Apart from its plan to engage in domestic and foreign borrowings for the budget, the Federal Government recently confirmed that it would sell or lease some government-owned properties to serve as additional source of finance for the 2021 budget of N13.5 trillion.
Following the announcement, some analysts have noted that Nigeria’s planned assets sales will not boost revenues for the 2021 budget. They ascribe this to the fact that most of the assets were liabilities and had no real value.
But apart from using it for financing the 2021 budget, Minister of Finance, Zainab Mohammed believes the sales of the public assets will benefit Nigerians and boost the economy. According to the Finance Minister, most of the assets are dead and can only be sold to the private sector who will reactivate and put them to use for the benefit of the entire country.
Most of the proposed assets for sales include those that the government has not been able to manage for years which are lying down, and in some cases even completely rundown. On the list of the proposed assets for sale are the country’s oil refineries which have remained a drain pipe on the country’s purse.
Concerned professionals and some stakeholders have welcomed the proposed privatization of oil refineries. Former vice president, Atiku Abubakar, noted that ceding off the refineries to the private sector, for which he has been a strong proponent, has a lot of benefits for the Nigerian economy. He however encourages transparency in the ceding process.
Some pundits have equally noted that privatisation of the refineries would be a major driver of a sustainable and efficient economy. They note that it will be beneficial for the growth and sustainability of the state-owned enterprises. Asides the fact that the sales of the refineries and assets will promote competitive efficiency and an open market economy, scholars have stated that the private companies have a profit incentive to cut costs and be more efficient.
Embarrassingly, Nigeria has been importing petroleum products from Niger, a neighbouring West African country which has a modest refining capacity of 20,000 bpd. That same Soraz Refinery in Niger is 60 per cent owned by CNPC, a Chinese state owned Oil Company, and was built with $980 million, while Nigeria earmarks more than $1billiion for one TAM exercise on its refineries.
This is why analysts believe that moving these public assets, especially the refineries, from the public sector to the private sector, will make Nigeria self-sufficient in oil refining and save the billions used monthly in the importation of petroleum products. They also propose that it will save the government a lot of money it spends on Turn Around Maintenance (TAM) that till date has yielded no significant result, given that Nigeria’s refineries currently operate at only about twenty percent capacity.
If for instance, the $215 million, $92 million, and about $254 million to $400.4 million spent on TAM by Sanni Abacha, Abdulsalami Abubakar, and Olusegun Obasanjo respectively during their administration, were used in other important sectors like education or technology, Nigeria would be shouldering with other developed countries of the world.
Besides, the refineries have gradually become obsolete over time and can no longer compete with other refineries in the developed and developing world which are built and fitted with state-of-the-art equipment. They cannot be well managed when compared to private companies.
More so, Brazil, India, South Africa and Singapore have refineries that are managed by private firms and which are also extremely efficient.
The case for the privatization of the refineries is further hinged on grounds that it would diminish the alleged corruption and mismanagement associated with NNPC in relation to issues such as unremitted subsidy funds, the crude for petroleum products swap deals, and the hollow process called TAM. The private sector might therefore fare a lot better in terms of transparency if given the chance to take over and maintain these refineries.
The proposed Dangote 400,000 barrels refinery will equally add to the 445,000 installed capacity of the four existing refineries in Nigeria. The Dangote refinery coupled with the existing ones should be able to forestall the practice where unrefined petroleum products are exported at low prices, then processed overseas, and brought back at high cost to local consumers.
However, the two major labour petroleum unions have constantly frowned at the proposed sale of the refineries. They always express dismay that it will amount to selling the country’s valued asserts, and could more worryingly mean the transfer of the country’s oil wealth to political cronies.
Many have equally argued against the proposed sale of the refineries. This is because ceding the refineries to private companies will upshot the prices of things, as a rise in oil has the usual tendency to affect the sales of other items.
Former Chairman, Estate Surveyors and Valuers Registration Board of Nigeria, (ESVARBON), William Oruka Odudu, in the same vein, opined that selling national properties is unwise because it would be difficult to replicate such edifice in the future. According to him, the government has in the past sold a lot of properties cheaply and now they cannot replicate nor rebuild them:
“They have borrowed enough money in the past, which is unnecessary and now they want to sell the nation’s assets to finance the budget, it is not a welcome thing at all. I won’t encourage it because to replace them would almost become impossible.
“The National Theater in Lagos, for example, if sold, how would you replace such a monument. That is something that posterity would love to admire. If it’s sold, it may be given out cheaply to private individuals or political cronies and so it is not wise.”
The Lead Director, Centre for Social Justice (CSJ), Eze Onyekpere also said if government must sell its assets, it should be to re-invest in other assets.
“Ideally, government shouldn’t sell capital assets to use the money for recurrent purposes because it’s against the rules and principles of fiscal responsibility.
“Government should rather cut down the cost of running government, instead of borrowing and selling assets to meet the over- bloated expenditures, which do not add much value to the economy.”
Mohammed Bougei Attah, the National Coordinator, Procurement Observation and Advocacy Initiative (PRADIN), equally faulted the proposed sales.
He noted that it is strange that with the level of resources generated from agencies such as Nigerian Ports Authority (NPA), Customs, Federal Inland Revenue Service (FIRS), and others, government is still looking at selling assets. According to Attah, the intention to borrow from external sources, dispose of public assets as well as borrow from the so-called unclaimed dividends, amounts to too much of borrowing. Attah therefore asked that government concentrate on Internally Generated Revenue (IGR).
Former Chairman, NIESV Faculty of Valuation, Kehinde Ogunsanya however insists that there shouldn’t be an issue about government’s concession or sell off assets as far as due process is followed.
There is a certainty that the government, like other past administrations, might shrug off the idea of selling the public assets, especially the refineries. Nonetheless, it is believed that whatever conclusion is reached by the Buhari-led administration, it will stem from one that reflects the best interest of Nigerians, and the country’s economy.