FG re­verses de­ci­sion to sell oil as­set stake

The Punch - - FRONT PAGE - ’Femi Asu

FOR the sec­ond year in a row, the Fed­eral Gov­ern­ment has failed to carry out its planned sale of some of its stake in joint ven­ture oil as­sets.

The Fed­eral Gov­ern­ment did not in­clude the sale of the JV oil as­set stakes as a source of ex­pected rev­enue in the high­lights of the 2020 bud­get pre­sented by the Min­is­ter of Fi­nance, Bud­get and Na­tional Plan­ning.

The 2019 ap­proved bud­get pre­sen­ta­tion re­vealed that the Pres­i­dent, Major Gen­eral Muham­madu Buhari (retd.), had di­rected that im­me­di­ate ac­tion be com­menced to re­struc­ture the JV oil as­sets “so as to re­duce gov­ern­ment share­hold­ing to not less than 40 per cent and that this ex­er­cise must be com­pleted within the 2019 fis­cal year.”

The doc­u­ment said, “The over­all rev­enue per­for­mance in 2018 is only 55 per cent of the tar­get in the 2018 bud­get partly be­cause some one-off items such as the N710bn from Oil Joint Ven­ture As­set re­struc­tur­ing and N320bn from re­vi­sion of the Oil Pro­duc­tion Shar­ing Con­tract leg­is­la­tion/terms have yet to be ac­tu­alised and have thus been rolled over to 2019.

“We have again re­flected pro­jected pro­ceeds from oil as­sets own­er­ship re­struc­tur­ing as rev­enues for trans­parency and mon­i­tor­ing. Ex­pected funds have been ear­marked to fund crit­i­cal cap­i­tal projects as this was not achieved in 2018.”

The na­tion’s oil and gas pro­duc­tion struc­ture is ma­jorly split be­tween the JV on­shore and in shal­low wa­ter with for­eign and lo­cal com­pa­nies and the PSC in deep­wa­ter off­shore, to which most in­ter­na­tional oil com­pa­nies have shifted their fo­cus in re­cent years.

The Nige­rian Na­tional Pe­tro­leum Cor­po­ra­tion owns 55 per cent stake in its JV with Shell and 60 per cent stakes with oth­ers, in­clud­ing Chevron and Exxon­mo­bil.

Un­der the JV ar­range­ment, both the NNPC and pri­vate op­er­a­tors con­trib­ute to the fund­ing of op­er­a­tions in the pro­por­tion of their eq­uity hold­ings and gen­er­ally re­ceive the pro­duced crude oil in the same ra­tio.

The Buhari-led regime had in its Eco­nomic Re­cov­ery and Growth Plan re­leased in 2017 said it would re­duce its stakes in JV oil as­sets, re­finer­ies and other down­stream sub­sidiaries such as pipe­lines and de­pots.

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