•Federal Government must tread softly on sale of assets
Surely, the arguments for and against the Federal Government’s decision to sell off some of the country’s national assets to shore up the country’s foreign reserves are not likely to abate anytime soon. And the reasons are not far-fetched: while the proponents see the matter as purely an economic decision, those opposed to the idea see beyond the economics of it because, even as economists are wont to admit, not all human decisions are rational.
This explains the passionate positions taken by the two sides since Senator Udo Udoma, Minister of Budget and National Planning made the government’s position on the matter known after a cabinet retreat last week, in a paper titled “Turning a Crisis into an Opportunity: the Economy and the 2017 Budget.” In the documents, items being proposed for sale by the Federal Government include the four refineries in Warri, Kaduna and Port Harcourt, some aircraft in the presidential fleet, part of the 49 per cent shareholding in the Nigeria Liquefied Natural Gas Company (NLNG). Other items for consideration are advance payment for licence rounds, infrastructure concessioning, use of recovered funds, among others, to bridge the funding gap in the budget and shore up our foreign reserves.
We must hasten to say though, that the issue is not necessarily about selling some of these assets. The fundamental question is whether the government has the fiscal discipline to use the proceeds from the sale judiciously. We can only imagine how bare the country would have been if the past governments had sold the assets, with the monumental corruption that has come to define most of them. Without doubt, Nigerians still believe in President Buhari’s integrity; but governance is not all about the man at the top being a good man.
Indeed, this is the worry of many of those opposed to the idea; apart from the emotional attachment to some of the national assets.
Senator George Akume, a former Governor of Benue State, put it bluntly when he said those canvassing the sale of the assets could be those with deep pockets, eyeing them already. Indeed, the matter has become so serious that even Deputy Senate President Ike Ekweremadu called for the redeployment of the Minister of Finance, Kemi Adeosun, and Udoma, to pave the way for people with a better understanding of the issues at hand.
But Senate President Bukola Saraki feels otherwise: “The executive must raise capital from asset sales and other sources to shore up foreign reserves. This will calm investors, discourage currency speculation and stabilise the economy.
“The measures should include part sale of NLNG Holdings; reduction of government’s share in upstream oil joint venture operations; sale of government stake in financial institutions e.g. Africa Finance Corporation; and the privatisation and concession of major/regional airports and refineries,” he said.
We have noted the arguments for and against the idea. Our verdict is that yes, we may sell off some of these assets like the refineries, for example, for the obvious reason that they have constituted a drain pipe on the economy. In the last 17 years, the four refineries, with a combined capacity to refine 445,000 barrels of crude per day, have gulped about N264billion on Turn Around Maintenance (TAM). Yet, they remain comatose. It has become so glaring that the government cannot manage them; hence, we see no reason why they should not be sold.
In the same vein, we do not know what the president is doing with about 10 jets in the presidential fleet. This, definitely, is not the time for such display of affluence. A reasonable number of the jets should go; they should be sold off to reduce the cost of running and maintaining them.
Perhaps the most controversial asset is the NLNG. Although the $40billion that the Central Bank of Nigeria (CBN) Governor Godwin Emefiele said we could make if we sell between 10% and 15% of our holdings in the oil and gas sector is tempting; we dare say that we must exercise a lot of restraint in this regard. We cannot discountenance the fears of people who see the NLNG as a big cash cow for the government, because it is not run by the government which controls only 49 per cent of its shares. Our experience, even up till the immediate past, has shown that government can be dysfunctional or downright irresponsible; and even when it means well, things may not work according to its expectations.
The fact is; yes, the government may have the best of intentions in wanting to sell off these assets (or parts of them as the case may be), suppose something went wrong in the process? What would be our Plan B or fall back option? If the previous governments had sold off the assets, would the government throw its hands up in despair instead of looking for other ways to solve the economic crisis? This is why we call for caution, especially as regards the NLNG.
Without doubt there is a challenge that the government must address now. Without doubt too, we should not allow our experience to prevent the government from taking decisions that seem inevitable given our dire economic situation. However, we do not think the government should go the whole hog at once in selling off these assets. Our recommendation is that it should begin with the non-core assets: presidential jets and even refineries that have become an albatross to us, among others.
But the government must be ready to carry Nigerians along. Some of the objections to the idea derive essentially from our experience. The government must be ready to disabuse the minds of the generality of Nigerians of the financial recklessness and excesses of the past. It must give iron-cast assurances that the money would be spent judiciously. Proceeds from the sales should not be spent on recurrent expenditure or to further pamper our overfed politicians. Rather, it should be used on regenerative projects like infrastructure (power and rail) that the government has said it would spend the proceeds on, in addition to using it to boost our foreign reserves.
The input of Nigerians in the matter is important because it concerns not only those of us here now; it will also affect our generations unborn, particularly if things go awry after the sale. We should not gamble with their future. We have seen many good plans on paper fall flat in the face of implementation.
People have expressed all manner of sentiments: some have canvassed gradual divestment; some are asking questions as to how we can get a fair deal from even the NLNG at this time that oil prices are low; some have said selling off the assets in oil and gas also has to do with national security. None of these can be thrown away. So, the government should look carefully before leaping on this matter. Even if it is only a matter of selling a part of the shares in the NLNG as clarified by Senator Udoma, it still must be well thought-out.
All said, the Federal Government should intensify efforts at resolving the protracted crises in the Niger Delta region so that the country can make more meaningful progress on crude exports. In addition, it should work with other stakeholders like the National Assembly to ensure speedy ratification of the executive fiat that the president needs to facilitate the implementation of the proposal. In doing this, though, the law makers must scrutinise the details of the proposals to ensure the best for the country.
Let the government not embark on any panicky sale. Let it make haste slowly.