Godwin Emefiele, governor of Central Bank of Nigeria (CBN), has urged the incoming government to consider selling down its majority stakes in joint ventures with multinational oil companies in order to shore up state finances and raise funding for infrastructure development.
“If you sell down a 30 per cent stake you could raise something substantial. It is an option they need to consider as a way of raising further funding,” he told the Financial Times.
“It is an option now because our revenues have dropped and we don’t need to pile on more debt. The alternative is to look for ways of releasing value from some of the government’s assets.”
Emefiele has asked CBN officials to evaluate how much could be raised if the state-owned Nigerian National Petroleum Corporation (NNPC) substantially reduced its 55 per cent equity in its numerous joint ventures, adding that petroleum profit taxes could be adjusted upwards to compensate for the state’s reduced stake in crude oil sales.
He said he had commissioned the research and would present the idea to President-elect Muhammadu Buhari when he assumes office on May 29 as he believes that $75 billion is a realistic target, and that private equity groups could be encouraged to compete with the oil companies for acquisitions to ensure the price is competitive.
Emefiele said a greater portion should be invested in transport and energy developments that would grow the economy, create jobs and could be used to rebuild macroeconomic buffers damaged by the collapse in world oil prices.
For years, Nigeria’s oil production has been stagnating at around 2 million barrels a day because of uncertainty around stalled reforms and because of the state’s difficulties in raising its own share of development and maintenance costs.
It is in joint venture agreements with multinationals including Royal Dutch Shell, Chevron, ExxonMobil, Total and ENI which pump about half of Nigeria’s 2 two million barrels a day of oil production.