{"id":3422,"date":"2019-03-21T14:48:55","date_gmt":"2019-03-21T14:48:55","guid":{"rendered":"http:\/\/baileyonlineclassroom.com\/subsaharanafricablog\/?p=3422"},"modified":"2019-03-21T14:48:55","modified_gmt":"2019-03-21T14:48:55","slug":"nigeria-set-to-sell-down-stake-in-oil-ventures-to-boost-finances","status":"publish","type":"post","link":"https:\/\/baileyonlineclassroom.com\/subsaharanafricablog\/2019\/03\/21\/nigeria-set-to-sell-down-stake-in-oil-ventures-to-boost-finances\/","title":{"rendered":"Nigeria set to sell down stake in oil ventures to boost finances"},"content":{"rendered":"\n

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Nigeria wants to sell part of its share in oil ventures with international companies as President Muhammadu Buhari advances his post-election plans to boost state finances and accelerate energy reforms.\n\nUdoma Udo Udoma, budget minister, said Nigeria was seeking to improve government revenues with the \u201cimmediate commencement of the restructuring of the joint venture oil assets\u201d, according to Reuters.\n\nHe said the government wanted to reduce its ownership of joint ventures to 40 per cent and expected the restructuring programme to be completed this year.\n\nThe Buhari administration, which begins its second term in May following elections last month, has proposed the most expensive budget in Nigeria\u2019s history, pursuing a strategy of state-led growth and infrastructure spending.\n\nOil and gas companies such as Royal Dutch Shell, Chevron and ExxonMobil operate facilities in Nigeria through joint partnerships with the state-owned Nigerian National Petroleum Corporation, which usually owns about 60 per cent of each venture.\n\nNigeria has toyed with cutting its stakes for years, but an oil crash in 2014 sabotaged those plans, energy analysts said.\n\nRecommended\n \nEM Squared\nNigeria \u2018needs structural reform\u2019 to escape low-growth trap\nAfrica\u2019s largest producer, which pumps about 1.7m barrels a day, was also hit by the collapse of its currency, inflation and a recession. That stalled government plans to bolster its domestic energy sector and enact much-needed reforms.\n\nNigeria\u2019s relationship with its energy partners has been fraught for decades, with the government struggling to pay for its share of oil production costs.\n\nThe government has maintained, too, that existing contracts are unfair to the state and have called for improved terms. The state has also pushed regulators to collect back taxes owed by international oil companies.\n\n\u201cNigeria is looking for money but selling assets under pressure isn\u2019t really the best way to get value for money\n\nCheta Nwanze,SBM Intelligence\nGail Anderson at energy consultancy WoodMackenzie said as the state already received 90 per cent of the sale of each barrel produced in taxes and royalties, the move to reduce the government share of each venture would only alleviate the burden of initial operating costs.\n\nAs oil prices recovered, from a 2016 trough of less than $30 a barrel to almost $70 today, Ms Anderson said the Buhari administration had found an \u201copportune moment\u201d to revitalise its efforts to reform the energy sector. \u201cHe\u2019s making up for lost time,\u201d she said.\n\nDuring the presidential campaign, Atiku Abubakar, Mr Buhari\u2019s opponent, said he backed a move to sell off state-owned refineries and privatise NNPC \u2014 which he called a \u201cmafia organisation\u201d.\n\nEnergy analysts have questioned the appetite of international oil companies to increase their share of joint ventures.\n\nCheta Nwanze, head of research at Lagos-based consultancy SBM Intelligence, noted that selling their oil stakes would be complicated and wondered whether the government would be able to follow through with its pledge.\n\n\u201cNigeria is looking for money but selling assets under pressure isn\u2019t really the best way to get value for money,\u201d said Mr Nwanze, who has been critical of the administration. \u201cYou have to go through a process, and the current government does not do process very well\u2009.\u2009.\u2009.\u2009It won\u2019t fly.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

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