Nigeria attracts $7.8bn FDIs from privatization programme
By Alex Okoh, Director-General, Bureau of Public Enterprises (BPE) announced on Thursday that the government has attracted $7.8 billion Foreign Direct Investments through the sale of 53 public enterprises in the last 18 years – eventhough 37 per cent of those privatized, commercialized or concessioned assets have failed to meet the objectives.
He said from 1999 till date, BPE privatized, commercialized or concessioned a total of 142 public enterprises, but blamed the failures to a myriad of factors, including policies of government which, in some cases frustrated the operators.
Briefing the press on the Bureau’s 2018 Work Plan and its other initiatives in Abuja, Okoh also disclosed that the Federal government has finalized arrangements to commence a special recovery plan in the power sector with a $1 billion credit from the World Bank.
The recovery plan is part of its post privatization agenda to revive the sector following persistent poor performance.
The one billion dollars credit from the World Bank would serve as a counterpart funding to revive the power sector especially the Distribution and Transmission sectors, which have performed below expectations years after privatization.
“We now generate up to 5,000 to 7,000 megawatts but unfortunately the distribution companies (discos) cant dispense even half because the capacity is not there , they lack facilities,“ Okoh told journalists at a press briefing.
He said because government does not want this situation to persist, “we have decided to collaborate with the operators of the distribution and transmission companies to solve the challenges they are facing with a recovery plan that will provide a counter fund of one billion dollars we are getting from the world bank.“
Reviewing the achievements of the privatization program since its inception, he said 7.8 billion dollars foreign direct investments have so far been attracted into country through 53 enterprises privatized and that government has realized more than 550 billion naira as proceeds from the program.
He added that 400 billion naira is the expected revenue to be generated from this year’s privatization programs which will be part of the revenue to fund 2018 budget.
He indicated a preference for sale of government assets over the present excessive borrowing by government to fund development and avoid a possible debt overhang.
Okoh said that with the current wide gaps in infrastructure funding and financing of socio-economic development programmes, sale of assets would be more economical than borrowing.
“Besides sentiment, there is no reason to borrow to run your government. Why not release the non-performing assets from which you can realise some capital and allow the private sector to operate them in a more efficient manner,”
The BPE boss also listed the privatisation of Afam Power Plant; re-privatisation of Yola DisCo; Concessioning of “B” Terminal of Old Warri Port; re-concessioning of the Lagos Trade Fair; partial commerciaslisation of six River Basin Development Authorities; as well as, partial commercialization of three National Parks as programmes being on by the government.
“The re-privatisation of the Yola DisCos has become necessary because the investors declared force majeure and the company had to revert to the federal government.”
On Lagos Trade Fair Complex, the BPE boss said that the agency was in the process of appointing a new concessionaire.
He said “It is a tragedy that the complex, with the massive investment in its infrastructure is in its current state of dilapidation.”
The Aluminum Smelting Company of Nigeria (ALSCON), Ikot-Abasi, Akwa Ibom State, would come on stream between late 2019 and early 2019, according to him.
His words, “Government has revoked the sale to BFIG. We have reverted to Rusal. We are in the process of conducting a Technical Audit. Rusal has submitted to the BPE what it will take for the plant to commence operation.
“Nothing should prevent the plant from going into production at the end of the year or early next year. We are not sentimental in this regard. We believe that the best operator should be allowed to put it into operation.”
According to him, by obeying the Supreme Court judgment, which ruled that the company be given to BFIG, the controversy on the issue of the preferred bidder had been resolved.
He added however, that after writing BFIG to pay 10 per cent of its $410 million bid, according to the terms of the offer, it failed, compelling BPE to revert to Rusal.
Okoh also mentioned that the Bank of Industry would soon be recapitalized and privatized with a view to allowing the private sector to take control of its management.
Under the new structure, the federal government would hold only 40 per cent equity and give out 60 per cent to the private sector.
According to him, of the 60 per cent, Farmers’ Cooperatives would be given 20 per cent to enable them a voice in the management of the bank.
Okoh raised the concerns on the reluctance of some Ministries Departments and Agencies of the federal government to let go of enterprises under their supervision, even when such enterprises were in efficient.
“Sentimentally, the MDAs want to hold unto these enterprises. There is this attitude of wanting to maintain control even if these enterprises are dying under their control,” he said.”
Onyinye Nwachukwu & Onuah Yvonne, Abuja
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