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| Odein Ajumogobia |
A former Minister of State for Petroleum Resources, Mr.
Odein Ajumogobia, has expressed opposition to the Federal Government’s proposed
sale of its stakes in some oil and gas assets.
The government had in its Economic Recovery and Growth Plan
disclosed that it would reduce its stakes in joint venture oil assets,
refineries and other downstream subsidiaries such as pipelines and depots.
Ajumogobia, who was a guest speaker at the Petroleum Club
Members’ Evening, noted that a debate had emerged as to whether the government
should divest its interests in some oil assets.
He said, “The argument is, of course, that Nigeria is in
recession, oil price diminished, huge obligations on the part of the government
and no cash. And it has been suggested that Nigeria can raise up to $40bn by
divesting from some of its assets.”
According to him, the Nigeria LNG has been one of the cash
cows of the government and there has been suggestion that if the government
reduces its 49 per cent stake in it and reduce its interest in joint ventures
from 60 per cent, it can raise significant money and invest it in the economy.
He said, “That is one argument. The other is equally
compelling; that we have seen privatisation before. NITEL and Nigeria Airways
were privatised; what happened to the money?
“But the more fundamental issue for me, from legal
standpoint, is the constitutional imperative that when money is paid in the
federal accounts, it is distributed among the three tiers of government. And
so, it is unlikely that the intentions that were behind the proposal in the
first place will be realised. So, I pitch my tent with those opposed to the
sale of those assets.”
But the Managing Director, Seplat Petroleum Development
Company Plc, Mr. Austin Avuru, expressed support for the proposed sale of some
oil assets by the government.
Avuru said, “We have
worked the numbers: 88 per cent of government’s take from crude oil production
comes from rent – tax and royalty. The 57 and a half per cent you have given
the NNPC to manage the entire contribution of that investment into the
government’s coffers is only 12 per cent.
“If you took all of that 57 and a half per cent away and
gave it back to the IOCs and they establish more efficiency because the
bureaucracy is reduced, we have demonstrated that government’s take will
actually be higher than it is when it is retaining 57 per cent.”
He said it was not really about what would be done with the
money to be generated by divesting from the acreage and non-performing assets
of government.
“It is to create efficiency;
remove the bottlenecks that are bedevilling the industry and actually deliver
more money to the government,” Avuru added.
Citing data from Ajumogobia’s presentation, he noted that
the IOCs in the country realised about $11bn selling assets in about three
years, adding that some of the assets had a lifespan of four or five years.
He said between 1990
and 1996, the government gave out 39 blocks to indigenous companies, adding,
“Neither was capacity created nor did the government realise any substantial
amount of money from them.
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