ON SELLING NLNG

Aliko Dangote

Since business mogul, Aliko Dangote suggested that the Federal Government should sell off the NLNG as a way of getting Nigeria out of economic recession, I have been reading all sorts of comments opposing the idea. As usual, some of the comments are heavily laden with suspicion and a barely concealed ethnic bias. These so-called economic “experts” argue, among other things, that the NLNG is the only federal company making profit, therefore it should not be sold!

These are the same people who have been harping on quick passage of the Petroleum Industry Bill (PIB) which by the way, government has sort to rename “Petroleum Industry

Governance and Institutional Framework Bill. These are the same arguing for fiscal federalism. I wonder if they actually appreciate what the full impact of PIB would be if successfully passed. I wonder whether they are aware that full passage and implementation of PIB would mean the unbundling of the oil and gas sector and the Federal Government, for instant, would lose its vice-like grip on NNPC.

For what it is worth, let me state some of the main objectives of the PIB as (a) the creation of efficient and effective governing institutions with clear and separate roles for the petroleum industry; (b) establishment of a framework for the creation (out of existing government-owned entities) of commercially oriented and profit driven entities that will ensure value-add and internationalization of the petroleum industry; (c) the promotion of transparency and accountability in the petroleum industry; and (b) the creation of a conducive business environment for operators in the petroleum industry.

With the above, it is clear that government is pushing, albeit sluggishly, to make the oil and gas industry to be more efficiently managed. You can’t be arguing that government has no business being in business and at the same time asking government not to sell its business to people who can manage it more profitably and efficiently. You can’t be seeking full passage of PIB and still be asking government to retain its strangle hold on oil and gas business. You can’t be asking for fiscal federalism and what you call “true” federalism and still maintain that the Federal Government should retain its hold on NLNG.

It is better to leave analysis of economic matters to my friend Kalu Aja, my oga Prof Pat Utomi and their fellow economists. We may disagree with their views but they certainly do make better sense, economically, than charlatans who dabble into economic analysis driven only by ethno-political motivations.

Let me ask these people some vital questions. If government continues to run NLNG, how long do they think it will take before the ills that bedevil NNPC befall it? Have we not seen enough of what deregulation can do? Have we not seen telecoms and broadcast revolution as powered by deregulation? Have we not seen the turnaround in the banking sector, again powered by deregulation?

You say that NLNG is making profit, and that is the only justification you have for arguing that government should continue running it. Does it not occur to you that that little profit comes about only because government is in partnership with private sector in running NLNG? Does it not occur to you that full government exit from NLNG would give the private investors full autonomy to run the corporation more profitably, maximize its full potential, employ more Nigerians and even fully develop the natural gas sector?

Do you not know that excessive administrative controls like we do have in Nigeria hampers business? Don’t be carried away by that little profit NLNG is making. The opportunity cost (I hope I’m using it right here) of that little profit is what we should be looking at. In other words, can government not make more money from NLNG if it were not directly involved in running it? Can the sector not be better developed than it is now that government is involved in it? I believe a full government divestment from NLNG would even make more money for government by way of tax.

Please leave what you don’t know and concentrate on what you know. Or are you piqued that it was Aliko Dangote himself who muted the idea of selling NLNG? Are you worried that he might position himself to buy it off? I ask, even if he does; what difference does it make?

What I think we should be asking is that, should government decide to sell NLNG, it should do so in a competitive and transparent manner, with level playing field available to all interested parties. I have seen enough to know that government should get out of business and limit itself to regulation and creating enabling environment for business to thrive.

I am in full support of selling off the NLNG.