FG, NSE warned against compulsory listing for multinationals

By Michael Eboh

The Federal Government of Nigeria, the Securities and Exchange Commission, SEC, the Nigerian Stock Exchange, NSE and other stakeholders have been cautioned on the need to exercise restraint in their plans to ensure compulsory listing for oil majors and multinationals in the Nigerian capital market.

This warning was given by Mr. Chidi Momah, General Counsel, Total E&P Nigeria, at the first 2012 Members’ Forum of the Capital Market Solicitors Association, in Lagos.

According to a Momah, in his presentation titled, ‘Compulsory Listing on the Stock Exchange – My Point of View,’ making oil majors, such as Shell, Exxon, Chevron, Total and Agip, are made to list on the stock market, may have a negative impact on the development of the stock exchange.

He said, “Much of the invested revenue in the market, today, will be pulled from current investments to buy shares in these companies, and will likely result in a two-tier market with these companies having a disproportionate impact on the direction of the Nigerian Stock Exchange.”

According to him, there would be a greater degree of success if the appropriate investment climate is created, where companies will seek to invest and will seek to be listed on local stock exchanges.

He averred that a situation where force is being applied will not present Nigeria as an investment-friendly destination and will have limited success.

Momah lamented the fact that oil majors in Nigeria, in his own views, are considered as unlimited ‘cash cows’ and available for all purposes.

He said. “In addition to a Petroleum Profit Tax, PPT, rate of 85 per cent, they pay ‘drip, drip, drip’ taxes and fees. Niger Delta Development Commission, NDDC, levy, which is three per cent of budget; Education tax – two per cent of assessable profits; Nigerian Content Fund – one per cent of value of contracts awarded.

“In spite of the above payments to government and its agencies they also spend billions of Naira on Community and Social Responsibility projects.

“There is a ‘Marine Security Agency’ Bill in the National Assembly which proposed to be paid for by charging: one per cent of the value of gross tonnage of cargo both inwards and outwards, and a Maritime Security Levy to be assessed and administered by the Agency.