Last week, the Federal Government announced that it had approved the sale of some critical national assets as a prudent avenue to raise funds required to steer the economy out of recession.
One of the assets mentioned as a possible target was the Nigerian Liquefied National Gas owned 49% by NNPC (on behalf of the government) and 51% by oil majors. But just how much can the government realise from the sale of its stake.
Several numbers have been put forward, mostly ball park, but had to validate due to a lack of access to its annual report. We can also attempt to value the company using data available.
According to data on the website of the company, NLNG paid about $1.4 billion to the FG in dividend. Using a simple dividend valuation model we can estimate it’s net worth based on it.
If we assign a 5% dividend yield (which is not uncommon) Nigeria’s share of NLNG could be worth as much $28 billion. Even though this is also a basic valuation metric, it at least provides a basis to determine the floor value of NLNG. NLNG is probably worth much more but that at least is an indication of how valuable it is and why the government is determined to sell.