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JVs: Clash of interests as CBN gov mulls sale of FG shares

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Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, says he will advise the incoming government of Muhammadu Buhari to consider selling off its stakes in joint ventures with multinational oil companies.

Emefiele who spoke to the UK-based Financial Times (FT) newspaper, noted that the about $75 billion to be realized from the sale could shore up state finances and raise funding for infrastructure development.

He however, also suggested such remedy could prompt opposition from those ideologically opposed to selling off state assets, and resistance from politicians dependent on oil resources for patronage.

Analysts are of the view, that the proposal will find sympathetic ears among the more liberal, market minded reformers in the administration in waiting. Some of them believe that the NNPC should be sold off altogether — both to eliminate associated corruption, and to help free up commercial oil firms to invest in new production.

Oil company executives argue that production could be almost doubled if the NNPC were commercialised or sold, and the companies freed up to meet the full cost of investment.

The state-owned Nigerian National Petroleum Corporation (NNPC) has about 55 per cent equity in joint ventures — with Royal Dutch Shell, Chevron, ExxonMobil, Total and ENI — which pump about half of Nigeria’s two million barrels a day of oil production.

According to the CNB boss, some of the proceeds could be used to rebuild macroeconomic buffers damaged by the collapse in world oil prices and failure of the outgoing government of Goodluck Jonathan to save more when prices were high.

But Emefiele said a greater portion should be invested in transport and energy developments that would “grow the economy and create jobs”.

“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 FT.

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