The Chief Executive Officer of Seplat Petroleum Development Company Plc, Mr. Austin Avuru, has stressed the need for the federal government to sell off its unproductive assets in order to raise the much needed capital to reflate the economy.
Avuru said this while speaking at: “2017 Budget- Implications for Business and Tax,” organised by KPMG in Lagos at the weekend. He expressed disappointment that most of the persons involved in the debate on sale of national assets do not understand what the discussing asset sales in Nigeria has happened among people who do not know what the real issues are.
Avuru explained: “What are the things we are asking that government should sell? Assets that are not performing, assets that are gulping capital badly needed for more useful things and assets whose sales would not only generate revenue, but would actually make the assets more efficient.
“Look at the refineries, when was the last time we are not importing 90 per cent of our product needs? So, what are the refineries doing for us? And there is capital allocation to them every year. There is overhead allocation them to pay their staffs.”’
According to the Seplat boss, if government had sold the refineries in 2007, the country would properly have made $2 billion, adding that if they are sold today, the country “will be lucky to make $1.5 billion. But if you put them up for sale after the Dangote Refineries have been commissioned, you won’t make $300 million and they would be worthless.”
“So, when people are that we shouldn’t sell those assets, I don’t understand what they mean.” Commenting the implications of the 2017 appropriation bill for the oil sector, Avuru noted that what government policies end up achieving is the crowding out of the public as they struggle to compete with the private sector in areas where the private sector is ready to provide funding.
“Let me also say that in the past five years, we were often misled into believing that the drastic reduction in activities, particularly in the onshore was caused by a sharp drop in oil prices. That is not true. “The real cause of the reduction of activities in the Joint Venture areas, that is the onshore and shallow waters, was actually because of the fact that government wasn’t paying its bills. That was a bigger factor.
“So, the attempt to solve the funding problem, the new initiative that has eliminated cash calls, again the devil would be in the details, we would watch to see how that would come into effect.
“But if that is effected, which means the JV partners would be self-funded, they would be able to generate funding for their programmes and we would see a lot activities picking up from the second half of this year,” he said.
He argued that the introduction of oil swap in the 2017 appropriation bill, was “a hidden form of subsidy,” adding that with that “you don’t need to go to the National Assembly to appropriate for subsidy. But I can tell you that during the fiscal year 2017, there would be close to $1 billion petroleum product subsidy just by that.”
Earlier, the National Senior Partner, KPMG in Nigeria and Chairman, KPMG West Africa, Mr. Kunle Elebute, bemoaned the delay in passing the national budget yearly, saying that the way and manner the executive and legislature go about the budget defeats the essence of having the document.