Nigerian government has at last bowed to the stringent conditions handed down to it by the International Monetary Fund (IMF) before any financial assistance could be extended to the country.
Both the IMF and World Bank, which the country had approached for $2bn loan facility with which to fund its 2016 deficit budget of $2.2 billion, had given some conditions, including selling most of Nigeria’s public assets, before approving such loan.
Other terms included government’s total divestment from viable public assets, among them, the NLNG, international airports and others.
Another condition is that the local currency, the naira, be devalued such that its exchange rate to dollar should be determined by market forces.
Nigeria is also to improve on its internal revenue generation mechanism by eliminating waivers on imported goods, as well as lift bans on importation.
But the country’s policy makers, including Finance Minister, Kemi Adeosun, have described the terms as too tough to meet, considering the would-be impact on the populace.
However, with the African Development Bank (AfDB), which had promised Nigeria a $1 billion loan reducing same to $600m after its October 2016 board meeting, government is said to have resolved to give the IMF/World Bank terms a push.
This is further confirmed by the Federal Ministry of Petroleum Resources draft policy document on the reform of the oil sector, made available to Ripples Nigeria on Sunday, which reiterated government preparedness to sell some of its stakes in the NNPC joint venture agreements to the highest bidders.
“Government will still retain effective control of the sector, even after disposing of its shares through this proposal. The aim is to have foreign currency to drive the economy,” states the policy paper.
Though the policy drive is also targeted at actualising government’s earlier expressed desire to sell half of its equity shares in the NLNG, it did not lay any emphasis on that.
But only states that the resources to be derived from the sale of the joint venture agreements and restructuring of NNPC will produce a lot of relief to the sector and in the long run meet with the intention to have private sector-driven oil and gas industry.
Still, both oil workers and experts have not agreed on the approach, describing it as padded with hidden agenda.
Said Mike Akinowo, a marketer with an oil servicing firm, Zilaks Oil Limited: “You can’t eat your cake and have it. It is either government gives more push to the passage of the PIB into law, which will open the window of opportunity for investors to come in or it will later discover that this half-way-house approach to the sector will run against the economy.
“Nigeria is the only major oil producing county that runs too often to IMF/World Bank for loan facilities, when the reverse is supposed to be the case.”
Even the two workers’ unions in the sector, NUPENG and PENGASSAN have vowed to resist any attempt by government to introduce what they termed a slavish policy to the industry.
Secretary General, PENGASSAN Lumumba Okugbawa,put it thus“Government can go ahead to sell any other public asset, but not NNPC. We’ll resist it with the last drop of our blood.”
By Emma Eke….
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