The Federal Government of Nigeria has announced it is no more selling off its 49 per cent share in the Nigeria Liquefied Natural Gas (NLNG) and the Refinery. The FG said the nation was getting huge dividend from the NLNG in Dollars.
The Director-General, Bureau of Public Enterprises (BPE), Mr Alex Okoh, threw the light on the two assets which were under intense pressure for offloading in recent months. He spoke on Thursday in Abuja at a news conference on the organisation’s work plan and other initiatives for 2018.
Most experts had called for the offloading of the 49 per cent share of the FG in the advent of recession in 2016, saying it was the best way to raise funds to fight way out of recession.
On privatisation of oil refineries, Okoh said the BPE believes in rehabilitation rather than selling them off to get scrap value now. “Through the present initiative of the Ministry of Petroleum Resources, we are able to rehabilitate the refineries, not with government resources, but private sector resources which is what is going on now. “Over the years, we have budgeted tons of money for Turn Around Maintenance (TAM) that did not turn anything around.
“If a private sector investor is coming into that sector and he is bringing his money for the rehabilitation, you better be sure that he will get that rehabilitation done because if he does not he will lose his money. “The whole programme is about private sector investors providing the rehabilitation funds directly to the original refinery builders who would rehabilitate the refineries.
“Over a period of time, the investor through the improvement in the products that are refined would be able to pay himself out,’’ he said.
He said it was a better deal for government because in future, after amortising payments that were due to the investor, they then return an asset of a better value that could be sold, privatised or commercialised at that time for better value.
He, however, said there was no plan to sell off the 49 per cent shares government owned in the Nigeria Liquefied Natural Gas (NLNG).
“We are enjoying the dividends so much that government sees it as one of its best investments so far and the dividends from that particular investment come in billions of dollars and add to the revenue base of the government.
Okoh added that Nigeria made 7.8 billion dollars as Foreign Direct Investments (FDIs) from privatisation and commercialisation of 53 enterprises in the past 18 years.
He, however, said that not all the reforms translated into a sale or cash,
“For the assets that are just commercialised and not sold, we will not see a proceed figure as some were commercialised while some were concessioned.’’
According to him, about 37 per cent of the enterprises that have been privatised or commercialised are not doing extremely well.
This, he noted was due to macro-economic issues, fiscal problems and other issues.
He said discordant policies fundamentally affect industries, adding that access to capital, especially debt to drive the working operations on a daily basis are priced out of the profitability framework of the enterprises.
“We are not abandoning these enterprises but looking at how to address the issues that are affecting effective performance of the enterprises.
“I believe that if those enterprises were not privatised, they would have still been in the same problem, so it is not the privatisation that caused the non-performance but the business environment both from the macro perspective and the micro issues,’’ he said.
On the challenges in the power sector privatisation, Okoh said there was an on-going review of the gaps in the sector.
He said that the review was essentially aimed at addressing the fundamental flaws, which includes issues around enumeration of the customers.
The director-general said enumeration and metering should address the issue of pricing and revenues in the system.
According to him, the Power Sector Recovery Plan (PSRP) provides some kind of counterpart funding of one billion dollars from the World Bank to help in the provision of some of the needed assets.
The director-general said that the organisation was not in any running battle with Distribution Companies (DISCOs), but in a collaborative effort because the BPE is a member of its board. “We want to help address the challenges in the downstream sector of the electricity industry. We do not take an antagonistic position against them because we believe that these are key business challenges that they are facing,’’ he added.
Okoh recalled that about N330Bn was paid as compensation of the entitlement of about 49,000 workers when the sector was privatised.
He stressed that privatisation was not a callous way of depriving workers of their entitlements because those factors were considered before the institution was privatised.
“The pipelines and depots are part of the assets in the downstream sector that we are presently looking at privatising and they are presently undergoing a strategic review on the best approaches to go.’’
He listed some of the transactions and initiatives the bureau was presently undertaking to privatise or commercialise.
They are: privatisation of the Afam Power Plant, which should be concluded between Dec. 2018 and first quarter of 2019.
Others are restructuring and recapitalisation of the Bank of Agriculture, partial commercialisation of three selected national parks and re-concessioning of the Lagos International Trade Fair Ground.
The BPE was created through the Public Enterprises (Privatisation and Commercialisation) Act 1999, to diversify the economy and strengthen the private sector as Nigeria’s engine of growth and economic driver.