The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has proposed that the incoming government to be led by Major-General Muhammadu Buhari (rtd) consider selling down its majority stakes in joint ventures with multinational oil companies to shore up state finances and raise funding for infrastructure development.
According to the UK-based Financial Times (FT) newspaper, Emefiele has asked CBN officials to evaluate how much could be raised if the state-owned Nigerian National Petroleum Corporation (NNPC) substantially reduced its 55 per cent equity in the joint ventures — with Royal Dutch Shell, Chevron, ExxonMobil, Total and ENI — which pump about half of Nigeria’s 2 two million barrels a day of oil production.
He believes that $75 billion is a realistic target, and that private equity groups could be encouraged to compete with the oil companies for acquisitions to ensure the price is competitive.
For years, Nigeria’s oil production has been stagnating at around 2m b/d because of uncertainty around stalled reforms and because of the state’s difficulties in raising its own share of development and maintenance costs.
Oil company executives argue that production could be almost doubled if the NNPC were commercialised or sold, and the companies freed up to meet the full cost of investment.
Some of the proceeds could also be used to rebuild macroeconomic buffers damaged by the collapse in world oil prices and failure of the outgoing government of Goodluck Jonathan to save more when prices were high. But Emefiele said a greater portion should be invested in transport and energy developments that would “grow the economy and create jobs”.
He added that he had commissioned the research and would present the idea to Buhari when he assumes office on May 29.