Criticisms have continued to trail the alleged plan by the federal government to sell parts of its equity in Joint Venture (JV) oil and gas assets.
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) yesterday warned that the plan could undermine the nation’s economic stability, weaken the oil sector and endanger workers’ welfare.
They said the alleged plan could hand over the control of the nation’s oil and gas sector to a few powerful individuals, discourage investment and destabilise the industry, reports Daily Trust.
This is just as a petroleum economics expert warned that the sale of the federation’s equity in the deep-water resources could undermine the country’s economic sovereignty and revenue stability.
An insider within the federal government’s oil and gas sector, also said that the plan to strip the Nigerian National Petroleum Company Limited (NNPCL) of some of its powers in managing the Joint Ventures (JV) and Production Sharing Contracts (PSC), on behalf of millions of Nigerians, through the amendment of the Petroleum Industry Act (PIA), has gone far.
According to the source, who does not want to be named because of the sensitive nature of the matter, some of the powers that would be taken away from the NNPCL will be handed over to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which will in turn makes it both a regulator and a player in the oil and gas sector.
He alleged that this will be counter-productive, considering that the NUPRC is already mired in questionable decisions, including the failure to release funds for frontier oil exploration activities between 2024 and 2025.
“As we speak, activities at the Benue Trough, Chad (Bornu) Basin, Anambra Basin, Bida (Mid-Niger) Basin, Dahomey Basin and Sokoto Basin have been halted. The funding is not forthcoming.
“Like many observers, we are also asking what exactly the government is doing with all the monies coming in after the subsidy removal. They are just looking for money from left, right and centre to the extent that some laudable gains we have started seeing from the passage of the PIA are being reversed,” he said.
Former Vice President Atiku Abubakar had earlier alleged that the government intended to reduce its equity in some JVs from controlling shares of 65 per cent and 55 per cent to as low as 35 per cent and 25 per cent.
Atiku, had in a statement last week, said the alleged plans to reduce the “Federation’s stakes in joint ventures such as RAEC JV, Oando JV, and Seplat Energy JV, especially under terms that appear to disproportionately favour select insiders and foreign entities, risk undermining Nigeria’s sovereignty over its most strategic resources.”
He had also alleged that the plan to amend the PIA and divest significant equity in key joint ventures in the oil and gas sector was saddled with lack of transparency.
The government has yet to respond to the claims. All efforts by our correspondent to get its reaction to the alleged plan proved abortive.
The Special Adviser to the President on Information and Strategy, Bayo Onanuga and the Special Adviser to the President on Policy Communications, Daniel Bwala could not be reached for comments yesterday. They also did not reply to text and WhatsApp messages sent to them.
When contacted specifically for a reaction to the alleged plan to amend the PIA, Kamarudeen Ogundele, spokesperson of the Attorney-General of the Federation and Minister of Justice, Lateef Fagbemi, merely said: “I hope you will agree that this should be a question for the Minister of Petroleum.”
There was also no response on the matter from the NNPCL and the NUPRC.
PENGASSAN, NUPENG kick
At a joint press briefing in Abuja yesterday, the president of PENGASSAN, Festus Osifo and his NUPENG counterpart, Williams Akporeha, described the alleged plan as “short-sighted and dangerous.”
They warned that it could undermine national revenues and mortgage the future of younger generations.
They also alleged that there was a plot to usurp the functions of the NNPCL by pushing for the sale of the assets as well as PIA amendments.
They called on President Bola Ahmed Tinubu to halt the alleged plot, cautioning that the divestment would weaken NNPCL’s capacity to meet obligations such as salaries, pensions and budgetary contributions.
They recalled earlier divestments by international oil companies like ENI, ExxonMobil and Shell which saw their Nigerian assets acquired by local firms.
The unions’ leaders cautioned that a further sell-off of government stakes would erode the federation’s control over its most lucrative sector.
Osifo said: “Government is seeking to reduce its stake in these assets, principally, they want to sell some huge percentages in these assets. In some places, sell up to 35 per cent, in some places, sell up to 30 per cent, so that they will have some cash to spend in other areas.
“That is the excuse that they are giving. But as an association, as PENGASSAN and NUPENG, we say no, no, no to this. You cannot mortgage our future today and tomorrow we will be starving as a country.
“If we allow this to continue, it has a way of making NNPC become bankrupt in the next few years. There are obligations that must be met; the chief of these obligations is payment of staff salaries and welfare of our members.
“Whoever mooted this idea, whether from the Ministry of Petroleum, Ministry of Finance, NNPC Ltd, or the presidency itself, we reject it 100 per cent.
“As you could recall a while ago, there were some divestments that took place in some of these JVs. If you could remember very well, in the ENI, Nigeria Agip Oil Company, it was bought over by Oando Energy and Natural Resources. And also, Seplat bought over the JV components of ExxonMobil.
“Today, there is a plan moved by government to reduce their stake in these JV operations. Currently, government holds between 55 per cent and 60 per cent of the JV assets in these companies.
“That is the stake of government today. And this stake of government today is being managed by NNPC Limited. So, they manage this JV on behalf of the Federation.
“And remember, every crude oil asset in Nigeria, every oil well in Nigeria, is not just owned by federal government, but it is owned by the federation. And NNPC limited is managing these assets on behalf of the federation. So the federation is everybody, collectively.”
On the alleged plan to amend the PIA which was passed in 2021, the PENGASSAN and the NUPENG alleged that there was a plan to remove the Ministry of Petroleum from joint ownership of the NNPCL, which they described as an aberration and a backdoor attempt to hijack the company.
According to them, the amendments would strip NNPCL of its core national role, undermine investors’ confidence and eventually drive the company into bankruptcy.
They said, “As a responsible association, we will fight this with everything in us because we strongly believe that these amendments that they are proposing, it is not correct, it is totally wrong.
“We have seen that it is a national oil company that manages the PLC on behalf of a country, on behalf of a federation. So, if you don’t have ulterior motives, why do you want to move it? Yes, we are happy because we also have members in the regulatory arm. But, unfortunately, the regulators are supposed to be the police of the industry.
“The regulators are supposed to be there to ensure that everybody plays according to the rules. So, it is totally wrong if you don’t have ulterior motives to say that you want to move the NNPCL management to the regulator as a concession. It is totally not correct.
“So, for us, we are totally against this. Let us do what is right as a country. What they are doing today, they are sending negative signals to the investors.
“What they are doing today, they are telling the world that yes, we have passed PIA. It is a law, but they don’t rely on this law that we have passed. That is clearly what they are doing as a government.
“And I think President Bola Ahmed Tinubu should look at this carefully and should call these people to order. He should call the Minister of Finance. He should call the Board Chairman of the NNPCL, he should call the GCEO and NNPCL to order and let them understand that this is not the direction to go.
“If all these were done before he came on board, I’m not sure that he would be able to get revenue to drive the budget. So, for us, we are sending a strong warning to them that they should cease and desist”.
Also a group, known as Committee of Patriotic Forces, had recently alleged in a statement that the government, through the Ministry of Petroleum Incorporated and the Ministry of Finance Incorporated, was considering selling significant portions of Nigeria’s stakes in key JVs.
It listed the JVs, in which the federation’s equities are being sold to private individuals, as including the following:
Renaissance Africa Energy Company JV (RAEC JV): Nigeria currently holds 55 per cent, managed by the Nigerian National Petroleum Company Limited (NNPCL).The plan allegedly involves selling 25 per cent to Sterling Global Oil Company, an Indian firm, reducing Nigeria’s stake to 30 per cent.
Oando JV: Nigeria holds 60 per cent. The proposal is allegedly to sell 25 per cent to Oando Plc, leaving the federation with 35 per cent. Oando is a Nigerian company led by Wale Tinubu.
Seplat Energy Producing Nigeria Unlimited JV (SEPNU JV): Nigeria’s 60 percent stake may be reduced to 25 percent after an alleged planned sale of 35 per cent sale stake.
The group had also alleged that the government was considering amending the Petroleum Industry Act (PIA), specifically Sections 8, 9, 53, 63, 64 and 85.
The statement partly read, “Below are reasons why the equities in these strategic national Assets should NOT be sold: Loss of control of Strategic national asset: Handing control of these JVs to a few private individuals takes away sovereign ability of the Nigerian state to control its national economic affairs. It can result to economic shocks and collapse of the Nigerian nation state. This is bearing in mind that the upstream Oil and Gas remains the backbone of Nigeria’s economy.
“Weakening of energy security: Sale of these strategic national JV assets to a few well-connected private individuals is at the great expense of Nigeria’s energy security and future.
“Loss of national revenue & forex: 60% of the revenue coming from these JVs are among the country’s most reliable source of revenue and foreign exchange. Shrinking the Federation’s stake in the JV means shrinking of the Federation’s revenue and forex inflow. This is simply selling away Nigeria’s assets that have sustained the Nigerian nation since the discovery of crude oil in Nigeria.
“Threat to jobs, skills, and local content: skills transfer, vendor opportunities, and host-community obligations built under public-interest stewardship.
“Loss of jobs and threat to local content in JV governance: Sale of national assets endangers existing and potential employment. This is because reduced equity means a weaker say on field development, local content targets. This is tantamount to taking Nigerians’ power to manage their resources from them.
“Irreversibility and dangerous precedent: Once the crown jewels are sold, they are difficult and costly to recover. This will then set a precedent for further disposals and it will greatly undermine intergenerational equity in the management of our natural resources.
“We respectfully call on Nigerians to stand up in defence of our national interests. These assets belong to Nigerians. They must not be traded away behind closed doors for the benefit of a few”.
‘Plan could diminish revenue’
Wumi Iledare, Professor Emeritus of Petroleum Economics & Director, Emmanuel Egbogah Foundation, said the equity sale would see the divestment of federation stakes from majority levels and could potentially diminish direct dividend revenues, weaken governmental influence over production and local content.
He further cautioned that such actions could undermine Nigeria’s economic sovereignty and revenue stability.
He said the NNPCL, as the majority owner, had been identified as a bottleneck due to bureaucratic delays and cash call burdens which had impeded investment and production.
He, however, added that the sale of equity could provide fiscal relief provided that the proceeds were allocated transparently for debt reduction or infrastructure development.
On the alleged plan to amend the PIA, the don said amending it shortly after its enactment might lead to policy instability, discourage long-term investment and be perceived as benefiting select interests, thereby undermining the act’s original objectives of stability and investor confidence.
