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NLNG shares sales: Selling performing equity absurd, economically illogical


The illogicality in the planned disposal of performing equities by the Federal Government, while non-performing assets continue to guzzle scarce resources, has not only drawn the ire of experts and stakeholders in the oil and gas sector, but further questions the economic credentials of the Muhammadu Buhari-led government.

While specifically warning that the sale of its equity in the Nigeria Liquified Natural Gas (NLNG) for a fiscal stimulus plan, to generate funds to reflate the economy was absurd and unwise, they insist that the growth of the domestic gas market would be hampered.

According to them, a performing asset like the NLNG, which brings good returns and holds strategic importance for the economy should be protected as its sale would not only affect government’s campaign for the use of LPG as a way of arresting deforestation, but also compromise the LPG industry.


The House of Representatives, last Wednesday urged Buhari to put on hold, the proposed sale of NLNG, after a resolution was passed following the adoption of a motion sponsored by Brown Randolph, an opposition lawmaker from Rivers State.

Brown expressed worries that the planned sale of the asset, will affect Nigerian workers and the country.

The Executive Director, Centre for Democracy and Development (CDD), Idayat Hassan, insists that it is simply absurd to sell such a performing company with one of the best management structures in the country.

“If the government desires to sell anything, it should be the moribund refineries and other not so useful assets,” she stated, adding that there are several options that government should consider, including concessioning, as was the case with the recent agreement signed with General Electric on railway.

The Chairman, Petroleum Technology Association of Nigeria (PETAN), Bank-Anthony Okoroafor’s says he would be surprised if government goes on to dispose of a profitable company, with great capital appreciation and dividends payouts as the NLNG

“NLNG is a strong brand; it is run professionally and generates lots of revenue. The structure that makes it effective is because government’s shareholding is not majority. Presently, the Federal Government owns 49 per cent via the Nigeria National Petroleum Corporation (NNPC); Shell owns 25.6 per cent, Total 15 per cent and ENI holds 10.4 per cent.

If the Federal Government decides to sell part of its 49 per cent, I would be surprised because the NLNG is a profitable company, with great capital appreciation and dividends payouts.

“Government’s 49 per cent has appreciated so much and the assets have appreciated to more than $19b. Maybe, government wants to raise immediate cash to finance its obligations, which may be short-term focus.

It should be noted that government could reduce its equity in the IOC’s from 55 to 45 per cent to move from majority to minority shareholding. Using the NLNG model, which has worked very well to date.”

The Executive Director of Civil Society Legislative Advocacy Centre (CISLAC), Auwal Ibrahim Musa, is of the belief that the entire episode was a ploy by the current administration to look for ways of selling vital assets to personalities within the ruling class.

Like Hassan, he wondered the rational behind selling an asset that is bringing income to the country, stressing that the Nigerian government has continued to under value assets in orderto sell to relatives and political office holders.


“We are not losing, we are actually making income from this outfit, and there is no reason to sell it, especially when there’s no transparency. Many people who end up buying assets are government officials. Government officials under value assets. They make it look like there’s a problem with the assets.

There is no problem with this asset, and we need something to fall back to economically. Even in developed economies, government still maintain a lot of assets,” Musa said.

For the President of Nigerian Association for Energy Economics (NAEE), Prof. Wunmi Iledare, the performance chart of the NLNG, when juxtaposed with many other assets, should discourage government from selling its share in the goose that lays golden eggs.

“I don’t understand why government wants to sell an asset that is generating money,” the professor of energy economics said, while advising government to consider selling its joint venture (JV) assets, which currently require so much cash call.

“Government would be better off selling its JV assets, rather than selling that of NLNG. When you look at the last economic crisis, dividends from NLNG was what government relied on. So, why would the government want to sell it?” Iledare asked.

He concluded that the NLNG is a mature dividend and self-sustaining outfit, which does not require government to pump money into it. 

His views align with that of the Chairman/Chief Executive Officer (CEO) of International Energy Services Limited, Dr. Diran Fawibe, who considers plans to sell its most-prized as ridiculous.

He stated: “We have 49 per cent interest in the outfit, while other investors have 51 per cent.  

The company has been bringing good revenue to the Federal Government yearly. Instead of selling off its interest in NLNG, government should rather sell-off its interest in less revenue generating assets.

I strongly oppose to the proposed government’s sales of income generating assets.”
He called on the Bureau of Public Enterprises (BPE) to list all struggling businesses that the Federal Government has stakes in, and rank them in terms of income yielding.  

“Yes Government needs money, but you cannot sell-off your most-prized assets, which may serve as a bailout on a rainy day,” he added.
The Nigerian Association of LPG Marketers, which said the firm has been of tremendous help to the LPG industry in the country, expressed concerns that its sale would hamper the growth of the domestic gas market.

President of the association, Nosa Ogieva-Okunbor, said, “When government sells off its interests, the LPG industry may be compromised. The present government has actually put LPG in the front burner to ensure domestic use.

The Federal Government has been promoting the policy on the use of LPG as a way of arresting deforestation, and this policy may be compromised if the government sells off its stakes in the company.

“We align ourselves with the House of Representatives that government’s interest should not be sold.  The sale should be suspended for now. The general public should be carried along in whatever decisions the government is taking concerning its interests in LNG,” he concluded.
Rather than sell government’s stake in the money- spinner, the Director, Centre for Petroleum Economics, University of Ibadan, Prof. Adeola Adenikinju, says the country’s ailing refineries should rather be sold in order to attract the private sector into the oil sector and help solve the country’s downstream crisis.

He stated: “We could reduce our shares in the other assets that are currently not doing well.  Another concern is, of what use would the money be put into?  

Naturally idle assets could be converted to active assets such as infrastructure.  For instance, we can use the money raised to build bridges that would be more useful to the economy.” 
He added that Nigeria would not be the first to do so as other countries have sold their non-performing assets during recessions to boost their economies.

Economic analyses do not favour the sale of an asset like the NLNG, so says the President/Chairman of Council, Chartered Institute of Bankers of Nigeria, Prof. Segun Ajibola.

Ajibola, who is also the Dean, College of Postgraduate Studies, Caleb University said, “My personal opinion is that such asset that continues to bring returns and hold strategic importance for the economy should be protected and not sold out.”

The dip experienced in the oil and gas sector lately weakened the Federal Government’s share from the company by 65 per cent, from as much as $1.04b in 2015 to $356m in 2016. That was the lowest share dividend paid to the government in 10 years.

In 2011, the dividend was as high as $2.5b, in 2012, it stood at $2.7b and in 2008, and government received $2.6 b. Government’s total investment was around $9.5b and dividends received in a period of 13 years stood at about $15.7b.  

But for the Managing Partner, The Chancery Associates, Emeka Okwuosa, there was nothing wrong in selling the assets off provided the transaction follows due process, and the sale, open and transparent.

“My problem is what the government does with the proceeds of the sale. If the money is not wasted, or disappears, but is used for major capital and infrastructural projects that would have meaningful development of our economy, then I don’t have issues with it,” the oil and gas lawyer said.

Okwuosa views tallies with that of the Executive Secretary, Lubricants Producers Association of Nigeria, Emeka Obidike, who said, “I am in support of the sale of government’s equity in the Nigeria LNG.  

The sector is going through several challenges because government has refused to hand over its shares to private investors.  Take a look at the country’s refineries, they are not working optimally because government is still holding on to the assets.  

It is time the Federal Government removed its hands from revenue generating assets and allow the private sector to manage them.”

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