FG To Sell Stakes In NNPC, 19 Entities

Servicing Debt With 90% Revenue Could Spell Doom

The federal government plans to sell stakes in 20 state-run companies, including the Nigerian National Petroleum Company (NNPC) Limited, as part of efforts to raise much-needed funds in Nigeria.

This is according to Mr. Armstrong Takang, the chief executive officer (CEO) of the Ministry of Finance Incorporated (MOFI), which manages a significant portfolio of federal government investments spanning a wide variety of asset classes, including corporate assets, financial assets, fixed assets, mineral and intangible assets, cash-flow-generating transactions.

In an interview with Bloomberg, he said the agency would consider two major options, a strategic sale or initial public offerings (IPOs).

Mr Takang noted that the agency, which takes charge of all investments made by the federal government of Nigeria, will set out to do this within the next 18 months.

He added that the FG will be going for value rather than control, noting that, “It is better for us to own 49 per cent of a high performing than 90 per cent of an entity that is underperforming.”

MOFI is currently speaking to consultants, including financial and legal, to handle different aspects of the transactions, Mr Takang told the publication.

Some of the considerations will be to the private sector, which will take controlling shares.

Nigeria has, over the years, sold some of its assets, including the Nigerian Aviation Co. Plc (NAHCO) and the Power Holding Company of Nigeria (PHCN), which has been structured into distribution companies in the hands of private handlers while the government controls generation and transmission.

If the country is able to hand over some of its assets to other parties, it will help cut down on the large expenditure used in running these entities as the country grapples with economic challenges.

In addition to this, President Bola Tinubu-led government is considering raising tax revenues, with the country’s Tax-to-GDP estimated at 10.86 per cent in 2021, a low rank among global peers.

He recently established a committee, headed by ex-PWC lead, Mr Taiwo Oyedele, to reform Nigeria’s tax administration with a target to double the collection rate within three years. They are to focus on fiscal governance, tax reforms, and growth facilitation.

“The committee, in the first instance, is expected to deliver a schedule of quick reforms that can be implemented within 30 days,” the President said.