The privatisation programme of the Federal Government has been unable to lift many of ailing firms. But as JOHN OFIKHENUA found out, the Federal Superphosphate Fertiliser Company (FSFC) in Kaduna and the Central Hotel in Kano have shown that the Bureau of Public Enterprises (BPE) is not entirely a failure.
THE Bureau of Public Enterprises (BPE) has received regular blows over the state of privatised public enterprises. Many of these former government businesses were in bad shape and privatisation was touted as the elixir that would see them return to life. This has not been the case for the majority of the companies.
There are, however, some of these companies that are doing well. Two of such are the Federal Superphosphate Fertiliser Company (FSFC) in Kaduna and the Central Hotel in Kano.
After the privatisation, the BPE has been monitoring them. During one such exercise observed by The Nation, it was glaring that these two companies are enjoying a blissful post-privatisation era.
According to BPE’s the Director, Industries and Communication, Mallam Dikko Abdullahi, “Over the years, 200 enterprises were privatised. And there are more negative reports about what we have done than the positive…There are enterprises really which are still working.”
FSFC chairman Ibrahim Birma said the firm was incorporated in 1973 to produce Single Superphosphate Fertiliser. On September 5, 2005, according to him, the firm was privatised through the Core Investor Sale, and it was handed over in January 2006 to the core investor, HEKIO Consortium. He said since the privatisation of the company about 17 years ago, it has been producing progressive outputs. Birma noted that the plant was initially made “to produce about 100,000 metric tonnes per annum”.
He added: “When we took over, it was about 17 per cent. Then subsequently it has been growing. We can say that about the specialised products, our product is about sixty-something per cent, which is a comfortable level for us. FSFC being a member of the TANK Group and also a member of the Presidential Fertiliser Initiative, we have had a cause to make production for Rice Farmers Association, Cotton Farmers Association, Wheat Farmers Association, all these have their specialised blends.”
The chairman said the company has exceeded its production capacity. The firm said Birma, “used to stop production by September so that we start cleaning but now we have only November to do that.”
He recalled that the staff strength was bloated but the company prioritised and made it effective. The FSFC now has about 48 technicians, 32 administrative employees and 120 production staff.
Birma said the company has a cordial relationship with the host community to the extent that the youths play football within its premises.
He said: “Almost every farmer within the community who wants to buy the regular fertiliser blended and in bags, buys. If you want the waste which is still 100% fertiliser, which we also give to our staff, if you want that, we give you free.”
Birma revealed that the Presidential Fertiliser Initiative has over the last two years supported all fertiliser plants with 100 per cent raw materials.
“Over two years and this is almost the third year, the Presidential Fertiliser Initiative, which is supportive of all the fertiliser plants gave us 100 per cent of all our raw materials requirements and they paid us blending fees, which cover our electricity, salaries, postage, logistics and whatever. To us, we don’t have any problem with funding. But after finishing their production, our little margin, we bring it back to buy raw materials, with which we now do our blend for market sales.”
Besides, the FSFC has dealership with all the 36 states. On international patronage, Niger is a major customer. He noted that the company still has a room for expansion in case of further demand.
“The firm is exploring measures for cheaper production since it has an installed capacity of 100,000 metric tonnes and we are now producing 62% so that difference of 38% if we can re-engineer our production system to make it more perfect and economically sensible, I think it is okay for us.
“We want to be a stable player in the distribution of fertiliser in this country and we also leverage the established concept of this company. It was established to which is to cover almost all the northern part of Nigeria, which to the glory of Allah we haven able to sustain it.”
Despite its love for expansion and meeting the primary concept of the firm, the FSFC is still mindful of its choice of a technology that will not take away people’s jobs.
Birma said: “The machinery we saw in India is the upgraded type that it is almost impossible to employ a lot of people. Ours here, one of the policies of this regime is to employ labour and that we have done our best.
“We have become the government of our own. We provide electricity, water and even part of the road. Looking backwards, the baby you gave us is still alive and kicking. At times with the kicks, we have had a good reason to say yes it is a good decision for us to key in. With the support you have given us, at times we think you are harassing us but you are just reawakening us. So, we are grateful for that. But at times we just say when are they (BPE) going to wean us?”
Abdullahi, who led the BPE team, expressed satisfaction with the post-privatisation performance of the firm.
He advised the firm to seek delisting from further monitoring, adding: “Delisting in the BPE is usually for the enterprises that are privatised. We usually monitor them for five years within which we monitor the post-privatisation plan they gave us. We have to assess them and report. But after the five years and they have done what they are set out to do, they are usually delisted. It means that since they have achieved the covenant and even maybe gone beyond the covenant, there is no more returning. Since they have done what they undertook to do within the five years, they can apply for it, seeking to be delisted. The department that is responsible for that will send a team to assess it. After that, we will write to the National Council on Privatization recommending that they should be delisted that they can now go on their own.
“Now, I can comfortably tell you that I am satisfied with the level of production and achievements. I am very comfortable with the result I have seen.”
Similarly, the team arrived at the Central Hotel, Kano that was also privatised about 12 years ago. The hotel was a sight to behold. The new management has not only revived it, but it has also redesigned and furnished the hotel with state-of-the-art facilities. With its alluring ambience in the centre of the ancient city, it stands out into the Kano horizon.
Its chairman, Alhaji Nasser Ahmed, said the original concept of the founders was for it to be the number one hotel in the North.
Speaking with reporters in Abuja, Ahmed recalled that it was in a derelict state, which stopped guests and customers from patronising it. According to him, “the Central Hotel, Kano was in a very derelict state. It used to be Kano’s number one hotel and eventually became the last hotel because people stopped coming there. All the facilities were broken down, everywhere was occupied by rodents. But we were not deterred because for us anybody with a bit of the knowledge of the history of Kano will know that Central Hotel was the first hotel in Nigeria. It started in 1928, and during the colonial period 1956, the Queen stayed there. It was the centrepiece of hospitality in northern Nigeria. At least because in the 1960s the British used to run the hotel and it was doing very well. By the late 70s, it had lost its steam, and by 80s, 90s it was completely shut down.”
The chairman said upon assumption of the management of the entity, it was redesigned with the assistance of the Protea Hotels in South Africa.
Those who share in the dream of the founders of the hotel, such as the late Managing Director, Guaranty Trust Bank, Mr Tayo Aderinokun, who was born and bred in Kano, and the President, Afrexim Bank, Prof. Benedict Okey Oramah, raised funds for refurbishing the hotel.
The chairman said: “Both of them released all the money needed for the refurbishment and stood by us. So, I believe that was the turning point in making it possible because they believed in it just like we did and today it happened because they were there.”
“I think when we acquired it, it was about $7 million and by the time we added about 12 to 14 million dollars, today the value itself is still very low because it is about under $20 million about 15 to 17 million dollars. So in real terms, the value has not yet been expanded because the economy is shrinking but we believe the potentials. We have new designs and we are talking to new finance parties to do new towers in the hotel so that we create another 200 rooms, business centres, offices and resident sections.”
Having spent about $3.6billion on the hotel, the chairman said the challenge was the cost of servicing the interest charges on the facilities that the hotel pays to the banks. “Internationally hospitality is the barometer of the government so it is in the interest of the government to create some level playing field for hoteliers so that this cost is thrown back into the system so if we lose so much on cost of funds then the ambition, the drive to create the necessary good environment is really encumbered.”
The chairman revealed the plans were underway to enhance the hotel. Already, according to him, the Central Hotel Kano is shopping for equity partners to raise $50million to develop and justify the value of the hotel. He said that “so the funding we are doing this time, we want to use more equity partners and we are working on that to raise the equity through an investment trust, that we want to raise about 50 million dollars that is when the real value and the history of the hotel will be justified.” He noted that the hotel is on the verge of securing the investment funding from two Turkish hotel hotels, Best Western and Continent Hotel. He is looking up to the two foreign hospitality firms to drive the investment funding of the hotel.
He said: “We are now on the verge of signing with both Best Western and Continent Hotel of turkey. So, they will share the hotel into two parts and then the Continent hotel will drive the investment funding we are doing to develop the new arm of the hotel.”
The BPE representative, who led the team to interview Ahmed in Abuja, Mr Abdullahi Shu’aibu, said since the Central Hotel Kano has performed satisfactorily, in a recommendation to his office, he would advise that the hotel be delisted from the monitoring regime of the BPE.
His words: “The hotel has met all the covenant it entered into. And as it is satisfactory, we will ask them to write like any other privatised entity that has met the requirements for it to be delisted from the monitoring regime. That is what we advise the hotel to do. But in our report, we will now certainly recommend that it has satisfactorily met all the covenants it entered into.”
With the success of the Federal Superphosphate Fertiliser Company (FSFC) in Kaduna and the Central Hotel, Kano, it is hoped that other privatised firms will live up to billings.