Capital market operators have urged the Federal Government to implement a targeted measure that will encourage local participation in the oil and gas sector and ensure distribution of wealth from the sector to the wider Nigerian public through the stock market.
Capital market operators, who spoke against the background of the low representation of the Nigerian economy by the capital market, said the sale of oil assets to Nigerians and provision of other incentives such as tax incentives would encourage companies to list their shares on the stock market.
Several active operators in the Nigerian oil and gas sector including Afren Plc, Centrica, Eland Oil and Gas, Essar Energy, Heritage Oil, Lekoil Royal Dutch Shell, CAMAC Energy, Sasol, Mart Resources Inc and Mira Resources among others have primary listings outside Nigeria but are not listed on the Nigerian Stock Exchange (NSE). The assets values of these active companies are estimated at about $89 billion.
Market operators said non-listing on the NSE denies Nigerian investors the opportunity to share in the profit made from Nigerian oil resource while simultaneously impinging on the economic development of the country. It is expected that assets divestment in the oil and gas sector would create between $4 billion and $5 billion in value in the next two years.
Operators tasked the government to take some proactive steps that would forestall past mistakes of handing over virtually all oil assets to foreign companies to the detriment of indigenous investors.
Managing director, Partnership Investment Company Plc, Mr. Victor Ogiemwonyi, said government should sell the oil and gas assets to Nigerians to create a general impetus for public participation.
According to him, government should also require public companies with licences that serve larger public to list their shares on the NSE for public participation after a stated number of years.
“Government should compulsorily make privatised companies especially to list a portion of their shares. Without these steps, the stock market will not grow as fast as we want,” Ogiemwonyi said.
He added that government should give incentives such as lower tax rate to encourage listing on the stock market.
Managing director, Crane Securities Limited, Mr. Mike Ezeh, noted that if the oil assets are sold to indigenous investors, the probability of their listing on the NSE would be very high.
“As we expect further government and private divestments in the oil and gas sector, I believe indigenous firms should be given the opportunity to buy some of these assets. If this is done, the companies will be listed on the Nigerian bourse thereby deepening the capital market and sharing the profit among Nigerians,” Ezeh said.
Executive vice chairman, Quantum Securities Limited, Andrew Elueni, had earlier called for a legislation that will goad the oil companies operating in Nigeria to list their shares on the NSE.
“Imagine if 20 per cent of the assets of the likes of Shell, Chevron are listed, the capitalisation of Nigeria’s capital market will shoot up. Legislation should be applied,” Elueni said.
However, an investment banker and financial analyst, Mr. Bayo Rotimi of Quest Advisory Services Limited, said preference should be given to incentives and enabling environment in the quest for new listings.
According to him, new listings can only be achieved through the introduction of incentives such as tax rebates and waivers as well as a continuous commitment towards the enthronement of transparency and accountability in the running of the capital markets.
“Bottom-line is that private sector entities cannot be forced to list. The capital market regulators must continue to engage these companies, seek to understand their apprehensions and roll out programmes and policies that address those concerns frontally,” Rotimi said.
