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FG to Sell 9% Equity in Oil Firms to Nigerians

From Onyebuchi Ezigbo in Abuja, 01.20.2010

The Federal Government has said it is floating an initiative that will have part of its equity in Joint Venture (JV) oil companies thrown open for subscription by Nigerians.

Special Adviser to the President on Petroleum Matters, Dr. Emmanuel Egbogah, in an interview with newsmen in Abuja yesterday, said government plans to sell 9 per cent of its stake holding in oil companies to Nigerians in form of shares.

The presidential adviser also said as part of the post amnesty package for Niger Delta, the Federal Government had decided to cede 10 per cent of the ownership stake in the oil companies to host communities in order to ensure development in the areas.

Egbogah said the shares to be allotted to oil producing communities would be managed on their behalf by a trust company that would be established by government and made up of representatives of the communities, including fund managers who would advise on how to prudently manage the funds.

The Federal Government holds 60 per cent stake in all JV agreements, the International Oil Companies (IOCs) hold 40 per cent, except Shell Petroleum Development Nigeria Limited which holds 45 per cent, while the Nigerian National Petroleum Corporation (NNPC) holds 55 per cent.

NNPC holds 60 per cent interests in the other JV with Mobil Producing Nigeria Unlimited, Nigeria Agip Oil Company, Chevron Nigeria Limited and Elf Petroleum Nigeria Limited.

Under the proposed initiative intended to widen the ownership structure of the oil companies, host communities are to have 10 per cent stake, while nine per cent would be available for Nigerians.

Oil-producing communities are to receive 10 per cent of the net revenue profit from crude oil sales, while 41 per cent goes to the Federal Government. IOCs would receive 40 per cent of the equity in the existing JV, while 9 per cent goes to Nigerians willing to invest in the Incorporated Joint Ventures (7 per cent in the case of SPDC JV).

He said government would approach the stock market at the appropriate time for advice on how to break up the shares as well as modalities for inviting public offers.

Noting that no one would be allowed to acquire more than 0.01 per cent of the shares, he said the idea is to avoid a situation whereby one person would come up to acquire all the shares, leaving nothing to the rest of the people.

The presidential adviser explained that the new arrangement had nothing to do with the 13 per cent derivation, adding that it would serve as additional source of revenue for the oil-producing areas.

“The difference is that this time, no one else would be allowed to have access to the fund except the people for whom it was meant. It would not be run by the Federal Government; it would not be run by the state or local council, but by the people themselves, so as to make sure that the money is deployed for the developmental needs of the people,” he said.

Meanwhile, the Minister of State for Petroleum Resources, Mr. Odein Ajumogobia, yesterday said that the renewal of the shallow water licences of Shell and Chevron had not been stalled by the absence of President Umaru Musa Yar'Adua from the country.

Ajumogobia emphatically said the Minister of Petroleum Resources had the full authority under extant laws to renew leases and licences, and that this does not require any specific authorisation from the Presidency for this purpose.

In a statement signed by the Deputy Director (Press), Mrs. Florence Mohammed-Bolokor, the minister explained that Chevron and Shell were still negotiating with the Federal Government through the office of the Minister of State for Petroleum Resources over the renewal of their expired licences following the renewal of the licences of Mobil Producing Nigeria.

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