Should we sell our assets? Things to note
By Bayo Adeyinka
I have strong reasons to believe the decision to sell off ‘national’ assets has been concluded and that the government is just flying a kite to gauge public opinion. Why do I think so? I think it is not mere coincidence or happenstance that Aliko Dangote, Saraki, Godwin Emefiele, Emir Lamido Sanusi and Senator Udo Udoma will make similar comments in one week. Aliko Dangote flew the kite on behalf of the private sector. Saraki rode on the kite so as to assure the Executive that there will be no blockade. Godwin Emefiele gave his input as the Federal Government’s banker. There was a royal and establishment assent from Emir Sanusi. And Senator Udo Udoma nailed it by being the voice of the Executive. We now have the quintuple- private sector, legislature, financial sector, royalty cum establishment and the executive in uncommon unison. What is left is just to gauge public opinion so as to determine how best to proceed. My opinion.
Now, to the question: why do we need to sell?
Nigeria is in a cul de sac. Recent reports revealed we have borrowed N2trillion naira in one year already. Can we sustain this level of borrowing? What is there to show for the borrowing? Are we borrowing to pay salaries and finance consumption? If we were borrowing to stimulate growth and finance capital expenditure, then that will be fine. If we want to get out of recession, there are two major options: either we borrow like we have been doing (debt) or we look for assets we can easily convert to cash. We cannot sustain this level of borrowing. Nigeria is getting into the debt trap again. That is where the sale of assets come in.
To the question: should we sell our assets?
We need to define the national assets. In my opinion, they include the presidential fleet of 11 aircraft, NNPC, NLNG, the refineries, JVs held by NNPC/FG, all federal airports, stake in financial corporations like AFC, etc.
Before I give my opinion on the sale, I think it is best we go down memory lane. What happened in the past can be a guide for the present and the future. Obasanjo had sold two refineries to Aliko Dangote and his Bluestar Consortium for $750m. Umaru Yar’adua reversed the sale immediately he got into office. That was when naira was N127.50 to the dollar. Today, no one will buy those refineries for $100m. Dangote has moved on and he’s building his own refinery. The story of Nigeria Airways is not any different. During it’s hey days, the national carrier was managed by KLM and it had 32 aircrafts in its fleet. By the time, Obasanjo liquidated it in 2004, it was riddled with debts and had only one aircraft left. Curiously, Skypower Catering was sold for N3b. Skypower provided in-flight catering services to Nigeria Airways. What if Nigeria Airways had been put for sale or concessioned earlier?
And this brings us to what has turned out to be a national discussion: shall we sell our assets or at least concession them now that we are in a conundrum?
My answer is yes but selectively. I believe we should sell off the refineries or concession them. I believe we should greatly reduce our holdings in AFC to free up some badly needed cash. I believe we should sell at least half of the presidential fleet. I believe we should reduce our shareholding in those oil and gas joint ventures. I believe all federal airports should be concessioned. If London Gatwick Airport which is Europe’s 9th busiest airport and the 37th busiest airport in the world can be sold off, there is no point retaining those airports that are more or less conduits for corruption and a drain on the nation’s resources. FG’s stake in NNPC should be greatly reduced so the behemoth can be more effective. There is an integrated oil and gas company called OMV with headquarters in Vienna, Austria. OMV over the years has divested and greatly reduced government holding and today, the company is in 11 countries, produces over 300,000 barrels per day, has a global workforce in excess of 24,000, 2 gas powered power plants, 3 refineries and 3,800 filling stations. OMV started in 1956 while NNPC started in 1977.
This brings us to the proposed sale of NLNG. So far, it has been a discussion that, in my opinion, has been more emotive than logical. I agree that NLNG contributed about significantly to the national coffers. However, what’s the future of oil and gas? Japan, South Korea and China are the 3 leading liquefied natural gas importers but their import has declined over the last one year. All of them are going nuclear. I believe Nigeria needs to be weaned off reliance on oil and gas. That is certainly not the future. We are still dependent on what is under the ground when we should be concerned about what is on the ground. Silicon Valley which is just a stretch of 50 miles between San Jose and San Francisco is the richest land mass in the world- with at least 99 listed technology companies that are together worth $2.8trillion and account for almost 10% of corporate America’s profits. The future is technology.
While I understand the fears of possible misuse of whatever proceeds are generated from the sale, I believe if Buhari with his famed incorruptibility cannot be trusted to handle this process, then no one else can. This even makes the sale more imperative. We need to sell now so we can kill the geese that lays all the corrupt golden eggs. Why do we need to continue to sustain what is essentially an ATM for politicians? I also believe government has no business in business.
My take: sell off 20% of our stake in NLNG. We will still retain 29% stake (to make us feel emotionally comfortable and be in the driver’s seat- for anything that is worth). The second highest shareholder will be Shell Gas BV with 25.6%. But mark it- in less than 10 years, NLNG may be worth nothing.