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Tag: privatisation

Workers flay privatisation

The Public Services International (PSI) has flayed the privatisation of some enterprises, describing the exercise as unfavourable to workers.

At the African regional council meeting in Lagos, PSL Vice Chairman Comrade Adeyemi Peter said the privatisation process was detrimental to workers’ welfare.

He said: “As a result of privatisation, employment is no longer secured, what you see is abuses against the workers. Virtualy every utility in our country is beig privatised, there is this mentality that government has no business in business and every thing has to do with the private sector but we are aware that most of our national assets have been sold to individuals.

”We also know that most of this privatisation that has been embarked upon with the country have not succeeded. The so-called privatisation has failed, and collapsed.

”We have privatisation of power in Nigeria, despite all the protection along all the struggles, those in government decided to go ahead to privatise but after, the privisation leads to complete collapse of our appraising.

“We have to use the hard money of the tax payers to bail them out of it and ironically even water is no longer free, it is something that is giving workers concerns. If we do not stem it this time, we might likely get to a point where even the air we breathe will be paid for.”

He urged the government to respect an average worker’s right and draw up an agenda on way out of workers maltreatment in the country.

The United Labour Congress (ULC), President Joe Ajearo said there was a need for government to stop assets sale as a way out of recession.

March 24, 2017
Power privatisation: Consumers renew push for review

More than three years after the privatisation of the power sector, consumers are yet to enjoy improved electricity supply. This has prompted renewed calls for the review of the exercise. Will the government bow to pressure and reverse the deal? Assistant Editor CHIKODI OKEREOCHA looks at the lingering crisis in the power sector, which appears to have put the government and private investors on the spot.

The Federal Government appears overwhelmed by the crisis in the power sector. The Minister of Power, Works and Housing, Babatunde Fashola, personifiedthe government’s seeming helplessness when in last November, he said the privatisation of the power sector was not up for review.

This followed persistent calls by aggrieved consumers for a review of the sector’s privatisation, which, according to them, was not only flawed, but has evidently failed to yield the desired result more than three years after.

However, beyond harping on the need to open up opportunities for more investment in electricity Generation and Distribution Companies (GenCos) and (DisCos), the minister’s clarification failed to provide a clear roadmap on how to turn things around.

Fashola, who spoke at the Fifth European Union (EU)-Nigeria Business Forum in Lagos, with the theme: “Harnessing Nigeria’s potential for economic growth”, insisted that his ministry would remain committed to the terms of power generation and distribution contracts it inherited.

“If revisiting the agreement means cancelling it, I won’t support. The investors who took the risk must have the assurance that government will not flip-flop. A contract that fails has consequences not only for the investors, but on both sides. This government will respect and uphold the contracts it has committed to and inherited. If there are issues with the contracts, the umpire is the judiciary,” the Minister said.

Although Fashola’s position that a review or reversal of the privatisation was not on the table may have been prompted by fears that a reversal would scare foreign investors, aggrieved consumers and other critical stakeholders have refused to be swayed. They have continued to mount pressure for a review, insisting that Nigerians have been short-changed by the investors.

To bring about efficient service delivery, the Federal Government in November 2013 unbundled the defunct state-owned Power Holding Company of Nigeria (PHCN) into 18 successor companies and subsequently handed them over to private investors.

The Bureau of Public Enterprises (BPE), which midwifed the process, projected that the private investors who bought 60 per cent shares in the power assets would increase electricity generation capacity to 20,000 megawatts by 2018.

It was envisaged that the sales would reduce the losses of Aggregate Technical, Commercial and Collection (ATC&C) caused by poor maintenance of the network and poor revenue generation.

This was why the 11 DisCos in a Service Level Agreement (SLA) with the BPE agreed to reduce losses significantly within five years. They also promised to roll out meters to ensure that customers are no longer exploited under the estimated billing methodology.

On their part,the GenCos said they wouldl turn around the three hydro power plants and other gas-fired plants and expand their capacity to generate more power supply above 5, 000 megawatts (mw).

The Nigerian Electricity Regulatory Commission (NERC), the electricity industry regulator, rolled out the interim rules and other electricity market code to guide the private operators in doing business as well as setting Key Performance Indicators (KPI) for the investors.

But none of these has happened more than three years after. Rather than enjoy a significant improvement in electricity supply, Nigeria’s electricity generation capacity has worsened in recent years, setting the authorities and the investors on the war path with angry consumers.

For instance, the immediate past president of National Union of Textile Garment and Tailoring Workers of Nigeria, Comrade Oladele Hunsu, observed that while Nigeria was generating more than 4,000 megawatts (Mw) of electricity before privatisation in 2013, electricity generation capacity is currently wobbling between 2,000Mw and 3,500 Mw.

He lamented that several electricity consumers were yet to be metered years after the privatisation, adding that this underscored the abysmal performance of the sector.

While describing the private investors’ failure to meter all consumers as illegal, he accused the NERC of failing to properly regulate the industry.

Hunsu, therefore, advised President Muhammadu Buhari to review the privatisation, noting that only a transparent review to unmask those who bought the PHCN’s unbundled assets and their capacities would resolve the crisis in the sector. “We need to investigate how those DisCos and GenCos were sold and who bought them,” he insisted.

The unionist said reviewing the process would not only save Nigerians the agony of paying for darkness, but also incentivise the real sector, which comprises manufacturing and agriculture. According to him, real sector operators bear the brunt of inadequate electricity supply, which has continued to stunt the growth of the nation’s Gross Domestic Product (GDP).

However, the alleged failure of the exercise to set the stage for a major transformation of the sector to guarantee uninterrupted electricity supply to the manufacturing sector and Nigerians in general is not the only knotty issue prompting Hunsu’s call for a review.

He expressed surprise that despite the investors’ obvious failure to turn things around, thegovernment is still determined to continue dolling out public funds to the investors as soft loans or bailouts to enable them run supposedly privatised entities.

Peeved by such largesse, members of the Senior Staff Association of Electricity and Allied Companies (SSAEAC) urged the Federal Government to shelve its plan to issue a N309 billion bond to finance the power sector.

“Issuance of bond will amount to spoon-feeding the operators for their inefficiency. The bond will be at a cost to Nigerians, as the risk of default will affect the government sovereign guarantee and lead to energy crisis in future,’’ its President Chris Okonkwo said.

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Speaking to reporters in Lagos, last week, Okonkwo asked the government to assess the investors’ performance in the past three years in relation to the terms and conditions of the privatisation exercise that handed over the power assets to them.

He emphasised that the anticipated efficiency in service delivery from the private power firms by Nigerians has been met with deception and failed promises, pointing out, for instance, that the investors have failed to provide prepaid meters to consumers within 18 months as agreed.

Okwonkwo described as sad a situation where consumers were not metered, even as tariffs had been increased twice since 2013. “The government should come in, apply the terms and conditions of the sale and see if we can correct the mistake,” he said.

He also said the power distribution companies have displayed inefficiency in revenue collection with 30 per cent collection rate as against 60 per cent that the sector recorded before the privatisation.

The SSAEAC chief said the financial and technical inefficiencies of the power firms were evident in the shortfall of funds they were reporting despite enjoying series of interventions from the government.

He said the Federal Government through the Central Bank of Nigeria (CBN) prepared a bail-out of N2013 billion as part of the Nigeria Electricity Sector Intervention last March , but the shortfall in revenue collections had continued to escalate.

“We think it is time to re-appraise the content of the agreement that handed over PHCN to the private sector and its implementation. It is time to hold those who bought the power sector down for what they had signed that they will do. We want to know if they are doing well or not,” Okonkwo said, insisting that if the private sector could not manage the sector, the government should take it over.

Why power crisis remains

There have been several reasons adduced for the perennial crisis in the power sector. From alleged investors’ lack of technical know-how and financial capacity to run the sector efficiently to the challenge of gas supply caused by vandals and consumers’ reluctance to pay their electricity bills, the sector is indeed, gasping for breath.

For instance, The Nation learnt that apart from the investment Federal Government made in the sector prior to the privatisation, the investors have not made significant investment in the growth and development of the power sector particularly in smart metering technology, upgrade of their networks and other power infrastructure.

According to a reliable industry source, the dearth of investment contributed to the incessant power outages and the regime of estimated bills that has pitched consumers against the power firms.

The source, which declined to be mentioned, said that because of paucity of funds, DisCos refuse to take their total power allocation from the market operator (MO), preferring to take little, which they serve industries and commercial entities considered as paying customers. This arrangement, however, leaves most residential areas across the country in darkness.

The activities of vandals who compromise gas pipelines have also been identified as another challenge. Vice President Yemi Osinbajo admitted this much when he recently said getting gas to the power plants remained one of the major hurdles before the administration’s commitment to stabilise power supply.

Indeed, the gas sub-sector, The Nation learnt, produces the raw material for production of electricity. But because the sub-sector has not been privatised, the supply of gas to GenCos and by extension, the supply of power by DisCos remains a pain in the neck. But the activities of vandals are said to have compounded the problem.

The situation is said to have put the DisCos under severe pressure by electricity consumers since they (DisCos) can hardly wheel power to them as they can only give what they get from the GenCos and transmission value chain.

Osinbajo said while the privatisation process had taken place for power generation and distribution, transmission was still in the hands of the government, managed by Canadian firm Manitoba.

Huge debt as an issue

In fairness to DisCos, many Nigerians do not pay for electricity consumed. The Association of Nigerian Electricity Distributors (ANED) recently said DisCos revenue shortfall in Nigeria has hit over N300 billion. It, therefore, urged all power consumers, including government agencies to pay up their debts.

The association’s Executive Director, Sunday Oduntan, said that the revenue shortfalls adversely impacted on the ability of its members to make capital investment in metering, network expansion, equipment rehabilitation and replacement that are critical for service delivery improvement.

“This is a cash liquidity crisis that threatens to completely undermine the electricity value chain and its ability to continue to serve its consumers,” Oduntan said.

Service providers also complain of energy theft. For instance, a Director in Eko Electricity Distribution Company (EKEDC), George Etomi, a lawyer, said energy theft by all categories of consumers was the greatest threat to private investors and the reform in the power sector.

However, it remains to be seen how the government intends to handle these issues. But one thismg is sure: unless there is improved electricity supply, the hope of salvaging the economy from the grip of recession may not be achieved.

January 27, 2017
Review power sector privatisation, Buhari urged

President Muhammadu Buhari has been advised to review the privatisation of the power sector so that the country could leverage on a vibrant real sector to exit recession and drive Gross Domestic Product (GDP) growth.
The National Union of Textile Garment and Tailoring Workers of Nigeria immediate past president, Comrade Oladele Hunsu, gave the advice in Lagos at the weekend.
He argued that only a transparent review of the exercise to unmask those who bought the unbundled assets of the defunct Power Holding Company of Nigeria (PHCN) in 2013 and their capacities would resolve the crisis in the sector that has remained a pain in the neck of real sector operators and stunted the nation’s Gross Domestic Product (GDP) growth.
Hunsu, who described the privatisation as “shoddy and fraudulent,” said more than three years after PHCN’s assets were handed over to private investors, there had not been any significant improvement in electricity supply.
He lamented that rather than improve, electricity supply has continued to drop.
“Nigeria was generating more than 4,000 megawatts (Mw) of electricity before privatisation in 2013. Today, electricity generation capacity is wobbling between 2,000Mw and 3,500 Mw in a country with a population of over 170 million. It’s high time we reviewed the privatisation.
“We need to investigate how those electricity distribution and generating companies (DisCos) and (GenCos) were sold and who bought them,” he said.
He noted that several electricity consumers were yet to be metered years after the privatisation, adding that this underscored the abysmal performance of the sector.
While describing the private investors’failure to meter all consumers as illegal, Hunsu accused the Nigerian Electricity Regulatory Commission (NERC) of failing to properly regulate the industry.
Besides, he said it is only in Nigeria that the government will hand over public funds to private investors as soft loans or bailouts to enable them run supposedly privatised entities.
The Federal Government had in November 2013 unbundled PHCN into 18 successor firms and, subsequently, handed them over to private investors. The exercise was expected to set the stage for a major transformation of the sector to guarantee uninterrupted electricity supply to the manufacturing sector and Nigerians in general.
But more than three years after, Hunsu regretted that this has not happened. According to him, the private investors have failed to meet most of the Key Performance Indicators (KPIs) given to them during the purchase by the government through the Bureau of Public Enterprises (BPE), which mid-wifed the sale of the power assets.
Earlier, the Minister of Power, Works and Housing, BabatundeFashola (SAN), said the privatisation would not be reviewed.
The minister, who spoke in Lagos, said the ministry would remain committed to the terms of power generation and distribution contracts it inherited, noting that the government would only listen to people calling for revisit if the aim was to open up opportunities for more investments in GenCos and DisCos.

January 16, 2017
Privatisation: Govt reneged on power generation, funding agreements, operators allege

The Federal Government may be the major cause of the problems being faced by the power sector after its privatisation. It has failed in most of the performance agreements signed with those who bought the power firms.

According to the Eko Electricity Distribution Company (EKEDC) Board Chairman, Mr. Charles Momoh, and the Country Director, Energy Market and Rates Consultants, Mrs. Rahila Thomas, the government did not honour the agreements signed during the sector’s privatisation in 2013.

Momoh said while handing over the assets, the government promised that generation would be between 5,000 megawatts (Mw) and 7,500Mw by 2015.

This, he said, has not happened as agreements on improved supply of gas to thermal plants, establishment of cost-reflective tariff and payment of outstanding debts that accrued from unpaid electricity bills of customers, especially ministries, departments and agencies (MDAs), have not been respected.

Mrs. Thomas said the transmission segment of the supply value chain works sub-optimally because of underfunding. She said the Transmission Company of Nigeria (TCN) was allocated N30.3 billion for capital expenditure in the budget contrary to the Multi-Year Tariff Order (MYTO) requirements.

To buttress the huge shortfall in capital expediture allocation, she stated that MYTO requirement for 2016 is N205 billion. For 2017, it is N419 billion and N265 billion for 2018.

She also noted that donors indicated their intention to provide $623 million for the transmission segment but nothing has been done three years after the pledge.

Momoh and Mrs. Thomas spoke when the Senate Committee on Privatisation, led by its Chairman, Senator Ben Bruce, visited Eko Electricity Distribution Company (EKEDC), Lagos.

Eko DisCo Chief Executive Officer Dr Oladele Amoda listed the challenges and achievements of the company, including the huge debt of about N10.7 billion owed by customers, power theft and meter bypassing by customers, among others.

He appealed to the Senators to make a law that would prescribe stringent punishment for offenders involved in vandalisation of equipment, theft and tampering with meters. He urged the lawmakers to include in the 2017 budget appropriation the debts owed by MDAs.

Bruce said the visit became imperative because people were questioning the privatisation process; “some said it was a mistake to have privatised the sector and why there has not been improvement in power. The generation level has not changed from what it used to be before privatisation. So the committee had to go round privatised entities to know the problems.”

The committee chair said it was inexplicable that power output had not improved since the sector was privatised three years ago.

The Federal Government owes the sector N900 billion. Bruce said it would be extremely difficult for the Senate to approve N1 triilion for the government to pay for debts when there was no output to justify such payment.

The Committee promised to meet other DisCos, Appropriation and Budget Committees as well as stakeholders to find lasting solutions to the problems.

The committee said the Senate would, before the end of the year, draft a law against power theft, vandalism of equipment and meter bypassing. It also pledged to appropriate the fund to pay the debts owed the power firms in the 2017 budget, and also meet with the Central Bank, DisCos and the Bureau of Public Enterprises (BPE) to solve the problem of accessing foreign exchange by power companies.

November 17, 2016
Furore over airports concession, privatisation

Discontent is growing among players in the aviation sector over plans by the Federal Government to either concession or privatise some airports. Suspicion is rife among airline operators, union members and workers of aeronautical authorities over what model and scope the concession will take, KELVIN OSA OKUNBOR reports.

DISCONTENT is growing in the sector over plans by the Federal Government to concession or privatise the international airports.

Stakeholders, including airline operators, unions and workers of aeronautical authorities, have accused the government of not making public the template for the proposed concession or privatisation of the terminals in Lagos, Abuja, Port Harcourt and Kano.

The allegation is based on speculations that the Ministry of Aviation may have concluded plans to hand over the juicy terminals to some Arabs managing airports in Turkey and some Middle East countries.

Minister of State, Aviation, Hadi Sirika, has inaugurated a steering committee to prepare the handing over of the airports to prospective investors.

Stakeholders are kicking against their non-inclusion in the committee, alleging that the minister might be acting a script.

They said the government had to go the extra mile to make public the template to be used for the concession.

The question many industry watchers are asking is: the number of airports for concession and what aspects of the airports to be concessioned without compromise to national security.

Unions have vowed to mobilise against the proposal if the interests of their members were not protected.

Sirika has, however, assured the unions that their members’ interest would be protected. He said the workers would not lose their jobs, if they allowed the government to concession the airports to bring about efficiencies, create national wealth and prepare the ground for the airports to become hubs.

Stakeholders forum in Lagos

But as lofty as the plans may appear, industry watchers are suspicious that it is another attempt to pull the wool over their eyes. They believe there is more to the proposal than meets the eye.

In Lagos last week, a private firm convoked a conference to examine the privatisation/concession of the airports. Sirika was absent at the event. The minister’s absence, despite assurances of his attendance to the convener, Mr Michael Ckikeka, seemed to have confirmed the suspicion of players over the insincerity of the exercise.

Head, Research and Stratety, Zenith Travels, Mr Olumide Onunayo, urged Sirika to convene a stakeholders’ conference that would draft a National Civil Aviation Policy (NCAP) to address issues related to airports concession.

He said concessioning airports in Nigeria was premature, and if the government had to concession the airports, the terminals should be handled as a chain.

Onunayo said: “On the concession of choice airports, there are fears because of Nigeria’s perculiar environment. It may have worked in the United Kingdom(UK). The UK’s privatisation worked well, because it is a mature political society, with experience of being a regulated environment for decades.

“In less-developed countries, such as ours, governments should be tilting towards building and enhancing the transport system rather than just offloading the assets. This is to avoid a situation whereby we move from ugly state-owned airports to even uglier privately-owned airports. It is noteworthy that most reputable private sector investors would not consider buying an airport with fewer than one million passengers.

“That is why airports have often been sold as a package – good and bad, small and large, domestic and international. In achieving the objective, the government should, as a first step, invite reputable international airport management companies, who will often achieve what governments can no longer take care of, improvements in capacity, efficiency and safety.

“The private managers are internationally recognised airport operators with track records, who can be sourced and verified by a click of the mouse. They will act as advisors or management consultants to the government within a limited time frame; during this period, they will be given the Federal Airports Authority of Nigeria (FAAN) to manage, restructure and reposition,” he added.

He said this would strengthen and improve FAAN’s corporate governance structure while our political environment would also mature to adapt to the inevitability of privatising the airports.

“These airport management companies should be selected through an open and transparent process backed with international referral,” Onunayo added.

Airline operators’ perspective

Domestic airlines, which are expected to benefit from the proposed airports concession, have accused the government of not carrying them along.

Chairman, Airline Operators of Nigeria (AON), the umbrella body of domestic carriers, Captain Nogie Meggison, said operators were yet to be notified by the Ministry of Aviation of any plan to concession the airports. He said operators were yet to see either the framework for the concession.

Meggison said the communication gap had cast doubt on the sincerity of the exercise, stating that stakeholders were confused about what aspects of the airports – landside or airside – are billed for concession.

He said a clear picture should be presented on how the government intended to concession the airports.

He said: “Are the airports to be concessioned or ruzn as public private partnership, a joint venture or build operate and transfer? How many are to be concessioned? For how many years? How much is the yearly fee to be paid to the government?

“But, I believe Nigeria needs airports of standards to take its rightful place to become hub of Central and West Africa,” Meggison added.

Litigations over previous concession

To restore investor confidence, experts said litigations over poorly-handled airport concessions needed to be critically looked into by the government.

This, they said, has become imperative as no investor would be willing to do business on a battlefield.

Former Director-General, Nigerian Civil Aviation Authority (NCAA), Dr Harold Demuren, insisted that if litigations on some concessions, public-private partnership or build, operate, transfer agreements were not addressed, the proposed airports concession would not work.

According to him, the concession plan is good but the agreements have to be honoured in existing and future concessions.

Demuren said: “When the government does not honour agreements, it destroys the sector and everything it has made. The concession plan is great but we can’t continue to operate by cancelling agreements all the time, in fact, all issues, litigations or agreements should be reviewed before we talk about another one.”

He said if the government went ahead with the concession without resolving issues on previous ones, there would be a flurry of litigations.

He urged the government to engage the unions, be honest about the issue and not renege on its promises to Nigerians.

Private sector experience

Meanwhile, operators of the only private airport terminal in Nigeria, Bi-Courtney Aviation Services Limited (BASL), has thrown their weight behind the proposed concession.

Its Chief Executive Officer, Captain Jari Williams, said concession was the only solution to infrastructure deficit in the country.

He, however, said aviation had not been spared in the wind of controversial concessions, which had either failed or were stalled by the government.

“There are no two ways to save our almost-derelict airport terminals than concession,”he said.

Sirika’s defence of

concession

Sirika said there was no going back on the concession of airports, saying the concession would not only bring an excellent passenger experience but would turn the gateways around in one year.

Sirika contended that the best way to attract passengers, investors and turn the airports into hubs was to concession them.

Unions’ perspective

Air Transport Services Senior Staff Association of Nigeria (ATSSSAN) President Comrade Benjamin Okewu said his colleagues were opposed to the exercise, especially the revenue-generating airports.

The unions, he said, needed to be carried along to understand the intentions of the government.

October 18, 2016
Fed Govt reopens NIIP plants’ privatisation talks

•Eyes $1.975b proceeds

The Federal Government has reopened discussions with the preferred bidders for three of the 10 power plants built under the National Integrated Power Project (NIPP) and supervised by the Niger Delta Power Holding Company (NDPHC) Limited.

The power plants and their installed capacities are Calabar in Cross River State, 634megawatts (Mw), Geregu in Kogi State (506.1Mw) and Omotosho plant in Ondo State (512.8Mw).

The NDPHC, a special purpose vehicle, established by the Federal Government to fast-track the achievement of stable power supply, built 10 medium-sized thermal power plants but was able to successfully market seven to investors globally in 2014 during President Goodluck Jonathan led administration. The others were not billed for privatisation due to litigations.

In line with the privatisation processes, investors submitted bids for the seven power plants preferred bidders and reserved bidders emerged but the transactions were concluded before the end of Jonathan’s government.

The Nation gathered that the Federal Government has resumed talks with the investors in the previous privatisation. However, this time, the government would market the plants at the same time. A source, who wants to be anonymous, said each power plant would be sold in accordance with its peculiarities.

According to the source, the government is discussing with the preferred bidders in the earlier exercise. In the previous privatisation, the Joint Transaction Board confirmed EMA Consortium as the preferred bidder for Calabar Generation Company with a bid price of $625 million, while Nebula Power Generation Consortium emerged the reserved bidder with an offer of $623.75 million.

For the Geregu Generation Company, Seoul Electric Power Limited was the preferred bidder with a bid of $690.2 million, and YellowStone Electric Limited the reserved bidder with $613.1 million offer while Omotosho Electric Power emerged the preferred bidder for Omotosho Generation Company with an offer of $659.9 million as against an offer of $645.15 million by the reserved bidder, ENL Consortium Limited.

If the government settles for the bids in the previous exercise, it would rake in at least $1.975 billion from the three power plants. The government’s intention in reopening the bids with a determination to close the transaction sustainably, the source said, is to promote private sector investment into the power sector.

When the deal on the three power plants is concluded, another two plants will follow successively until the entire power plants are privatised. The previous government was expected to realise $4.3 billion from the sale of the plants. Whether that amount will still be realisable is left to the government to decide, the source added.

August 8, 2016
Fed Govt urged to revisit privatisation of power sector

The Chief Executive Officer (CEO), Mommas Engineering Meters Manufacturing Company Limited (MEMMCOL), Kolawole Balogun, has urged President Muhammadu Buhari to re-visit the privatisation of the power sector.

Balogun spoke at a news conference in Lagos.

He said the role of the DISCOs should be separated from that of electricity marketing companies (EMC) for the development of the power sector.

Balogun said: “Power sector “re-privatisation” may have to be tabled again, wherein DISCOs role is limited to power distribution up to the transformer-point (at one-end) and allow for electricity marketing companies (EMC) to take it from there to the consumers. So, DISCO ensures power transmission is always and effectively delivered to the connecting transformers, while EMC ensures the power is effectively distributed to the consumers (metered for billings and feedbacks).”

According to him, most transformers in place cannot withstand the amount of power required by the consumers.

“Technically speaking, power transmission companies have enough electricity to supply to the consumers through the DISCOs, routed through power transformers. However, most current transformers in place cannot withstand the amount of power or energy required by the consumers.”

He argued that the DISCOs have been overwhelmed by distribution and marketing. He said the marketing companies should not be organs of DISCO, but interdependent.

He added that Nigerians clamoured for locally manufactured electricity meters.

He said local manufacturers want government to promulgate an enabling law to enhance the patronage of locally-manufactured meters and products.

He said the country has local manufacturers of meters that can produce close to 150,000 meters monthly, explaining that his company has the capacity of producing 50,000 meters per month.

“Infact, more licences should be given to more companies, after accreditation in order to flood the markets with enough and quality meters and smart meters. Investors here and abroad will begin to look into the power sector to stock it with much more funds than we presently have. With time, Nigeria will run an efficient, steady-state power sector to be envied,”he said.

June 21, 2016
Oyo refutes claim of planning to sell off public schools

‎Oyo State Government has refuted claims and allegation that it intends to privatise public schools in the state but rather said the initiative is to go into Public Private Partnership and return some public schools to its original owners.

The Special Adviser to the Governor on Communication and Strategy, Yomi Layinka stated this on Tuesday while addressing journalist at the press centre, Ibadan.

According to him, the decision of the state government followed over 40 years appeal from missionaries and communities that their schools should be return back to them.

The Special Adviser noted that not all schools will be ceded in the process, but schools would be ceded based on certain criteria, adding that the decision was in the interest of promoting qualitative education in the state.

Layinka who was accompanied by the Permanent Secretary, Ministry of Education, Mrs Ronke Makanjuola, and Permanent Secretary, Ministry of Information, Mr Bashiru Olarewaju, said only about 30 schools will be ceded out of the 631 secondary schools in the state.

“The issue of return of schools has Ben a recurring issue since 1975 when schools were taking over by government from missionaries and private individuals for best reasons known to them. Governor Ajimobi administration has deem it ft to respond positively to their request and has started the process of returning back the schools as far as it is for public interest especially for proper management and sustenance of such schools.

“It will create energy and resources to manage the schools properly. It is a concept of PPP which is operated globally. We have advertised for an expression of interest from stakeholders interested to pick up the form. There will be clearly stated agreement to be meeting before an MOU will be signed,” Layinka said

Reeling out the consideration for the ceding of the schools to stakeholders, he said:” Spread of government secondary schools in the area, total population of students in the area, evidence of previous experience in school administration, evidence of means of financial and management capability to operate the school successfully on their return”

He said government will ensure that stakeholders comply with open administration policy, adherence to government policy in state, regular inspections to ensure quality assurance.

Layinka also explained that no teachers will be retrenched during the process, but has the option of staying in their schools with their new employers or staying in government employment.

He went further that:” No student in any of the affected schools that is from JSS II to SS III will be liable to payment of school fees. Existing primary schools in the premises of some of the secondary schools affected will not be interfered with at this stage.”

May 31, 2016
Privatisation not the problem with power sector – BPE DG

Mr Vincent Akpotaire, the acting Director-General, Bureau of Public Enterprises (BPE), said on Friday that privatisation was not the problem affecting the power sector in the country.

He told the News Agency of Nigeria (NAN) in Abuja on Friday that the long-standing decay in the sector was the main cause of the present challenges facing the sector.

Akpotaire said that privatisation became the only option open to the government due to the need to have a process that would be self-sustaining and responsive and make electricity supply transparent and investment sustainable.

According to him, “Privatisation is a process, it rides on the back of sector reform and sector reform is a necessity that arises from failure of infrastructure basically.

“Privatisation is not the problem we are facing today; the problem we are facing today is getting the system that is now in place to run without glitches; to remove the bottlenecks in the system, because you are moving from one completely different system to a new one where the people take their obligations seriously.

“Power cannot be stable in this country after 40 years of decay and rot two years after privatisation.’’

Akpotaire said that the present administration had taken full charge of the situation by working out modalities to solve some of the issues in the sector.

According to him, government is taking adequate steps to ensure that the new system that is in place begins to work properly in order to improve power supply.

He advised the Federal Government to create incentives for the Transmission Company of Nigeria (TCN) to strengthen its capacity to transmit more than it was doing presently.

“Government can continue to fund the existing infrastructure, but at the same time government can encourage Public-Private Partnership in funding what was in the past called super grid.

“This supergrid could transmit up to 760 megawatts and that gives a very robust capacity to wield power, so the lost regime in transmission will drop significantly.’’

He, however, urged Nigerians to be patient with the present administration, as it is doing everything possible to improve power supply.

He also disclosed that Ntel, a new company carved out of MTEL, a subsidiary of the defunct Nigeria Telecommunications Ltd (NITEL), is in the process of rolling out new lines to the public.

According to him, that is a testimony that the guided liquidation of the government assets was properly executed.

“We are aware that the Ntel facility is about rolling out its new lines and substantial part of what they want to do is in the areas of 4G data and voice.

“Its not yet Uhuru, because they are starting out on completely new platforms.

“The old platforms of NITEL are obsolete and useless; that is the truth.

“So what they really bought was the space and a couple of the equipment that they could still transit.

“Most of what they are doing now is premised on brand new platforms that they are bringing on board to start their activities.

“We will work with them to ensure that they do get it right in the interest of deepening the telecoms space and having a Nigerian player that will be able to leapfrog the local economy into better use of data like the 4G data spectrum that we are doing currently.’’

April 8, 2016
How to make success of privatisation, by Indorama MD

The Managing Director of Indorama Eleme Petrochemicals Limited, Manish Mundra, spoke with reporters at the company’s premises in Port Harcourt, Rivers State. OLUKOREDE YISHAU was there. Excerpts:

The first part is the construction phase. The construction phase we can easily say on an average that we use about 4500 workers each day. About 2000 Nigerian workers are involved for a period of six months of the construction of this plant. The second phase is the operations. In the operations, we expect more than 300 to 350 direct employment in the plant; because a world class plant is fully automated, we don’t need many people working around. Everything is controlled from the control room. About 800 people will be on contract with respect to loading, packing, bagging etc. It doesn’t include the port operations which will have 80 to 100 people. That is the direct employment. But indirect employment, such as transport facilities, and the usage of fertiliser will create indirect employment. We expect between $200 to $300m coming in as foreign exchange earnings. We can expect around $1b GDP impact.

Likely probe of the privatisation

Whenever new government comes in, the first thing is another round of probing. As far as the privatisation of Eleme Petrochemicals is concerned, I know a lot because I was heading the privatisation process from the point of view of Indorama Group. I landed in Nigeria in 2005. Dangote and our firm went through the whole process. The presence of Dangote itself ensured nothing went wrong. Otherwise, he would have won. I am very clear that the whole process was very transparent and we have no fear about any probe. It is not the first time this probe would happen or has happened. We have already had discussion with the House Committee on Privatisation. They were here on a visit. They gave us questionnaires and we have given them answers. As per privatisation law and our agreement with the Federal Government, which we signed in 2006, the monitoring period is five years and after five years is over and the performance is fine, they set us free from any involvement in this thing. There has been proper shareholders agreement and sales agreement and we have complied. That is the confidence on which we have invested $1.5 billion in this place. We have nothing to hide. We have all the documents.

One of the reasons for the probe is said to be that the investment on Eleme Petrochemicals was $2.4 billion and that it was sold cheap. Somebody said that and did not provide proof. The Eleme Petrochemicals was part of NNPC. It was a subsidiary of NNPC. So, all assets of Eleme Petrochemicals were warehoused in NNPC. When the privatisation was done, it was agreed by BPE and NNPC to unbundle Eleme Petrochemicals and give it to us to move the balance sheet forward. So, when they unbundled EPCL from NNPC, they total assets value was $750 million. The net asset was around $300 million because there was depreciation over 11 years. You know Nigeria better than us. When it comes to spreading rumours, anybody can do it but when it comes to presenting the papers, you will not find credible information. We have those proper evaluation and we have those proper papers in our hand. It is true that there was an investment plan of phase two and phase three in the same place but it never took off. Even the land that was acquired from this place was more than 900 acres but we only got 350 acres. The balance is still with NNPC because they said they were still working on phase two and phase three and that only phase one was privatised. We know we are truthful. We know we have through each and every phase of the privatisation transparently. Most importantly, Dangote was our competitor and we could not have tried to play in front of Dangote so that also ensured a second safety net. The International Finance Corporation funded our acquisition when we had won and International Finance Corporation did their own due diligence and they have their report on their website. You can also demand and we also provide their own report on the due diligence and their value of the assets. All these international agencies were involved in the privatisation process. Even the bidding process was live on television. I was a participant. We all know that Dangote bided $135 million. We bided $215 million and we increased our bid by $100 million when we were asked to revise our bid in fifteen minutes. Everything was transparent. So, we have no fear on that. We have gone far that going back is very difficult because if the probe says something else, we will like to get our refund of $1.5 billion investment. We have given dividends more than $600 million plus to federal and state governments. We have paid $200 to $300 million of taxes. All these are value addition.

Pioneer status tax

One thing I can say as Indorama Group is that we follow the rule of the law. If there is a pioneer status law, we have applied for it and we have gotten it as per the law, no special request was granted. We don’t even send letter to the Presidency or anywhere for special favour or grants. The question is whether it is important to have pioneer status, yes it is. In fact, it is too low and that is why no investment is coming to Nigeria. In the last 20 years, countries like Iran, Qatar, Saudi Arabia, Quwait and all the Middle East, including southeast Asia, in totality would have gotten $100 to $120 billion investment in petrochemicals and downstream gas. In 20 years, Nigeria got nothing. Yet it has one of the highest gas reserves in the world. The question is that nobody is paying attention to proper incentives for the new investors to come in. Companies like Exxon-Mobil and Total are one of the largest petrochemicals producers in the world. They have one of the largest petrochemicals complexes in Saudi Arabia, in Qatar, in Singapore but they did not find time to invest in Nigeria. Somebody should question that and the reason is that Nigeria, the economic team of Nigeria, has never focused on the petrochemicals investment drive for this country. Today that the crude oil price has gone down, everybody is talking about non-oil base revenue. But non-oil base revenue doesn’t come overnight. It takes years to calculate and cultivate. If you can imagine Qatar, which has huge amount of oil and Saudi Arabia, which has huge amount of oil investing more than $60 to $70 billion in the last 20 years just to harvest the potentials of gas and non oil business, they were very smart. They knew that oil prices may go up and down but if you go into petrochemicals, you enter into fertilisers, you enter into LNG, Nigeria was one of the first to enter into LNG, but it entered and it stopped. Qatar has more than 60 trains of LNG. Nigeria started four, five, six and seven.

If you invest $1 million in Nigeria, you will still get the pioneer status of five years and if you invest $1 billion, you still get five years irrespective of the quantum of investment. It should have two phases: segment specific and sector specific incentives where Nigeria can focus whether it is agriculture, whether it is petrochemicals, whether it is gas, whether it is power. You should have sector specific incentives. It should also have to do with what you have invested. They have to be scientific about the incentive.

What Indorama is doing differently

It has been proven globally that government has no business in doing business. When it comes to petrochemicals, refineries where day-to-day decisions have to be made, bureaucracy does not work no matter how efficient the government is. If a petrochemical plant has a breakdown and you need to fly in engineers tomorrow, I sitting here can say let’s fly them in. Even before that happens and our people say this can happen and we should bring in engineers, I have the power to bring them in, even if it may be a wrong decision. So, you need a lot of actions which are based on preventive maintenance. But this does not happen in government establishment. Government’s role is to create the enabling environment for businesses to thrive.

This place was run more as a government organisation. The leadership here today we are responsible for everything. We cannot blame anybody for anything but on us. So, day and night, we take care of this place but if you keep retiring and transferring the MDs, nobody will have the ownership. The most important aspect of running petrochemicals is that you need to have spares in place because you cannot afford the plant to shut down and we did that when we took over from NNPC and that is the world class management that we are talking about. In the fertiliser plant, we have invested more than $25 million in the spare parts, even before the plant takes off. In Eleme Petrochemicals, we invested more than $80 million in spare parts when we took over and that is why we are successful and it happens in all the petrochemicals in the world. It is not as if we have done magic. It is the basic rule of management of a petrochemicals plant. Preventive maintenance, proper shut down every 24 to 36 months are important. Like this plant, when we took over in 2006, it was started in 1995 and for 11 years, not a single shut down had been done. They had not done Turn Around Maintenance (TAM). It was never done in 11 years and you can imagine the position of the plant.

March 21, 2016