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Sale of National Assets’ll Reduce Govt Borrowing

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  • Sale of National Assets’ll Reduce Govt Borrowing — Experts

As the debate over the nation’s debt sustainability continues, economic and financial experts have advised the Federal Government to sell some national assets as part of measures to increase its revenue.

The nation’s rising debt profile has raised concerns among experts and other stakeholders in recent times, with the World Bank describing the government’s debt servicing costs as unsustainable.

The Federal Government’s interest-to-revenue ratio rose from 33 per cent in 2015 to 59 per cent in 2016, the World Bank said in a report released earlier this month.

Last week, the Minister of Finance, Mrs. Kemi Adeosun, admitted that the debt burden had escalated when she said the government could not borrow any more and needed to generate funds domestically to fund its budget.

In a contradiction to Adeosun’s statement, the Ministry of Finance on Thursday said the government would continue to borrow from foreign and domestic financial institutions to fund its programmes.

But experts said the government should look more inwards by selling some idle national assets to shore up its revenue.

The Chairman, Nigerian Economic Summit Group, a private sector think-tank and policy advocacy group, Mr. Kyari Bukar, said, “The government should look at the possibility of selling some of its assets. That can generate cash that will then be used to invest properly in infrastructure.

“There are many assets that the government should look at,” he said, citing joint venture assets in the oil and gas industry as an example.

Bukar said, “The other thing that I do believe very strongly, which I don’t know whether is on the table, is that we ought to be looking at listing the NNPC on the stock exchange. Saudi Aramco is going to be listed.

“I think they are trying to put up about five per cent of the company and do an IPO. Everybody is saying this might be the largest IPO in the world. I think the Saudis are being extremely smart. Petrobras in Brazil is pretty much a publicly-owned entity.”

The Managing Director, Cowry Asset Management Limited, Mr. Johnson Chukwu, said the government could get some quick cash from sale of idle assets with some economic realisable value.

He said, “Today, we have airports that are not being optimised. Take for instance the Lagos international airport; there is no reason why we should not build it into a regional hub so that it will be a transit airport for almost all the countries of West Africa. That way, the government will attract a lot of revenue.

“Nothing stops us from privatising the airports; give them to private sector operators who will now modernise the airports into world-class standard over a period of time.

“Look at the stadia; the one in Lagos has been idle for almost 20 years. Abuja stadium is hardly used. There is nothing that stops the government from privatising the stadia for them to be restructured. There is nothing that stops the government from adopting the concession arrangement for the Lagos-Kano rail corridor, which is commercially viable.”

Chukwu said the government had continued to pump money into the turnaround maintenance of the nation’s refineries rather than selling them.

“Look at the Federal Secretariat in Ikoyi; it is almost a dead asset. That can be a massive hotel complex if it is in the hands of private operators,” he added.

An economist and faculty member at the Lagos Business School, Dr. Bongo Adi, said the government had gone on a borrowing spree because it felt that the country’s debt-to-GDP ratio was low.

He noted that the debt servicing had gulped so much of government’s revenue, adding, “So, if they go ahead to borrow more, that increases the debt servicing going into next year, and that means the government won’t have money to do anything.”

The Federal Government, in its Economic Recovery and Growth Plan, a Medium Term Plan for 2017 to 2020, said it would reduce its stake in Joint Venture oil assets, refineries and other downstream subsidiaries such as pipelines and depots.

There have been calls for the government to consider the sale of some critical national assets to raise money to finance critical infrastructure in order to raise money to reflate the economy.

For instance, the Senate President, Dr. Bukola Saraki, on September 20, 2016 recommended the sale of some national assets and the utilisation of the proceeds for infrastructure development.

He said this was necessary for the nation to fight its way out of the current recession, adding that the measures should include the sale of the Nigeria LNG Limited; reduction of government’s share in upstream oil joint venture operations and financial institutions; and the privatisation and concession of major/regional airports and refineries.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

NNPC Supplies 1.44 Billion Litres of Petrol in January 2021

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The Nigerian National Petroleum Corporation (NNPC) supplied a total of 1.44 billion litres of Premium Motor Spirit popularly known as petrol in January 2021.

The corporation disclosed in its latest Monthly Financial and Operations Report (MFOR) for the month of January.

NNPC said the 1.44 billion litres translate to 46.30 million litres per day.

Also, a total of 223.55Billion Cubic Feet (BCF) of natural gas was produced in the month of January 2021, translating to an average daily production of 7,220.22 Million Standard Cubic Feet per Day (mmscfd).

The 223.55BCF gas production figure also represents a 4.79% increase over output in December 2020.

Also, the daily average natural gas supply to gas power plants increased by 2.38 percent to 836mmscfd, equivalent to power generation of 3,415MW.

For the period of January 2020 to January 2021, a total of 2,973.01BCF of gas was produced representing an average daily production of 7,585.78 mmscfd during the period.

Period-to-date Production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and Nigerian Petroleum Development Company (NPDC) contributed about 65.20%, 19.97 percent and 14.83 percent respectively to the total national gas production.

Out of the total gas output in January 2021, a total of 149.24BCF of gas was commercialized consisting of 44.29BCF and 104.95BCF for the domestic and export markets respectively.

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Economy

NNPC Says Pipeline Vandalism Decrease by 37.21 Percent in January 2021

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Gas-Pipeline

The Nigerian National Petroleum Corporation (NNPC) said vandalisation of pipelines across the country reduced by 37.21 percent in the month of January 2021.

This was disclosed in the January 2021 edition of the NNPC Monthly Financial and Operations Report (MFOR).

The report noted that 27 pipeline points were vandalised in January 2021, down from 43 points posted in December 2020.

It also stated that the Mosimi Area accounted for 74 percent of the total vandalised points in Janauray while Kaduna Area and Port Harcourt accounted for the remaining 22 percent and 4 percent respectively.

NNPC said it will continue to engage local communities and other stakeholders to reduce and eventually eliminate the pipeline vandalism menace.

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Economy

Nigeria’s Food Inflation Hits 22.95 Percent in March 2021

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Food inflation in Africa’s largest economy Nigeria rose by 22.95 percent in March 2021, the latest report from the National Bureau of Statistics (NBS) has shown.

Food Index increased at a faster pace when compared to 21.70 percent filed in February 2021.

Increases were recorded in Bread and cereals, Potatoes, yam and other tubers, Meat, Vegetable, Fish, Oils and fats and fruits.

On a monthly basis, the food sub-index grew by 1.90 percent in March 2021. An increase of 0.01 percent points from 1.89 percent recorded in February 2021.

Analysing a more stable inflation trend, the twelve-month ended March 2021, showed the food index averaged 17.93 percent in the last twelve months, representing an increase of 0.68 percent when compared to 17.25 percent recorded in February 2021.

Insecurities amid wide foreign exchange rates and several other bottlenecks that impeded free inflow of imported goods were responsible for the surged in prices of goods and services in March, according to the report.

The Central Bank of Nigeria-led monetary policy committee had attributed the increase in prices to scarcity created by the intermittent clash between herdsmen and farmers across the nation.

However, other factors like unclear economic policies, increased in electricity tariffs, duties, subsidy removal and weak fiscal buffer to moderate the negative effect of COVID-19 on the economy continue to weigh and drag on new investment and expansion of local production despite the Federal Government aggressive call for improvement in domestic production.

Nigeria’s headline inflation rose by 18.17 percent year-on-year in the month under review.

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