The Revenue Mobilization Allocation and Fiscal Commission, RMAFC, on Tuesday frowned on proposals by some prominent Nigerians for the federal government to sell the multi-billion dollar Nigeria Liquefied Natural Gas Limited, NLNG, to raise funds to reflate the economy.
With the country’s economy officially in recession, government has been considering several options to fuel a speedy recovery.
A ministerial retreat convened last week recommended an ambitious fiscal stimulus plan involving the generation and injection of massive foreign capital, estimated at between $10 and $15 billion (about N4.72 trillion) into the economy to help the recovery process.
The Minister of Budget and National Planning, Udoma Udoma, said one of the ways to fund the plan would be through sale of some national asset to raise needed capital for infrastructure development.
To add his voice in the search for solution to the economic crisis, Chairman, Dangote Group, Aliko Dangote, proposed the immediate sale of Nigeria LNG, along with other dormant government assets.
The proceeds would be invested in the economy.
“The only way for us to get out of this recession is to make sure we move into action quickly; by diversifying the economy quickly.
“If I had challenges in my company, I would not hesitate to sell assets to remain afloat, to get to the better times. It doesn’t make any sense for me to keep any assets and then suffocate the whole organisation.
“We have a lot of assets to sell. We can sell part of the joint ventures, or part of the shares. My suggestion before was that they should even sell 100 percent of NLNG. I don’t think government should be in any business of investing in sectors like LNG,” Mr. Dangote told CNBC Africa.
Mr. Dangote had said sale of Nigeria LNG could fetch the country between $12 billion and $15 billion, to be invested in the economy to boost development and build national reserves.
Senate President, Bukola Saraki, equally spoke in the same vein, urging government to dispose the multi-billion dollar gas facility established to help harness for economic value the country’s huge natural gas reserves.
Mr. Saraki said selling the 30 metric tons per annum production capacity plant, along with other national asset, could help raise the capital required to develop the basic infrastructure to bail out the country from recession.
The seven-production-train NLNG is reputed to possess the capacity to produce 22 million tons per annum (MPTA) of LNG, and 5 MPTA of natural gas liquids (NGLs) and condensate) from 3.5 billion standard cubic feet per day (BCF/d) of natural gas feed-stock.
Mr. Saraki, who was addressing senators on resumption from recess on Tuesday, said he was throwing his full weight behind the proposal to sell off NLNG and other asset to finance the country’s economic recovery.
But, acting Chairman of RMAFC, Shettima Gana, told government it would be unwise to accede to such proposals.
Citing the Nigeria’s oil and gas industry 2013 Nigerian Extractive Industries Transparency Initiative (NEITI) audit and financial report, the Commission said about $12.9 billion was received by the Nigerian National Petroleum Corporation (NNPC) from the Nigeria LNG operations over an eight-year period.
The report had revealed the money was not remitted into the Federation Account, against only $1.289 billion paid as dividends for 2013.
“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 short-term financial obligation.” the commission said.
The Central Bank of Nigeria (CBN) governor, Godwin Emefiele, was the first to propose disposal of part of government equity holding in some national assets to raise about $10 billion funding for infrastructure development.
Rather than accept the proposal, the Commission said in the alternative, it was strongly in support of borrowing from international financial institutions like the International Monetary Fund (IMF) and others.
“The revenue from these assets could be used to amortize the loans over an agreed period,” it argued. “It should be noted that after the amortization of the loans, those assets would still be owned by the Federation in addition to their regular dividends and revenue.”
The Commission said rather than selling off such vital asset generating huge funds for the federation, wealthy Nigerians, like Dangote, should be encouraged to set up their own LNG projects, considering the huge reserves of natural gas in the country.