Nigeria plans $2.26 bln Joint Venture Oil Assets Restructure with IOCs

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    Plastic containers used in the crude oil cleanup, are seen at the Bodo site in Rivers State, Nigeria. Unlike clean-up operations run routinely by oil giant Royal Dutch Shell, this one is backed by local communities and teams of scientists who will take samples of water, mud and soil in each area to measure progress and determine the best cleaning method. REUTERS/Afolabi Sotunde

    By Godwin Okafor with Agency Reports

    LAGOS, Nov 9  – Nigeria plans to raise 710 billion naira ($2.26 bln) via restructuring its equity in joint venture oil assets and increasing private sector participation, the Debt Management Office (DMO) said on Thursday.

    Oil companies including Royal Dutch Shell, Chevron and ExxonMobil, operate in Nigeria through joint ventures with NNPC. The government has considered selling stakes in these joint ventures for more than a decade.

    The current plan was captured in the 2018 budget proposals and is aimed at providing revenue to the government to be used to create new assets, the DMO said in a statement, responding to Moody’s downgrade of Nigeria’s bonds.

    In March, the government said it expected to earn 35 billion naira from the sale of some assets, including oil joint ventures, and reducing stakes in other oil and non-oil assets.

    Ratings agency Moody’s on Tuesday cut Nigeria’s long-term foreign-currency bond to B1 from Ba3 and kept its outlook stable, saying Nigerian efforts to broaden non-oil revenue had been unsuccessful. The local-currency rating was unchanged at Ba1.

    The debt office said Nigeria’s economy had improved since Moody’s last rating a year ago and that it expects improvement in revenues this year to continue into 2018.

    Nigeria’s sovereign bonds traded flat on Wednesday after the downgrade as investors had already factored in issues that triggered the rating change and were buying debt at a discount to book profits, traders said.

    However, Moody’s move could make Nigeria’s forthcoming dollar bond issues more expensive, analysts say.

    On Tuesday, President Muhammadu Buhari presented to parliament a record 8.61 trillion naira budget for 2018 and said it would borrow abroad to cover half of its deficit for next year.

    The country issued $1.5 billion worth of eurobonds in the first quarter to fund its 2017 budget and plans to sell a further $2.5 billion worth this year in addition to refinancing a $3 billion treasury bill portfolio to lower its borrowing costs.

    Nigeria has been holding talks with oil companies regarding new financing agreements for joint ventures since last year as it struggled to fund its portion of such partnerships through cash calls which have often been delayed in parliament.

    $1 = 314.50 naira Reporting by Chijioke Ohuocha; editing by Jason Neely

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    Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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