Nigeria must consider oil
asset sales as foreign loans delayed: Senate leader
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[September 20, 2016]
By Libby George
ABUJA (Reuters) - Nigeria must consider
selling stakes in joint ventures with oil majors and other assets as
talks to borrow abroad have not succeeded yet and would in any case
not generate enough funds to stimulate economic recovery, the leader
of the Senate said.
Senate President Bukola Saraki, the third most powerful official in
Africa's biggest economy, also said the oil producer might struggle
with recession for up to nine months or even longer unless it got
serious about attracting investors.
The government said this month it had approved loans from China, the
World Bank, Japan and the African Development Bank, but Saraki,
whose relations with the president have cooled since last year, said
such talks were still ongoing with no deals yet.
"There is a big hole now in the fiscal deficit because that funding
is not coming through. So we've got to look for alternative ways to
fund that," Saraki said in a joint interview with the Financial
Times on Monday when asked about the loans.
The government has said it plans to borrow as much as $10 billion,
with half of that coming from foreign sources, including a planned
$1 billion Eurobond issue, to fund a budget deficit of 2.2 trillion
naira ($7.21 billion) and boost an economy hammered by low oil
prices and hard currency shortages.
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Saraki said that even if the loan talks succeeded, the amount raised
would not be enough to plug the hole in public finances. "My take is
that even if it does come through, it's money too little, too late,"
he said, referring to the loan talks.
He said Nigeria needed to sell stakes in oil and gas joint ventures,
oil exploration contracts and refineries to raise funds. "In my
view, I really can't see any other pathway to recovery. We need
investors, we need to raise capital."
Such an asset sale would be necessary even if global crude prices
recovered to $70 a barrel and Nigeria managed to restore oil
production to 2 million barrels per day (bpd) with an end to
militant attacks in the Niger Delta oil hub, Saraki said. Officials
say the attacks have reduced output by 700,000 bpd.
Saraki said Nigeria could overcome recession in six to nine months
if swift action was taken -- a more downcast view than that of the
government, which has forecast a quick recovery.
Central bank governor Godwin Emefiele was due to hold a news
conference at around 1315 GMT (09:15 a.m. EDT) after a meeting of
the rate-setting Monetary Policy Committee. The finance minister
said on Monday the central bank should lower interest rates so that
the government can borrow domestically to boost the economy.
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![](../images/092016pics/busine49.jpg)
Senator Bukola Saraki looks on after being elected as the senate
president of the 8th Nigeria Assembly in Abuja, Nigeria June 9,
2015. REUTERS/Afolabi Sotunde
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Economists polled by Reuters last week predicted that the central bank would
keep its key interest rate at 14 percent and reiterate its focus on
resuscitating growth.
The government has said it is considering asset sales, but has given no details.
"If we do things right, the confidence will come in," Saraki said. "If we carry
on waiting for government revenues to go up, if we don't do anything seen as
thinking out of the box" the recession could drag on longer.
Nigeria's 2016 budget was the largest in the nation's history, but the oil price
drop and Delta attacks have left the government scrambling for funds.
Saraki is from the same ruling All Progressives Congress (APC) as President
Muhammadu Buhari, who was elected in March 2015 on a promise to end graft and
mismanagement in the West African nation.
But relations between the two have been strained since Saraki ran unopposed for
the position of Senate president last year, mainly with the backing of the
opposition. He was not the APC's preferred candidate.
(1 = 305.0000 naira)
(Reporting by Libby George; Editing by Ulf Laessing and Philippa Fletcher)
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