The Bureau of Public Enterprises (BPE), whose boss Ms. Bola Onagoruwa, was sacked yesterday, has recorded more failures than successes in its 13 years of existence, writes LEKE SALAUDEEN
A little over a year ago, the Senate recommended the sack of Bola Onagoruwa as the Director-General of the Bureau of Public Enterprises (BPE). The Presidency turned deaf ears, making the recommendation one of the several that President Goodluck Jonathan would ignore. It is unclear if yesterday’s sack of the BPE boss has anything to do with the Senate’s findings on how she ran the agency.
The Senate’s Ad hoc committee on Privatisation andCommercialisation was set up to investigate the privatisation and commercialisation activities of the BPE from 1999. In its report, it said Ms Onagoruwa was unfit to hold the position.
Senators were not happy with President Goodluck Jonathan’s decision to shun their resolution on BPE. At a session earlier in the year, while debating an amendment bill on the establishment of the BPE, they recalled a resolution seeking the sack of Onagoruwa.
Senator Uche Chuklwumerije said: “We recommended sanctions against key officials of the BPE but the president hasn’t done anything about it. It will get to a point of threatening him with impeachment. I will move the motion.”
The committee, which indicted Onagoruwa, was chaired by Senator Ahmad Lawan. Other members are Senators Babafemi Ojudu, Ali Ndume, Philip Aduda, Ifeanyi Okowa, Hope Uzodima and Mohammed Magoro.
The report said: “Dr Julius Bala should be investigated by anti-graft agencies for giving approval to Folio Communications Limited for the illegal sale of assets of Daily Times Nigeria Plc and that Director-General, BPE, Ms Bolanle Onagoru-wa, be relieved of her appointment for gross incompetence in the management and for illegal and fraudulent sale of the five per cent of Federal Government’s residual shares stated in Eleme Petrochemicals Company Limited (EPCL).”
The report added that former Directors-General, Mallam Nasir el-Rufai, Dr Julius Bala and Mrs Irene Nkechi Chigbue, should be reprimanded by the National Council on Privati-sation (NCP), “for seeking approval directly from the president instead of the NCP, as stipulated in the Public Enterprises Act 1999.”
The committee urged the NCP to rescind the sale of Transcorp Hilton Hotel, for failure of the core investor to deliver on the fundamental provisions of the share purchase agreements.
The committee also advised that the NCP should rescind the sale of Abuja International Hotels Limited (Nicon Luxury Hotel), for failure of the core investor to also deliver on the provision of the share purchase agreement/post-acquisition plan.
It equally asked NCP to rescind the sale of Daily Times of Nigeria (DTN) Plc to Folio Communications Limited, in keeping with the court judgment.
It added that the 140,252,900 shares allotted to Folio Communications Ltd be returned to DTN Plc, insisting that DTN Plc had paid for 140,252,900 shares, that is 56 per cent of its shares and that Folio Communications Ltd was no longer a shareholder of Daily Times of Nigeria Plc.
The committee said the sales of assets of Daily Times Nigeria Plc by Folio Communications Limited and its directors should be investigated by anti-graft agencies and the sold assets recovered
The committee, in its recommendations, stated that the BPE should source for funds through budgetary means, to settle outstanding staff liabilities in ALSCON (N2.7 billion), Delta Steel Company (N5.2 billion) and Federal Seperphosphate Fertilizer Company (N73 million).
It also asked that the share purchase agreement of Volkswagen Nigeria Limited, now VON Automobile Nigeria Limited, should be rescinded for non-performance and re-advertised for sale.
The BPE was a child of necessity. Established in 1999, it got the mandate to breathe life into comatose public-owned companies by selling them to private investors. The National Council on Privatisation (NCP) was also established to supervise the BPE. These two agencies were given legal teeth through the promulgation of the Public Enterprises Privatisation and Commercialisation Act 1999.
Since then, it has privatised or concessioned no less than 120 companies. But, sadly, only a few can be pointed at as the success story of the much-taunted exercise.
By the admission of the BPE before the Senate ad-hoc Committee on the Privatisation of Public Enterprises, only 10 per cent of the 120 government companies sold are properly functioning.
Eighty per cent of the privatised concerns are finding it difficult to remain in business.
A recent BPE in-house stock-taking aimed at compelling the new owners to adhere to post acquisition plans found a huge chunk of them in bad shapes.
According the appraisal, the ailing enterprises are bedeviled by huge debts, energy crisis, infrastructure collapse, escalating production costs and unfriendly government policies.
Ever since it was sold, the Daily Times of Nigeria (DTN) has been involved in controversies and legal struggles related to the sale value as well as the allegations that the buyers (Messrs Folio Communications) have not revived the media organisation– in line with terms of agreement. Most of the valuable properties of the company in Lagos and London have been sold by the buyer. Lately, a bench warrant was issued by the court against the firm.
Of the six privatised hotels, the BPE singled out NICON Luxury Hotel along with Sheraton Hotel & Towers (both in Abuja) as “lagging behind in the implementation of their rehabilitation projects”.
NICON Luxury Hotel, acquired by Global Fleet, has failed to meet up with share purchase agreement. Hans Gremly, the German firm and new owners of Sheraton Hotel & Towers, has not lived up to expectation.
The general debt profile of many of the privatised companies seems astounding, going by the details of the BPE report. The National Clearing & Forwarding Agency (NACFA), for instance, owes a staggering N10.2 billion incurred from huge investments that are apparently not yielding profit. The outfit was sold to Joroton International Agency Nigeria Limited.
Also, Vehicle Assembly Plants (VAP), Peugeot Automobile Nigeria (PAN) and the Anambra Motor Manufacturing Company Limited (ANAMMCO), are indebted to the tune of N25 billion and N3 billion respectively, as unpaid bank loans. Acquired by ASD Motors, PAN has laid off 226 workers. Lack of patronage and unfavourable policies stifle its operations. The National Insurance Commission (NAICOM), is owing the BPE a whopping N1 billion, which it used to recapitalise the outfit in 2007.
Apart from the debt burden, ANAMMCO is in crisis and does not have a structure in place to run the company,” discloses the BPE, adding that “activities in the firm are almost coming to a halt due to conflict among shareholders.” The report stated that all the VAPs are struggling to survive in the face of the threats from unfavourable policy, and having difficulty accessing funds from banks due to high overhead costs and high interest rates.
The other VAPs are: VolksWagen of Nigeria (VON) Automobiles Limited, Leyland Nigerian Limited, Steyr Nigeria Limited and National Trucks Manufacturers Limited.
The oil palm companies (such as those at Ode Irele, Ihechiowa and Ayip Eku) have a peculiar power challenges, as they are all yet to connect to the national grid. They rely totally on generators with the attendant high cost.
The BPE frowned at the performance of enterprises in the iron and steel sector and particularly those that were privatised through guided liquidation.
The case of Jos Steel Rolling Mill is pathetic. Jardin Holding BV of Ukraine and Nigerian Zuma Steel Company, who invested 75 and 25 per cent stakes respectively are locked in war of ownership that has stifled the resuscitation process of the plant.
Osogbo Steel Rolling Mill, which was sold to Kaura Holding, a subsidiary of Dangote Group is still moribund. No production has taken place since it was concessioned in 2006.
So also is the fate of Delta Steel Company, Aladja, which was acquired by Global Infrastructure Nigeria Limited in 2004. It stopped production in October 2007 due to lack of raw materials. The company has laid off 2,878 workers.
The Osogbo Machine Tools, which was privatised through core investor sale, has not fared better. It is yet to commence production.
In the same vein, the Ajaokuta Steel Complex which had 60 per cent of its stake concessioned to Indian Global Infrastructure Nigeria Limited on May 17, 2007 has since been returned to the Federal Government while its 5,000 workforce has been reduced to around 1,000.
But it is not all sad story. The hotels, whose performance, are regarded as being satisfactory and have either completed or carried out substantial repair and reconstruction of physical infrastructure, include Transcorp Hilton Hotel in Abuja, Central Hotel in Kano, as well as Ikoyi Hotel and Federal Palace Hotel, both in Lagos.
There are also other companies doing well in other sectors. One of such is the Aluminum Smelter Company of Nigeria (ALSCON).
Located in Akwa Ibom State, ALSCON was almost dead before it was privatised. Though it produced its first metal in 1997, it never operated at installed capacity before it suspended production two years after.
In February 2007, a company, RUSAL acquired a majority stake in the ALSCON.
The resuscitation of the firm worked and ALSCON has commenced large scale production of aluminum products.
Also doing well is the National Fertiliser Company of Nigeria (NAFCON).
It was sold to Notore Chemical Industries Limited in 2005. The company was one of the showpieces of Nigeria’s manufacturing sector, but it collapsed in a manner characteristic of most government enterprises.
The Eleme Petrol-Chemicals Company Limited (EPCL), which was privatised in 2006 by the Federal Government has also shown good results. Prior to its take over by Indorome Group, its core investor and majority share owners, the plants were in very bad shape.
Within six months, the production of poly propylene and polyethylene begun at the new EPCL for both local and foreign markets. Its high density polyethylene is now exported to France, Spain, Italy, Belgium, Portugal, Turkey, India, China, Pakistan, Sri Lanka, Napal, Vietnam, Ghana, Tanzania, Togo, Kenya, South Africa, Egypt, Algeria, Morocco and Ivory Coast.
The exports are said to account for 10 per cent of Nigeria’s non-oil exports. EPCL now contributes US$80 million to Nigeria’s Gross Domestic Products (GDP) through its export earning. The company has also created more than 1,000 direct and indirect jobs for Nigerians, especially in the oil-rich Niger Delta.
The National Trucks Manufacturers (NTM, Kano) was shut down for 15 years before it was privatised. Now it is fully operational with over 350 workers. The company now assembles agricultural tractors, light and articulated trucks, lorries and tippers, 14-seat buses, pick-up vans and motorcycles. Its turn over has grown from millions in 2003 to billions.
Another good side of the privatisation exercise is the Savannah Sugar Company Limited.
The company was acquired by Dangote Industries Limited and its Technical Partners, the Kenana Group. The Sudanese firm is the biggest sugar production group in the world. Before the company was privatised in 2002, its installed capacity stood at 50,000 to 55,000 tonnes per annum.
Dangote Industrial Limited officially took over in 2003 while its technical partners came on board in 2004. Since then, tremendous efforts have been made to resuscitate the company.
Katsina Rolling Mill was bought by Dana Holdings in 2006, the rolling mill is performing till-date. Dana Steel broke even at Katsina Rolling Mill within three years.
Before it was acquired, the rolling mill was in bad state of health. This was evident by the refusal of private investors to bid for it in 2001 when the BPE put it on offer.
But, with the sad stories of the exercise overshadowing the good sides, analysts say Nigerians and Nigeria have lost rather than gain from it.
