Onuegbu: Don’t sell assets that are doing fine

The immediate past chairman of the Rivers State chapter of the Trade Union Congress of Nigeria (TUC), CHIKA ONUEGBU, has expressed opposition to the call for the sale of national assets. In this interview with KELVIN EBIRI, he explained that considering the country’s antecedent, it appears that some Nigerians are beginning to prepare themselves to buy off lucrative government assets and hijack the economy.

As the country grapples with economic recession, should government sell off some of its assets to raise funds?
From economic theory, when you have financial problem, one of the things you do is to sell some of your assets to raise cash. The only problem here is which asset do you sell? Do you sell your most performing assets or do you sell the non-performing ones?  You don’t sell your most performing assets. For instance, the NLNG is a cash cow. It is one of the most performing assets owned by the Nigerian government. And one of the good examples that government can own a business and that it can be run profitably. If government is looking for asset to sell, that is not the kind of asset to sell. If you remember last year, when the country had financial problem, part of the money that was used for the bailout came from the NLGN. Selling that kind of assets will mean that we will no longer have that kind of opportunity.

The second thing is at what price are you going to sell? When people know you have challenge, and that you are desperate, they are not going to give you the full value for the assets you want to sell. So, if Nigeria plans to take the option of selling off its assets, I think that the NLNG is one of the assets that are not in the interest of Nigeria to sell off. Nigerian government can look into other assets, but not the ones that will bail them out in the future when they have this kind of economic crisis.  I know that selling assets will raise funds, but if you add that to our external reserve, and what we have, I do not see how that will liberate us from the economic problem. So, sale of asset is one thing, but there is supposed to be a balance between fiscal and monetary policies of the government. Right now, the monetary policy makers are going the other way and the fiscal policy makers are facing the opposite direction.  Sale of assets is fine, but it is not in the best interest of Nigeria to sell assets that are well managed.

Should government unbundle the NNPC now?
I do not think that the Nigerian government is keen about reforms in the oil and gas sector. In 2013, when we went to the National Assembly to present oil workers position on the PIB, we told the government to use the NLNG model to run the Nigerian refineries. We also made suggestions to the government how to increase domestic gas supply and then increase our gas supply for power generation. But it is unfortunate that nobody is interested. Nobody is looking at all that. As we speak today, there is no Petroleum Industry Bill (PIB) from the executive arm that is in the National Assembly. So, how then will we know that the government is serious about reviving the economy? One of the reasons why the Trade Union Congress supported subsidy removal was that we wanted it to be clear that we were not the one holding the economy to ransom. Because if we had not supported the removal of subsidy, people would have said that was the reason why the economy is in recession.

The reforms in the oil and gas industry must be taken seriously. I heard they are making attempts to bring three versions of the PIB to the National Assembly. It took the general strike of January 2012 for former President Goodluck Jonathan and Alison Madueke to set up a committee on how to get the PIB through the National Assembly. But from my investigations, based on interaction with members of the National Assembly as chairman of PENGASSAN’s PIB committee, they were not interested in making the PIB go through the National Assembly. And we can see the same thing being repeated by this current government.

The reason why they are not interested is because the Petroleum Act of 1967, which was an Act promulgated during the civil war, gave so much powers to the Minister of Petroleum of which the President is today. So, it is all about not wanting to relinquish power, rather than an issue of really trying to reform the oil and gas industry. If this government was serious, it should have started proffering solution to the crude oil induced economic crisis during the transition process.  During the campaign period, oil price had already fallen.

It wasn’t that as an incoming government it didn’t know that the country was running into recession. As at September last year, I said the economy was already in recession. If they had an economic team during the campaign they should have prepared for what is happening now, and should have known that they are coming in at a time when the economy is bad. They had the whole time in the world, but there was no urgency to address the economic challenges.

Isn’t it time government sells off assets like the railway?
What is stopping private people from building railway? Nobody is talking about building railway from Calabar to Lagos, or from Lagos to Kano. Basically, what has been the character of the capitalist in Nigeria is to get government to use their funds to build these critical national assets and then coax the government to sell them at terribly low value to them.

You recall what was the situation in the Nigerian telecommunication sector before MTN and Econet came and paid over $200 million each for the licence to operate in Nigeria. NITEL did not pay. Today we can attest to the growth in that sector. We not only have MTN, but Glo, Etisalat, Airtel and others.  What we should be talking about is what are the incentives that the government is willing to give the private sector to invest in the Nigerian economy? When you concession something to the private sector, if the environment that will enable it survive is not there, it will fail. But if the environment is there and the issue was that of management, it will flourish. So, it is not just about selling assets, it is also about providing the right environment. We were told that the moment the power company was sold, we would have power. Years after, we don’t have power.  There is no significant improvement compared to when we were under the PHCN. When people come up with this liberal economy ideology of sales, sales, it is laughable. As I speak with you, there is no agreement among economists that privatisation as a policy is a good one. In fact, 52 percent of economists do not agree globally. So, for privatisation to work, it must be followed by reforms that make the process of the sales of those assets transparent. Then, having the right business environment that will encourage investment to thrive. No government sells its performing assets. You can check business theories. What I think is happening here is, I hope I am wrong, is that some Nigerians are beginning to prepare themselves to buy off lucrative government assets. Not really because they love the country, but because they fell that those assets are viable and they want to own them.

Won’t selling critical assets create monopoly?
Selling off critical assets will create a monopoly, and that is why we suggested in our PIB presentation before the National Assembly that the government should use the NLNG model to run the refineries. What is the NLNG model? Government will have 49 percent equity and divest the rest share so that Nigerians and worker will also be part owners of the refineries. Nigerians should be part owners of the refineries. Even the states where these assets are located should be part owners. The kind of thing they are suggesting now seems to me like people, basically are coming to hijack the economy. Look at what they did with the power privatisation. Power assets were sold to companies that never had experience in the power sector. The truth is that all over the world if you invest in utilities, you are guaranteed earnings for life.

For instance, PHED is the one that supplies power to Rivers, Akwa Ibom, Cross River and Bayelsa states. It is either you connect to them or you don’t have power. So, the companies know they are going to make money. The promises they made in terms of power improvement and supply, they are not keeping to any of them. And that is why it is important to have a proper regulatory environment before taking decision on sales of assets. But it does appear the government is not serious about genuine reforms. They wanted to unbundle the NNPC without going through the PIB. They wanted to do some things without going through the law.  We are getting to the second year of this administration and there is no PIB from the executive to the National Assembly.

What can the government do in the short term?
The problem we have now is that oil price is falling, and you cannot produce what you have because of militancy in the Niger Delta. While you cannot do anything about the oil price that is falling, you can do something about engaging the elders and the youths in the Niger Delta, so that you can go back to producing 2 million or 2.5 million barrels per day.  Those are things that government can do in the short term. The government needs to get the reforms in the oil and gas sector on track.