Fresh facts are coming up on the Federal Government’s plans to sell some assets in a bid to push back the recession that has hit the economy.
Certain conditions must be met before the sale, which is expected to boost Nigeria’s foreign reserves – a critical factor for potential foreign investors.
The conditions, include:
- inserting a repurchasing clause in the assets sales agreements; and
- no outright sale of the yet unnamed assets.
A Presidency source, who pleaded not to be named, said: “The Federal Government has no plan to sell off its shares outright in the LNG, where it owns 49% shares. The balance 51% is owned by private foreign interests.
“The Federal Government doesn’t own the entire gas company and will certainly not sell off its entire shares, but it’s open to the possibility of selling down its 49% ownership by 5% or thereabout.”
On the repurchase clause, he said: “Just as in other potential asset sales, there would be a repurchase option that guarantees the Federal Government’s opportunity to buy back any such assets if circumstances change anytime in the future.”
While there have been no list drawn up for the proposed assets sales, the source said that there is also a clear decision not to sell any critical asset. He did not mention such assets.
He said: “Some of the intended sales could be in form of time-bound leases, advance renewal payments on leasing licences and concessioning which would attract buoyant signature fees.
“If we even want to sell down certain assets, while our target is to get foreign currency, specifically dollars, the option would also be opened to Nigerians at some point to buy limited shares through the Nigeria Stock Exchange.”
The source added that one of the concessioning deals almost completed is the East-West lines of the Nigeria Railways, with the General Electric-GE-being the concessionaire.
The source said the global giant would invest $2 billion in the economy, including for the refurbishment of the single-gauge lane of the lines that have been largely left idle for years.
GE under the deal, he said, is expected to hire back some of the laid off staff of Nigeria Railways and also open a Transport University in Nigeria while building/assembling train coaches in this country.
Under the deal, the source said the Federal Government would also receive a signature fee in foreign currency as it would in other assets that might be concessioned.
“The important thing to keep in mind is that the sales down of some of the assets is an option to raise the much-needed dollars at a critical time for the Nigerian economy,” the source noted, adding that if and when such a sale is done, “Nigerians can be sure that there would be no shady deal, considering the character of the Nigerian leadership at this time”.
The proposed plan to sell some national assets has generated excited comments especially after businessman Aliko Dangote called for the sale of the LNG last week, fuelling speculations that the Federal Government wanted to sell its entire share in the firm.
“Generally whatever we sell, we shall get real value for, and we shall include a repurchase clause into any such sales agreements,” the source said.
Some other experts have argued that there is a need to take some drastic steps to save Nigeria’s shrinking foreign reserves.
It is believed that an injection of about $15 billion into the reserves will have a positive impact on the economy.
The Federal Government’s plan to raise between $10 billion to $15billion quickly from asset sales “is imperative” as the monthly foreign earnings have dropped drastically to as low as about $300 million.
The government also has been losing about one million barrels of oil due to vandalisation of pipelines and installations by militants in the Niger Delta region.