By Danlami Yakubu

Established under the Public Enterprises (Privatization and Commercialization) Act of 1999, through its secretariat, the Bureau of Public Enterprises (BPE) is charged with driving the Federal Government’s programme of privatizing public enterprises, carrying out sector reforms and liberalization of key economic sectors.

Privatization and commercialization stemmed from the frustration of successive administrations that invested huge sums of public funds in organisations that are not efficiently run to deliver requisite services for which they were established.

BPE Reform Agency

It was in order to ensure an orderly programmed privatization and commercialization of public enterprises that the government of former president Olusegun Obasanjo established the BPE to give greater push to the policy.

After its successful reform in the telecommunications industry and others, the need for more privatization of public enterprises remains imperative, especially given the paucity of funds with which to run the government.

Face with a lean government pause, the present administration has announced that it has to sell some of its assets in order to address a situation where about 90 percent of its revenue goes into debt servicing, as announced by President Bola Tinubu, at last week’s conference of the Nigerian Bar Association (NBA).

The Ministry of Finance Incorporated (MOFI) which holds Federal Government assets in trust for all Nigerians has given notice of government readiness to sell its stakes in many Government Owned Enterprises (GOEs) across the nation, to raise funds for the government.

As the Federal Government prepares to sell its shares in those firms, it must avoid the mistakes of the past by ensuring that the transactions are handled by the BPE, the agency of government established for that purpose, rather than managements or supervising ministers of such GOEs. There are many negative cases of unprofessional handling of privatization from which the Tinubu administration should learn from.

Toxic privatization transactions

The privatization of two very key companies: Ajaokuta Steel Company, in Kogi State and Aluminum Smelting Company of Nigeria (ALSCON) located in Ikot-Abasi, Akwa-Ibom State were bungled due to interference or the refusal to follow privatization guidelines set by government itself.

Under the administration of former President Olusegun Obasanjo two desperate attempts were made to privatise the Ajaokuta Steel Company.  First, it was given to Solgas, said to be owned by Nigerians and Americans in a concession arrangement that failed woefully. That deal had been struck, despite expert advice against it, because Solgas was said not to possess the requisite technical knowhow to complete and operate that plant.

The Complex was later handed over to Global Infrastructure Nigeria Limited owned by some Indians.  Rather than completing and operating the company, according to the agreement with the federal government, the Indians were accused of asset-stripping the company.  That concession was again terminated by the administration of late President Umaru Yar’Adua.

President Yar’Adua took the decision to terminate the Global Infrastructure deal following the reports of the Inuwa Magaji committee set up to investigate the asset stripping allegations against Global Infrastructure.

In fact, the President directed that the Indians should be investigated by the Economic and Financial Crimes Commission (EFCC) and be made to face the law. 

However, it was gathered that EFCC did not act on the directive, as powerful interests took advantage of Yar’Adua’ sickness to frustrate that directive. Instead, Global Infrastructure sued Nigeria at the International Court of Arbitration for terminating the concession agreement.

The matter dragged on until former President Goodluck Jonathan took over government, after Yar’Adua’s death.

It alleged that even though Nigeria had enough evidence of asset-stripping against the Indians and was on its way to winning the case, somehow, the Nigerian legal team decided on an out-of-court settlement and handed the National Iron Ore Mining Company to Global Infrastructure as part of the settlement, to leave Ajaokuta Steel.

At a time when Nigeria had no money and had to depend on borrowings for government to run its affairs, the President Muhammadu Buhari was said to have paid a whopping $500 million to the Indians a few months before leaving office, through an out-of Court settlement deal midwifed by former Attorney-General and Minister of Justice, Abubakar Malami.

Industry players said that President Obasanjo’s failure to get it right on Ajaokuta was literally due to the insincerity of top government functionaries who rejected the offer of the Russians the builders of the plant.  The Russians were said to have indicated their willingness to return and complete the plant but somehow, other interests advised the Obasanjo government to enter into a concession agreement with another group.

Similarly, Aluminum Smelting Company of Nigeria (ALSCON, another multi-billion dollar company has remained shut since 2004, when the federal government decided to privatize it because guidelines were not followed.

The controversy that pitched Dr. Reuben Jaja and his BFI Group against the federal government and Rusal, a Russian company has yet to be fully resolved.

BFIG was initially declared winners of the bid but issues cropped up when Rusal, which submitted a conditional bid and for which it was initially disqualified was later given ALSCON.

The legal battle between BFIG and the federal government got up to the Supreme Court, yet the matter remains unresolved, largely because wrong decisions were taken by government officials, who were out to do the bidding of vested interests.

The most recent bad example was the attempts at privatizing the nation’s two airports through concession.

Failed Airports concession another bad example

The botched airports concession which the Federal Ministry of Aviation undertook under Alh. Hadi Sirika, insisted on undertaking, despite stiff opposition from the workers and other industry stakeholders, reminds one of the sure taste of failure to adhere to laid down procedures and impunity.

Just like in the case of Ajaokuta Steel Company, the Bureau of Public Enterprises (BPE) which is the statutory federal government agency with the mandate to optimise value in the privatization of Government Owned Enterprises, was not part of the airports concession arrangements.   

Although the concession of airports was listed by the BPE, the Federal Ministry of Aviation decided to undertake the transaction on its own without recourse to BPE, the government agency charged with the task of privatization of its enterprises.

Workers in the airports kicked against the concession deals with Corporacion American Airport Consortium for the two: Nnamdi Azikiwe International Airport (NAIA), Abuja, and Mallam Aminu Kano International Airport (MAKIA) Kano.

The aviation workers threatened a showdown if the federal government imposed the concession on them, alleging that the exercise was fraught with illegalities and lacked transparency.

They alleged, “From the selection of the Transaction Adviser, through the pre-qualification and selection of bidders/winners, to the development of the Full Business Case and conclusion of the concession, only the Minister, his henchmen in the Ministry and the ICRC and the favoured bidder, apart from the wind and walls, have any inkling of the concession process, whereas the whole exercise, by regulation, ought to be carried out transparently within the public view”.

That President Muhammadu Buhari’s government approved the deals within a few weeks to the end of that administration, did not help the case.

Only a few days ago, the new Minister of Aviation, Mr. Festus Keyamo, announced a halt in the deals, as well as, the controversial Nigeria Air project.  Public funds have obviously been wasted.

The lesson to learn from the failed concession arrangements is that due process must be followed.  Future transactions should be transparent in such a way that members of the public can see the openness with which each transaction is handled.

Arbitrariness, dubious manipulation of processes and procedures will always have unwholesome outcomes, which will hunt the perpetrators and hold back the wheel of the general progress and well-being of the economy.

NNPC and Ports

The Nigerian National Petroleum Company Limited (NNPCL) and the seaports have been identified as some of the low-hanging fruits with assets that can be easily converted to liquidity, in the days ahead.

The Tinubu administration must act right in the privatization of these and other assets because the stakes are, indeed, very high.

Speaking on a television programme last year, the Group Managing Director (GMD) of the NNPCL, Mr. Mele Kyari, put the already-transferred assets of the company at about $59.8 billion, representing 80 percent of the total assets due to the limited company.

He said, “The assets of the company in a manner that is determined by law in a process that is best practised in the industry, we engage the best evaluating agencies that you can think of to arrive at the value of those assets and ultimately the federation in its wisdom, by the provision of the PIA had transferred assets currently worth $59.8 billion,” he said.

NNPCL’s off-shore is said to be over $90 billion. The Managing Director of the Ministry of Finance Incorporated (MOFI), Mr. Armstrong Takang, has announced the decision of the federal government to take the NNPCL to the market.  It is critical that the federal government avoids the mistakes of past administrations by ensuring that the BPE, which has a large pool of experts in handling privatization, to lead the transactions in order to optimise value for the assets, in public interest.

The same should be the case of the air and sea ports in which the nation has invested massively, over the years, so that Nigerians can have full benefits of efficient organisations, as envisaged in the privatization programme.

Edun’s experience

It is noted that MOFI is under the Federal Ministry of Finance and the Minister of Finance is the Vice Chairman of the National Council on Privatization which is headed by the Vice President. Therefore, using his wealth of experience in both the private and public sector, the minister should provide appropriate guidance and ensure that the privatization of the government assets are carried out in such a way that conforms to international best practice and highest standards.

An uncoordinated privatization programme is certainly not the way to go, especially now that the Federal Government has expressed its determination to raise revenue from its assets.  We need transactions that are seamless, through which the organisations can provide better services to the Nigerian public, not transactions that would become conduit pipes through which to steal Nigeria’s meager resources through legal battles and judgement debts.

•Yakubu, a public affairs commentator, lives in Abuja.