Tuesday, November 20, 2018

NNPC Reforms and what we should be doing

It is campaign season and of course the opportunists would be out bandying unworkable ideas to feather their nests of opportunism.

How does it make sense to fully privatize a company that accounts for 90% of the revenue of all governments in Nigeria month to month without spelling out a transitive arrangement that will replaced 550-700bn monthly that is shared? How will we meet payroll monthly? Athiefku is just being an opportunist as usual.

Of course , NNPC must be restructured. And here I was sharing ideas...

It can be done with common sense over 3-4 years but with the transitive arrangement at its center. For example the productive assets of NNPC which is basically the PSC and JVs can be moved into NLNG with predictive current cash flows being securitized by a bond that will be sold in international market and deposited in an investigate Trust Fund (invested in even more accreative assets) from which FG and states can draw for 20 years  almost like an annuity.

The hard assets like refineries, storage depots and pipelines built since 1970s but now in bad shape should be concessioned not sold outright to allow the nation keep ownership but swear the asset - including taking advantage of common use rules to reduce inefficiencies of siloed ownership of such infrastructure.

Lastly, unrelated subsidiaries like NNPC Shipping and even downstream player like NNpC Retail (NNPC  has 54 subsidiaries or more) that are doing what private sector are already good at doing should find Strategic Investors with FDI to purchase a third and list the balance  on the stock exchange which can directly inflate the economy and stock exchange as well.

If this plan above is implemented we can add 50-75% to the GDP without losing sleep over salaries and funding for government. But definitely selling NNPC to Intels is a No-No.


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