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Does privatisation serve public interests? (3)

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By Eric Teniola

This is the concluding part of this piece first published two weeks ago. The second part last week posited that public enterprises were infested with numerous problems, including the fact that about 55 per cent of Nigeria’s external debts were due to funds sourced to establish them

IF we are to go with the 2004 phase three of the privatisation programme, by now the Nigeria Ports Authority, the Nigeria Railway Corporation and the Nigerian National Petroleum Corporation and their subsidiaries should have been privatised. The privatisation of enterprises scheduled under the first phase was completed between 1999 and 2003. These were commercial and merchant banks, cement companies that were already quoted on the Stock Exchange.

These enterprises which were divested through public offers or a combination of public offer and core investor sale were: NAL Merchant Bank, International Merchant Bank, IMB; FSB International Bank, Unipetrol, African Petroleum, AP; Assurance Bank, National Oil and Chemical Company Plc, NOLCHEM; West African Portland Cement Co., WAPCO; Ashaka Cement Co. Plc, Northern Nigerian Cement Company Plc, NNCC; and Benue Cement Company, BCC.

The second phase was concerned with public enterprises engaged in sectors where the prices of their respective output/services were largely market-determined. A number of enterprises in this phase have either been fully privatised or partially privatised through sales to strategic/core investor groups and offer to the investment public on the floor of the Nigerian Stock Exchange. These included Festac 77 Hotel, Nigerdock Limited, Assurance Bank Nigerian Ltd, Electric Meter Company of Nigeria, EMCON; Calabar Cement Company Ltd., CALCEMCO; Nigeria Cement Company Plc., NIGERCEM; Savannah Sugar Company Ltd.

; National Truck Manufacturers, Kano; Nigerian Re-insurance Corporation; Niger Insurance Plc; Capital Hotel Plc(Owners of Sheraton Hotel and Towers, Abuja); Daily Times of Nigeria Plc.; Ore-Irele Oil Palm; Leyland Nigeria and Ihechiowa Oil Palm. Others are Central Packages Company Ltd., Afribank Plc, 4 Nos. Bricks and Clay Companies (Subsidiaries of Nigerian Mining Corporation), Concession of Nigerian Ports (Lagos and Port- Harcourt Terminal), NICON Insurance Corporation, NICON Hilton Hotel, Nigerian Aviation Company, Nigeria Unity Line, Ayip Eku Oil Palm, Steyr Nigeria Limited, Eleme Petrochemical Company Limited, Federal Superphosphate Fertilizer Company, Kuru Quarry, Jos and Volkswagen Nigeria Limited were sold.

Delta Steel Company Ltd was sold in February 2005 with gross proceeds of $30million. Other enterprises were National Trucks Manufacturers, Kano, sold in April 2005 with a gross proceeds of $3.01 million, Leyland Nigeria Limited, sold in 2005 at a proceed of N274 million, Central Packaging Limited (June 2005) at a proceed of N141million, Ikorodu Bricks (June 2005) at a proceed of N310million, Ibadan Bricks and Clay (June 2005) at a proceed of N175million, Enugu Bricks and Clay (June 2005) at a proceed of N50million, Ihechiowa Oil Palm (July 2005) at a proceed of N34million, Afribank Plc (June 2005) at a proceed of N5.1 billion, Calabar Cement Company Ltd. (August 2002) at a proceed of N216million, Niger Insurance Plc (December 2002) for N622million, Festac 77 Hotel (January 2002) for N1.01 billion, Central Hotel, Kano (July 2004) for N642.5million, Savannah Sugar Company Ltd.

(December 2002) for N1.35 billion, Nigeria Reinsurance Corporation (December 2002) for N1.01 billion, Daily Times of Nigeria Plc (June 2004) for N1.25billion, Ore-Irele Oil Palm (September 2004) for N166.02million. Others were Osogbo Steel Rolling Company Limited (November, 2005) for N2.61 billion, Katsina Steel Rolling Mill (November 2005) for N335million, Steyr Nigeria Limited (December, 2005) for N800milion, Nigerdock Nigeria Limited (December 2001) for N3.4billion, Assurance Bank Nigeria Plc (March 2002) for N853.2, FSB International Bank Plc. (April 2001) for N1.65 billion and NAL Merchant Bank Plc. (April 2001) for N1.42 billion.

The Federal Government did not name investors that bought FSB International Bank Plc., NAL Merchant Bank Plc., International Merchant Bank Plc, Cement Company of Northern Nigeria, Nigeria Hotels Limited, Ikoyi Hotels Limited and many other companies which bring up the question of transparency. The larger question is, how have we benefitted from the privatisation programme as a people?

Events have proved that private ownership does not necessarily translate to improved efficiency. Even the present Director General of Public Enterprises Bureau, Dr. Okoh on February 22, 2018 disclosed in Abuja, that 37 percent of the 152 privatised enterprises were non performing. Dr. Okoh attributed the poor performance of the enterprises to the challenging, operating business environment in Nigeria, which he said had made it difficult for many businesses to survive, while many private or privatized public enterprises have either closed down or relocated to neighbouring countries.

There is no doubt that between 1999 and 2006, the government made a large undisclosed money through privatisation. For example, N150 billion was realised from privatisation proceeds through the sale of NITEL and Nigerdock alone. The proceeds went into the sales of Assets Account as an independent revenue from where it goes into the Consolidated Revenue Funds of the Federal Government for the funding of the Federal budget. The states and the local governments don’t benefit from it. I recall that the argument of the Federal Government has always been to the effect that the investments/projects were financed from its own share from the Federation Account.

A lot of jobs have been lost through the privatisation programme and millions of people have been thrown in the unemployment market. Some of these companies privatised were established by loans procured by the Federal Government on behalf of the government and people of Nigeria and it is the people of Nigeria that have to repay the loans. Of what benefit has this privatisation programme been to the people of Nigeria and what impact?

I think the privatisation programme was just an opportunity by the Federal Government to allow very few individuals to buy our Commonwealth at give away prices. They used our money through their authority, position, contacts and influence to buy our Commonwealth for themselves. Some of the sale of these companies is shrouded in secrecy. Those who benefitted are quick to defend the privatisation programme with sound arguments the way exploiters defend their actions. As usual, helpless as we are, there is nothing we can do about it.

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