By Louis Iba and Adewale Sanyaolu
Recent calls for the sale of the country’s crown jewels to pull the economy out of recession has met stiff opposition from well meaning Nigerians and economy experts who described it as a dangerous move by the Buhari administration.
First, it was the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, who flew the kite last year, when he advised the Federal Government to reduce its stake in its various Joint Venture (JV) agreements with International Oil Companies (IOCs).As at that time,many dismissed the submission of the CBN boss as a thought that would not see the light of the day probably because the economy was not in recession then.
As a follow-up to Emefiele’s call, billionaire businessman, Alhaji Aliko Dangote, woke up recently with similar suggestions that the Federal Government should sell its holdings in the Nigerian Liquefied Natural Gas (NLNG) to bail the country out of recession.
But just as Nigerians were still dissecting the thoughts of Dangote against an earlier call by the CBN boss, Senate President, Bukola Saraki, equally drummed support for the Emefiele and Dangote.
Saraki even went beyond the sale of oil and gas assets to prescribing the same measure for the aviation sector, as he was convinced the action would halt the current economic recession.
Saraki was not alone, as the Minister of State for Aviation, Mr. Hadi Sirika, had while briefing Aviation Correspondents in Lagos, unveiled plans by the Federal Government to concession the nation’s 22 Airports following its inability to upgrade, expand and maintain them in line with international standards while raising revenue to boost the country’s Gross Domestic Product(GDP).
NLNG as Nigeria’s cash cow
The Nigerian Liquefied Natural Gas (NLNG) is today Africa’s biggest producer of liquefied natural gas, and has proven to be a viable venture for the Federal Government which holds 49 percent equity with Shell,Eni and Total sharing the remaining 51 percent.
Since its inception in 2007, it has continued to pay out dividends to the Federal Government in addition to touching lives within and outside its hosts community in Rivers State.
It was the NLNG, for instance, that paid $2.1 billion dividend with which the Federal Government bailed out states and local governments having financial challenges to enable pay workers wages.
The NLNG in its 2016 Facts and Figures said the company had paid $65 billion in dividends, taxes and gas purchase levies to its shareholders from inception.
The firm stated that 61 per cent of the money went to the coffers of governments at different levels between 1999 and 2015.
The former NLNG Managing Director, Mr. Babs Omotowa ,had in April while presenting the 2016 Facts and Figure, maintained that $39.56 billion (N7.793 trillion) in dividends, taxes, levies and other remittances were paid to the governments at different levels in Nigeria in 17 years.
The Nigerian National Petroleum Corporation (NNPC), which manages Federal Government’s shares in the NLNG, Omotowa said, received $15.69 billion (N3.09 trillion), representing over 40 per cent of the total remittance to the government as dividends.
NLNG raked in $90.370 billion (N17.802 trillion) during the period under review, and according to Omotowa about 44.44 per cent of these revenues were ploughed back to Nigeria through dividends and gas purchase to the NNPC, Company Income Tax (CIT) and Education Tax (ET) to the Federal Inlands Revenues Services (FIRS), Pay As You Earn (PAYE), Withholding Tax, Value Added Tax (VAT), state and local government taxes, regulatory fees and levies, and local contractors for goods and services.
“Between 1999 and 2015, the dividend to the government through its shareholding was $15.348 billion; gas purchase through NNPC amounted $11.87 billion; gas purchase through escrow as per agreement between NNPC and the other JV partners under Modified Carry Agreement (MCA) was $1.152 billion.
Others remittances include $3.862 billion paid as company income taxes and education taxes to the Federal Inland Revenues Service (FIRS) between 1999 and 2015; $334 million paid as PAYE; $946 million paid as withholding tax; $647 million paid as Value Added Tax (VAT); $8.159 million paid as taxes to state and local government; $299.062 million paid as regulatory fees and levies and $5.053 billion paid to local contractors for goods and services.
In 2015 alone, its corporate income tax paid to the Federal Government amounted to about $2.2 billion, he said, adding that since 2008, the company also contributed about four per cent of Nigeria’s yearly Gross Domestic Product (GDP). “NLNG provided more than 12,000 jobs in each construction year. Overall, the major sub-contractors employed over 18,000 Nigerians in technical jobs in the base project,” he said.
It was therefore surprising why government and other interested stakeholders are considering the sale of a firm that appears to be the nation’s best managed and most profitable organisation when refineries operating at fits and start have not featured in the debate. Many commentators have called on rich Nigerians interested in NLNG to set up green field facilities since the country has one of the largest gas reserves in the world and stop waiting to buy the nation’s commonwealth for selfish interest.
Aviation sector sale
In the aviation sector, attempts to dispose of the Federal Government equity in some key assets are already generating a lot of controversy within the industry. With two ground handing companies, the Nigerian Aviation Handling Company of Nigeria (NAHCO) and the Skyway Aviation Handling Company Limited (SAHCOL) having been successfully privatised by the previous governments of President Olusegun Obasanjo and Umaru Musa Yar’adua, the Buhari administration had first tinkered with the idea of an outright sale of all the 22 Federal Government owned airports beginning with the four international airports in Lagos, Abuja, Kano, and Port Harcourt.
But the decision to kick start the exercise with the privatisation of the four airports, considered as “most viable or lucrative” had raised some suspicion on the actual intention or motive of the government. Labour unions and other concerned stakeholders had raised the alarm that the government had already lined up its cronies to buy over these viable national assets at ridiculously low prices given the haste with which it wants to execute the programme. They have also queried the rationale behind the attempt to dispose of the four airports and associated assets that are raking in millions of naira monthly into the government coffers.
“Why not privatise the other moribund and non-viable airports and allow private sector inject funds to boost the state of infrastructure and also find the ways of attracting airlines and passenger traffic to make them viable? They questioned. It was perhaps due to the various protests staged by aviation unions, critics and other stakeholers opposed to an outright sale of the four airports, that the government appear to have moderated its earlier position to privatise them.
According to Sirika, the government had opted for the concession of the airports to private sector investors rather than an outright privatisation. According to him, government indeed lacked the funds to continue to pump into their upgrade, expansion and maintenance and that if privatisation was opposed by the majority of stakeholders, at least, they should see the concession deal as a better alternative. According to the Minister, concession will allow private firms inject funds for the upgrade of facilities and management of the airports for a specific time which doesn’t necessary imply that the government and the citizens will lose their equity in these assets. But even the decision to concession has still raised more suspicion than assuage the earlier fears. Some have pointed out thatamong the four airports lined up for concession in Lagos, Abuja, and Kano have already been concessioned to Chinese firms. That leaves only the Port Harcourt airport free for any form of concession or even outright privatisation, at least at the moment.
Recall that in 2013, the Chinese Exim Bank had granted Nigeria a $500million loan to build new airport terminals at the Lagos, Enugu, Abuja and Kano International airports, but with a caveat that included a 22-year Build Operate and Transfer (BOT) concession deal that allows China to first manage and recoup its investments before transferring the assets back to Nigeria.
At the moment, work is nearing completion on these projects as the Chinese firm are preparing for the next phase of operating the terminals. It was learnt that the Chinese government has been unsettled with the planned concession programme of President Buhari on the airports. Recently, former Director General/CEO of the Nigerian Civil Aviation Authority (NCAA), Dr. Harold Demuren, specifically faulted the ongoing plans by the government to concession some of the airports, noting that except those luring the government into the concession project were naive or had other sinister plans, it was a known fact within the industry that an attempt to concession the four international airports would be met by stiff resistance by the government of China.
This could even be followed with possible litigation and tense diplomatic row between China and Nigeria, he said. Stakeholers have also pointed at existing issues and litigation cases in courts over the Lagos domestic airport between FAAN and Bi-courtney which should first be resolved if the country wants to get the best suitor at home or overseas for any of the airports.
“We don’t keep to promises and the contracts we sign with people in this country and this is a serious problem and serious investors won’t come because they don’t take us serious,” lamented Demuren, who supervised some of the private sector investments in the aviation sector. “So how do you want to go ahead to concession the airports that China granted you loans and they are still constructing the airports and they are yet to commence the execution of the BOT. Someone should educate me better because it doesn’t add up,” queried Demuren, a former regulator of the industry.
Similarly, Chairman, Airlines Operators of Nigeria, Capt. Nogie Meggison, also appears confused, saying the entire concession plan was immersed in ambiguity. “What are we concessioning? Is it the terminal buildings of the airports? Or are we concessioning the airsides of the airports? Or the runways, control towers, fire services. Or the hospitals and schools?,” asked Meggison.
Unions, others kick
The Nigeria Labour Congress (NLC) has warned that the Federal Government’s proposal to concession or sell the assets was unacceptable, noting that investments in the LNLG and Joint Venture oil upstream operations were profitable and represent potential sources of revenue into the future.
NLC President, Mr. Ayuba Wabba, in a statement in Abuja, said those pushing for the sale of the commonwealth, were already angling to acquire them; querying what happened specifically to the proceeds from the sale of power sector.
Wabba’s counterpart in the Trade Union Congress (TUC), Mr. Bobboi Kaigama, said the Congress is totally against the sale, warning that such national assets are like security assets that must not be toyed with.
Meanwhile, not a few Nigerians have condemned the call, as senators last week voted against Saraki position on assets sale. Some of them, including Senators George Akume and Andy Uba had in their contributions at the special senate session on the current economic downturn urged government not to dispose of the patrimony.
Kaigama tasked government to mobilise Nigerians to think deeply and proffer solutions to the current economic crisis, saying that wealthy Nigerians must begin to pay taxes.
“Was it not the NLNG that provided the money that we used for bail out? If those who built it did not do that, what will they be thinking of selling now? We must leave something for our children,” he stated.
Former governor of the Central Bank of Nigeria (CBN) Prof.Chukwuma Charles Soludo, faulted the advice by the Senate and the National Economic Council (NEC) to the Federal Government to dispose of the nation’s assets to pull the country out of the current recession.
Soludo in a piece titled, “Nigeria: Sale of Assets as Dangerous Policy Myopia” made available to Daily Sun, described the call by the two top institutions of government to sell the public as assets as flawed.
On his part, Chairman of Stanbic IBTC, Mr. Atedo Peterside, says rather than sell its stake in NLNG, the Federal Government should reduce its holding in its joint venture partnerships to a maximum of 40 percent.
In an op-ed which he shared with an online medium, the economist and investment banker said the success of NLNG owes to the fact that the Federal Government stake is less than 50 percent and suggested that this should be replicated in other joint venture (JV) partnerships in the upstream sector.
But, the Managing Director of Financial derivatives Limited, Mr. Bismark Rewane, said that only non-viable assets should be sold.
‘‘Why would the Federal Government thinker with the idea of selling its stake in a viable venture such as the NLNG,’’ he wondered.
In a dramatic twist,the senate has voted against the sales of national assets and using same to tackle the current economic recession ravaging the country.
The senate took the decision, following a motion by Minority Leader, Senator Ali Ndume, urging the upper legislative chamber to reject the proposal for the sale of the nation’s assets.
Ndume said,“I move that the senate oppose the sale of national assets to shore up our reserves.”
Senate President Bukola Saraki, had put the motion to a voice vote to which “the ayes had it.”
Other recommendations
The Senate, has, however, recommended that the Federal Government should engage in meaningful dialogue with those aggrieved in the Niger Delta and avoid an escalation of the conflict in the region and consider immediate release of funds to ensure the implementation of the budget for the near short term to inject money into the economy. Similarly, the agricultural sector and the agro-allied businesses should be directly supported to boost value addition and job creation.
Other recommendations were that while 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.
The Federal Government should also consider immediate release of funds to ensure the implementation of the budget for the near short term to inject money into the economy, adding agricultural sector and agro-allied businesses should be directly supported to boost value addition and job creation.
In all both legislature and executive must co-operate to ensure the passage of the Petroleum Industry Bill (PIB) into law as soon as possible to stimulate new investment and boost oil revenue.