entirely for these two corridors of standard gauge rail, we are going to create an economic asset that has the capacity to grow economic activities in agriculture, manufacturing and what have you.

“In the next two years on the two corridors, we would have created economic activities that will generate enough foreign exchange, enough revenue, enough tax income, and enough employment as to compensate for the foregone dividend income we would have earned from the investment in NLNG.” he added.

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