₦airaland Forum

michelz:
This is the worst unsolicited advice ever... So Nigeria should sell off her patrimony? Is that not a pure example of [b]21st century daylight neo-colonialism? [/b]Then what happens to all these cries and hues over state-controlled revenues? This will spirall the country into serious anarchy if attempted.

stronger:
This makes sense. Sell part of it off and raise up petroleum tax to make up for the reduction in revenue.

This provides cash to develop badly needed infrastructure (electricity, transportation etc) that will drive growth in non-oil sectors, without having to increase debt profile significantly.

Of course this means a lot of cash in the system and only a responsible govt will be able to handle it well. This is why the CBN governor did not suggest it to GEJ! They would have used it for elections. Good to see that he has more confidence in GMB!

jascon1:
How Una take day hear all these news self. Abi Una day record their calls? Am forced to ask oh. Wetin bihari tell him wife for night before e sleep Una report am. The kind tea way him maid do for am for night Una report am. The makeup him daughter day use, Una report am. Na wah o

Seun:
For once, the general sentiment is right. This is a terrible idea. Even if you want to sell the stakes, this is the stupidest time to sell them.

Bevista:
Great Immediate revenue to solve today's problems (assuming the funds are used judiciously). However, with only 30% stake in the JV, how will that impact the country's Future revenue stream?

barcanista:
I am not in support of this...What kind of advice is this for God sake?

stronger:
This makes sense. Sell part of it off and raise up petroleum tax to make up for the reduction in revenue.

This provides cash to develop badly needed infrastructure (electricity, transportation etc) that will drive growth in non-oil sectors, without having to increase debt profile significantly.

Of course this means a lot of cash in the system and only a responsible govt will be able to handle it well. This is why the CBN governor did not suggest it to GEJ! They would have used it for elections. Good to see that he has more confidence in GMB!

stronger:
We have had 60% for years. What have we done with it? Nothing! Politicians loot!

Now that we have a responsible and accountable govt, sell part of it and develop infrastructure. Saudi Aramco has RESERVES that we can't even dream of. There is a future. Our oil will soon finish and the oil price will never get to above $100 again except there is a MAJOR WAR in the ME. Major! best thing, sell off now!

Volksfuhrer:
I agree with that part of your submission. But the idea is not as heinous as it sounds. The idea could still be fine-tuned to hedge against long term disadvantages. We should not just reject the idea without seriously looking at its merits and finding ways to minimize its demerits.

ideykwum:
It's inherently a good approach if managed well! It's strange to see Nairalanders who know very little about public finance or investment or the economy reject what they don't even comprehend!

AZeD1:
This is a brilliant idea. We need serious cash for infrastructure and we need the cash now.

For those talking about mismanagement, you should know that we don't have to sell for cash.
- Want a high speed rail from Abuja to Lagos, sell a X% equity to the construction firm.
- Want to increase power generation by building more power stations, do the same thing.

Look at it like hire purchasing infrastructure with our God given natural resources.
Another point to note is that we can always transfer for a period of time e.g Julius Berger says it costs X amount to build y infrastructure, and we say ok take 10% in our JV stake here, in about 6 years, you should have gotten your money with profit then you transfer it back to us.


I think this idea is what looking at.

Well I would say instead of selling of 25% of its stake and keep just 30%, why not sell off 15% and retain 40%? This way the FG would raise $45 billion which equates to N8.94 trillion or 60% of the said N14.9 trillion. This way, and with prudent application of the resources, infrastructural development projects can still be carried out, the new stake owners, should have local stakes (also with state govts of the regions), and petroleum tax can still be raised like Emefiele suggested. It's a win-win situation both for the short term and long term IMHO.

jazzsoul:
Saudi Arabia has $750 billion in foreign exchange reserves and Nigeria now has only $30 billion. Even South Africa has $50 billion in reserves with much more in development to show for its earnings.

stronger:
This makes sense. Sell part of it off and raise up petroleum tax to make up for the reduction in revenue.

This provides cash to develop badly needed infrastructure (electricity, transportation etc) that will drive growth in non-oil sectors, without having to increase debt profile significantly.

Of course this means a lot of cash in the system and only a responsible govt will be able to handle it well. This is why the CBN governor did not suggest it to GEJ! They would have used it for elections. Good to see that he has more confidence in GMB!

ideykwum:
Like I said earlier, it's amazing to see people make judgements without thinking things through! Even the concept of time-value of money can explain this proposal, if the earnings are properly invested for competitive future benefits and cashflows! It beats being mired in the corrupt cesspool that the Oil and Gas Industry is!!

$10 today may be worth several times more than $50 tomorrow, if properly invested and if it presents a better Net Present Value. If I had the figures on the two scenarios ( projections on the status quo and projections based on this proposal), I would have valued their risk components and from their NPV calculate EMVs for both options and make a decision! You can't discard a decision without empirical facts, or based on sentiments!

The CBN dude could be wrong, or very very right!

Volksfuhrer:
Thank you for your brilliant analysis.

chigoizie7:
And who bares the consequencies of those increased tax? The common poor nigerian?

stronger:
Nope! The increased PETROLEUM tax is for the oil companies. PETROLEUM tax

chigoizie7:
The person that bares the burden of tax is the final consumer. well, maybe that of petroleum is different.

blank:
Instead of selling off, can't we reduce the corruption in NNPC and the multinationals? Do you know that the multinationals mostly pass off 100% sometimes over 100% of their costs to NNPC instead of it being in ratio of their contributions.

NNPC internal auditors hardly find out maybe due to the fact that they are there because of federal character or they are being settled.

Corruption is really endemic. God save us.

stronger:
No, that's the way the Joint ventures (JVs) and Production sharing contracts (PSCs) are structured.

The cost of production incurred by the oil company is FIRST removed before the profit is shared. Of course the NNPC has to audit to be sure the costs are real. . . Whether they do that properly is a different matter, but 100% of the costs should be taken out.

blank:
You misunderstood me. I mean NNPC bears 100% of the cost instead of 60% of the cost because the multinationals overblow the total cost and pass on a seeming 60% which is in fact 100% to NNPC.

Sometimes, after removing this overbloated cost of production, there is little to tax.

stronger:
This makes sense. Sell part of it off and raise up petroleum tax to make up for the reduction in revenue.

This provides cash to develop badly needed infrastructure (electricity, transportation etc) that will drive growth in non-oil sectors, without having to increase debt profile significantly.

Of course this means a lot of cash in the system and only a responsible govt will be able to handle it well. This is why the CBN governor did not suggest it to GEJ! They would have used it for elections. Good to see that he has more confidence in GMB!