Nigeria’s Plan to Cut Stake in Oil Assets Raises Doubts
By Dirisu Yakubu, with Agency reports
The Federal Government of Nigeria’s plan to pull the nation out of recession and create 15 million jobs by selling stakes in Joint-venture oil projects within the next three years has been met with skepticism, Bloomberg reports.
This plan which will run till 2020 will lessen Nigeria’s stakes in joint ventures with oil majors which produced about 90% of the country’s crude, from 55% to 40%.This will improve their efficiency and reduce government’s financial burden.
Some analysts think the sale would not be easy, given the severe production disruptions in 2016, previous unsuccessful efforts to privatize state assets and the fact that the Nigerian National Petroleum Corporation, NNPC still owes huge sums of money to their venture partners.
Others, however, believe that “the need to increase government’s income is the primary motivation for this new proposal and a return to the good times of higher oil prices and normal Nigerian production.”
This is not the first time that the government sells its assets. Last year, it indeed sold power assets to private investors, a process that Nigeria’s Senate President, Bukola Saraki in February said had failed to improve domestic access to power.
Over the past year, Africa’s second biggest oil producer was among the world’s hardest-hit crude supplier nations due to militant attacks and low oil prices.
The government intends to increase oil output to 2.5 million barrels a day by 2020 from a low of 1.6 barrels daily in Q3 of 2016. This is expected to boost government revenue by N800 billion ($2.53 billion) annually.