Proposed Assets Sale: Senator Abaribe Fears Proceed Could Be Frittered Away

Enyinnaya-AbaribeThe proposed plan to sell off some of Nigeria’s national asset is not a welcome idea for many Nigerians.

One of such is the Chairman, Senate Committee on Power Steel Development and Metallurgy, Enyinnaya Abaribe, who believes such plan is as good as putting the country in the hands of a few people.

He expressed fears that proceeds from sold assets could be frittered away, putting the nation in a direr situation.

Lack Of Confidence

Mr Abaribe was speaking on Channels Television’s breakfast programme Sunrise Daily on Monday.

“The fear is; assuming you sell everything and it comes in and goes out in the same process without affecting the real sector which is the manufacturing sector, where will you be?

“That is why you see divided opinions in the Senate among those who contributed to the debate on the assets’ sale proposal.

“They say, there are several ways that you can reflate an economy and not just by one set of policy.

“There is a lack of confidence in the economy today and once there is no confidence in the economy, you will find someone that wants to find a safe haven,” Senator Abaribe pointed out.

He stressed the need for the government to bring back the people’s confidence.

Also speaking on the issue of assets sale, an energy economist, Mr Onuoha Nnaji, has challenged the government to come up with better strategies to reverse the current recession.

In his view, the government should think of ways of keeping oil production at benchmark levels by working with the Niger Delta militants regarding the protection of the oil facilities.

The Senate President, Dr. Bukola Saraki, had at a plenary asked the executive to raise capital from the sale of government assets and other sources to shore up reserves.

Senator Saraki made the recommendation as the Senate resumed plenary after a seven weeks’ recess.

Addressing lawmakers, Senator Saraki said that the sale of assets would calm investors, discourage currency speculation and stabilise the economy.

After the Senate President made the proposal, the National Economic Council approved President Muhammadu Buhari’s strategies to pull the economy out of recession.

This was done during its meeting in Abuja, chaired by the Vice President, Professor Yemi Osinbajo on September 22.

The council of ministers and governors debriefed the Finance Minister, Mrs Kemi Adeosun and the Minister of Budget and National Planning, Mr Udoma Udo Udoma as well as the CBN Governor, Godwin Emefiele on the strategies to take the country out of the woods.

Briefing State House correspondents after the closed-door meeting, the Deputy Governor of Ogun State, Yetunde Onanuga, said that the Central Bank would henceforth adopt best options to manage the situation.

Fiscal Stimulus Plan

The plan triggered mixed reactions which the Minister of Budget and National Planning tried to address in a statement.

Sale of National Assets
Senator Udo Udoma said Nigeria needed enough money to get the economy back on the path of recovery

Senator Udo Udoma, said that the primary objective of government’s fiscal stimulus plan was not to sell off all major critical national assets but to source immediate funds to reflate the economy and implement capital projects in the 2016 budget.

Senator Udoma gave the explanation in Lagos at the weekend while briefing reporters on the forthcoming Nigerian Economic Summit.

He said the intention of the government was just to get enough money to fund the 2016 budget and get the economy back on the path of recovery.

Government, he stated, needed to inject a large dose of funds into the system to get the economy back on track and to faithfully implement the provisions in the capital budget tailored at reflating the economy and aiding the diversification process.

Senator Udoma further explained that the country had lost almost half its expected revenue and would need to urgently source for the shortfall to enable the government faithfully implement the budget.

“This unfortunate scenario prompted the Economic Management Team to urgently work out a fiscal stimulus plan to generate immediate large injection of funds into the economy through asset sales, advance payment for license rounds, infrastructure concessioning, use of recovered funds, among others, to reduce the funding gap.

“The other option would have been to source for additional loans, beyond the level of borrowing already projected for in the 2016 Budget.

“This would not be a wise option as it would raise the level of debt service to an unsustainable level.” a statement by the Minister’s spokesman, Akpandem James, read.

Economy In Recession

Nigeria’s economy slid into recession, triggered by the drop in the price of crude which was compounded by resurgence of militancy in the Niger Delta region.

Gross Domestic Product (GDP) was contracted by 2.06% in the second quarter of 2016, a report by the National Bureau of Statistics showed.

According to the report, the decline has caused the Naira to get weaker while lower oil prices dragged the oil sector down.

The output shrunk by 0.36 in the first quarter.

During the quarter, nominal GDP was 2.73% higher at 23.48 million Naira at basic prices.

The nation’s economic situation became worse, as several oil facilities got destroyed.

These attacks on oil installations dipped production output by over 700,000 barrels per day (bpd) to 1.56 million bpd in the last few months, according to the nation’s Minister of Information, Mr Lai Mohammed.

A group that calls itself the Niger Delta Avengers has claimed responsibility for most of the attacks that have forced some oil companies in the region to declare force majeure.

The group, which few weeks ago said it had agreed to a ceasefire and was open to negotiations with the Federal government, launched another attack on an oil facility last week.

The Niger Delta Avengers said it was a warning to the government to cease the harassment of youths in the oil-rich nation.

Energy Economist Hails Unbundling Of NNPC

NnachiAn energy economist, Mr Onuoha Nnachi, has hailed the decision of the Minister of State for Petroleum, Mr Ibe Kachikwu, to unbundle the Nigeria National Petroleum Corporation (NNPC).

After the unbundling, Mr Nnachi said “we are going to have four or five areas and within those areas, you will have subsidiaries,” adding that “it is not the number of the subsidiaries you have, but the functionality of hose subsidiaries,” he said.

Mr Nnachi said many policies were talked about during the Society of Petroleum Engineering Conference.

He further noted that bringing professionals and experts would bring about “a better understanding from what we are expecting to come out of it”.

Speaking on the Petroleum Industry Bill (PIB), Mr Nnachi said that Mr Kachikwu was only implementing one aspect of the bill.

“Any law that is made in any country has its legal and administrative part. The legal part is still intact but Kachikwu is going ahead to implement the administrative part, which does not in any way contravene the law at any point.

“I believe that the PIB we have is too cumbersome to deal with”, maintaining that “each of these sectors – upstream, midstream and downstream – should be treated independently not holistically,” he said.

He insisted that it would take a long time before the PIB would be passed because it would take seven Senate Committees to sit and deliberate before a conclusion on the Bill is reached.

Mr Kachikwu had during the Society of Society of Petroleum Engineering Conference announced that the NNPC would be unbundled into 30 competitive revenue generating subsidiaries

The conference focused on global oil price and the use of technological advancements in hydrocarbon exploration and exploitation.

Dr Kachikwu told the petroleum industry experts that an overhaul of the foremost government oil firm, NNPC, was imminent to ensure the return of profitability and stability in the sector.

In what the Minister said would be a major overhaul of the system, the positions of Group Executive and Managing Directors, as existed in the NNPC, would be replaced by Chief Executive Officers who would head each of the companies.

He said that the move, which would be concluded within the next seven days, would reposition the corporation to bring in huge profits which had been impossible to achieve in the past 15 years.

However, other experts at the lecture noted that for Nigeria to be able to get over its financially challenging times occasioned by the instability in the oil market, advanced technology in the sector was a must to reduce costs and maximise profit.

The experts said that several sub-sector practices must be ratified and enhanced, including joint venture structures, gas exploration, oil production and refining chain among others.

Evolution Of Shale Gas Has Affected Nigeria’s Economy – Economist

Onuoha NnachiA Nigerian Energy Economist has given some clues as to what might be affecting the country’s dwindling economy.

Approaching the problem of the dwindling economy from the energy sector, Mr Onuoha Nnachi said that there are two key factors affecting the oil price which in turn, affects the Nigerian economy.

Speaking on Channels Television’s Sunrise Daily on Friday, Mr Nnachi said: “The evolution of shale gas oil production and the crisis across the Middle East, have deeply affected the Nigerian economy.

“Before the shale production started, the shale existence has been known to everybody in the industry, but the technology that would allow you do the drilling, was very high in terms of cost – the cost has been driven by the United State technologist, who had invested so much in his research,” he explained.

Giving his opinion about the increase in price of crude oil, the Energy Economist stated that the government should create higher demand of the crude oil.

“One of the key options in creating higher demand is to increase the energy consumption of the globe, the developed country should be pushed to development.

“Africa stands a chance of benefiting from the development in terms of increasing energy demand,” he said.

Answering a question on what the country has done so far to solve the problem of dwindling economy, Mr Nnachi said that “the situation today, is redefining the global alliance and that is a new evolution of the world, we have to accept it.

“Today, global alliance is shifting – oil no longer moves from the Middle East to North America, South and back to Europe.

“Coming down to our own nation, people have said in time past that Nigeria is not an oil nation, but a gas station, what have we done about our gas?,” he asked.

“Experts said we have done 187 trillion cubic feet reserved – this number has been taunted for many years which implies that we are not increasing it.

” The reserve has been a result of accidental gas – gas that was discovered while drilling oil,” he said.

Mr Nnachi further shed some light on challenges faced by people who build refineries.

“Some state governors are being threatened by persons that want to build refineries in their states.

“The refinery module development has three points that is very critical – you have to edge the supply, you must have an off taker’s agreement before funding the project.

“But today, most people who plan to build refineries may not have the edge supply, off taker’s agreement,” he added.