The 2008 privatization transaction year is ending with many of privatized firms looking more controversial than ever, while many more are already on the privatization slab in the coming year(s).

While there were less concessions, privatizations or commercialization in 2008 compared to 2007, there are controversies associated with those already privatized.

Although about 31 state-owned firms were privatized in 2007, only one, namely; Nigerian Newsprint Manufacturing Company Limited, Oku-Iboku, Akwa Ibom state was privatized in the 2008 transaction year, information on the Bureau of Public enterprises' website showed.

Negris Holdings Limited, an indigenous company took over ownership of the paper manufacturing company after paying the winning bid price of $32.1 million in July. Under the sale agreement, the liquidator was to pay staff liabilities and entitlements of about N1.2 billion while creditors of the liquidated company are due to get N148 million verified debts.

Other highlights of the privatization activities in 2008 are summarised below:

Nigerian Telecommunications Limited (NITEL)

NITEL is arguably the privatized government firm that has generated the most controversies, emotion and public discuss. It was privatized through core investor sale to Transcorp Plc in 2006.

After a botched sale under controversial circumstance during the reign of former FCT Minster, Nasir el-Rufai as BPE's head, now under the watch of Mrs. Irene Chigbue, Transcorp Plc, got it at the cost of $500million (N63 billion) with a commitment to the federal government to turn its fortune within a year or face revocation. Ever after, the fortune of the foremost telecom company has nosedived, leaving more questions than answers.

Following the non performance of Transcorp after one year, the federal government invoked the Share Sale and Purchase Agreement (SSPA), calling on the company to step down as core investor for a new one to be selected. The 51% shares to be given to the new core investor would be contributed by the federal government and Transcorp. This took place in December, 2007 but after one full year, a little seemed to have been achieved to restore the moribund NITEL.

In July, the BPE, with the approval of the National Council on Privatization (NCP) appointed BNP Paribas to provide advisory services towards the search for a new core investor. According to the time table released by BPE, the transaction would be completed in February 2009. But recent happenings are pointing to somewhat different directions. A consortium of banks including UBA, Union bank, Intercontinental bank, Wema bank among others had claimed ownership of NITEL upon hearing the plans to sell it to a new owner. The group claimed Transcorp borrowed about N75 billion to finance NITEL purchase which was yet to be paid back. Apart from that, the staff of NITEL and MTEL, the mobile arm of the national carrier are still having a running battle with Transcorp management, alleging non payment of arrears for several months and cannibalization of NITEL/MTEL's property.

Another controversy that arose was the refusal of Transcorp to accede to the power of attorney to relinquish some of its shares to BPE which would in turn be given to the new core investor as agreed by government and Transcorp. Media report also had it that 6.67% equity have been ceded to Investor International London Limited (IILL) for the $131million initial payment it made in its bid for NITEL in 2002 which was revoked for its inability to pay the balance. Another reason speculated to delay the February 2009 date line is that the Federal Government which owns 49% of the shares in NITEL has whittled down its shareholding considerably by ceding 15% of the shares to the Nigerian Communications Satellite, NigComSat and with that if IILL, the market might be very uneven for the government.

The journey to privatize NITEL has been a long and assiduous one. It started in 2000. It was stopped in 2002, when IILL, then investor failed to pay the $1.317 billion it offered. In 2003, Pentascope was appointed by government to run a three year contract to prepare the sleeping giant for sale but this failed following alleged embezzlement and incompetence. In 2006, Orascom of Egypt offered $256.53 million but this was rejected by the federal government on the ground that it was ridiculously low before the coming of Transcorp in November 14, 2006.

PPMC, NGC, EPCL et al

The Petroleum Pipeline Marketing Company (PPMC), Nigeria Gas Company and Eleme Petrol Chemical Limited are among others that raised a lot of dust during the 2008 transaction year. Following the release of privatization and commercialization timetable in the next two to three years, workers in the oil industries raised palpable fears of loss of jobs and other benefits should government go ahead to change the ownership structures of the oil firms.

The National Union of petroleum and Natural Gas Workers (NUPENG) and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) had issued a 14-day ultimatum for the public reversal of the plan by government risk their industrial action as well as the reversal of the sale of Eleme Petrol Chemicals. The BPE issued statements denying such privatization plans but that did not allay the unionists' fears until a joint world press conference was held by the management of NNPC and BPE before it was laid to rest.

According to BPE, "It has become necessary to reiterate that there is no immediate plan by the NCP/BPE to sell off any enterprises in the Oil and Gas sector" adding that "What was released after the last meeting of NCP was a draft work plan for all outstanding privatization, commercialization and restructuring of public enterprises listed in the Public Enterprises (Privatization and Commercialization) Act. The work plan for over 105 public enterprises was for the next three years. The work plan does not contain any immediate or short term plan for the divestment of FGN's interest in public enterprises in the Oil and Gas sector. There is nothing in the work plan for further divestment of shares of EPCL other than to workers and the host community."

Govt sells 49% stake in Sheraton Hotels

In August, the BPE, following the approval of the divestment of the remaining 49% government shares in Capital Hotel Plc (owners of Abuja Sheraton Hotels) by the NCP, a total of 637,919,840 shares at N6.50 per share, representing the prevailing market price was sold to the Nigeria public at the floor of the Nigeria Stock Exchange (NSE). The shares were sold on the floors of seven stock exchanges across the nation to satisfy the requirement of the privatization law that such sale be done on the basis of equality of federal constituencies. These include; Abuja, Lagos, Ilorin, Yola, Onistha, Kano and Port Harcourt.

The core investor sale of 51 % to Hans Gremlin Nigeria Limited was concluded in 2002. Capital Hotels Plc was partially privatized by the sale of the company's shares to the core investor (Hans Gremlin). Prior to its initial privatization, the hotel was heavily indebted to foreign creditors to the tune of $300 million as at December 31, 2000.

BPE uses N150 billion

The Bureau of Public Enterprises (BPE) said it has spent N150 billion to settle the arrears and salaries of affected workers in privatized companies. It said, "Workers have received payments from BPE for the settlement of labour liabilities, including salary arrears, terminal benefits and pensions"

The breakdown of some the expenses indicated that NITEL/MTEL staff got N60.590 billion, Nigeria Ports Authority; 31 billion, Delta Steel; N5.1 billion, NICON Insurance; N3.8 billion and NAFCON; N8.5 billion. Others include: Savannah; N1.2 billion, Bacita; N2.3 billion, Sunti; N107 million, Nigeria Airways: N34.4 billion, Nigeria Re N751 million, ALSCON: N1.04 billion and Benue Cement: N636, 327, 704 million.

Privatization proceeds: The big question

Another issue that took the front burner in 2008 was the whereabouts of the privatization proceeds. It took a controversial dimension when chairman of the Revenue Mobilisation and Fiscal commission told Daily Trust that the BPE refused to remit the proceeds to the federation account as was statutorily required. The BPE boss, Mrs Irene Chigbue however maintained that the money could be found in the Privatization Proceed Account with the Central Bank of Nigeria. But effort to trace the money to the account has been unsuccessful. The CBN had refereed Daily Trust to the Office of the Accountant General of the Federation, but the National Assembly has intervened bringing to fore that there is no harmony between the records of BPE and those on the Accountant General's office.

Mrs. Irene Chigbue had said: "From 2003 to 2008, the sum of N74, 791, 465, billion was deposited in the privatisation proceed account domiciled in CBN while the sum of N56.836billion was also transferred into to the Consolidated Revenue Fund."

According to Alhaji Haman Tukur, who is the chairman of the Revenue Mobilisation and Fiscal Commission (RMFC), "we wrote the BPE to bring all the proceeds from the sales back to Federation Account and they have not responded since they started selling these assets. Legally, the proceeds belong to the federation account. In practice, we have not received such money. So, to us, where is the money kept? The answer we don't know."

Allegation of corruption against BPE boss

The year was also dotted by the petition of a former Assistant director in BPE, Mr. Ajayi Olatunji Olowo against the privatization agency's boss. Mr. Olowo accused Chigbue of corruption, under hand deals and nepotism in running the office. He was subsequently relieved of his job but that did not stop the anti-graft agency, Economic and Financial Crimes commission (EFCC) from wading into the weighty allegations. The BPE boss denied any wrong doing but she is still being investigated as the EFCC has not come out with its findings.

Transport sector reforms

During the year, the National Council on Privatisation (NCP) approved that eight bills prepared by the Bureau of Public Enterprises (BPE) be forwarded to the Federal Executive Council (FEC) for onward presentation to the National Assembly for passage.

The Bills are; the Railway Bill, National Inland Waterways Bill, the Federal Competition and Consumer Protection Bill, Postal Bill, Federal Roads Authority Bill; National Roads Fund Bill, the National Transport Commission Bill and the Ports and Harbour Reform Bill.

The bills are meant to ensure legal frame works for the desired reform were developed to attract participation in the transport sector.

2009 and the task ahead

The Nigerian Television Authority (NTA) and the News Agency of Nigeria (NAN) are among 105 government's agencies that will be consumed by commercialization and privatization in the next one year by the federal government, the BPE announced during the year under review.

A key transaction in the plan is the privatization of Petroleum Pipeline Marketing Company (PPMC) which will go through privatization process from October 2008 to October 2009. So too will the Nigeria Gas Company (NGC) go through privatization process from September 2008 to June 2009, according to the BPE. The BPE will initiate and seal the process of selling the outstanding 15% government equity in Eleme Petrochemical Company Limited (EPCL) to workers (2.5%) and host community (7.5%) from October 2008 and March 2009. These lines probably irked workers to threaten industrial action which was eventually reconciled with BPE publicly dropping the plans.

The BPE will also resolve the recapitalization issue of NICON Insurance and put on public offer the remaining 30% government shares in the company starting from August 2008 to May 2009. Going for public offer too are the remaining 49% government shares in Nigeria Re-Insurance between September 2008 and July 2009 and remainder of Federal Government shares in Transcorp Hilton, before September 2009.

The deferred public offer of the remaining government shares in NIGERDOCK Plc will also be sold by the Bureau from October 2008 to March 2009.

Seven coal blocks in Okpara, Onyeama, Amasiodo, Ezima, Inyi, Ogwashi-Azagba and Owukpa will be privatized in conjunction with the Ministry of Mines and Solid Minerals from October 2008 and November 2009.

On the commercialization slab too from March 2008 to 2010 are seven national parks - Chad Basin National Park, Cross River National Park, Gashaka Gumti National Park, Kainji Lake National Park, Kumuku National Park, Okomu National Park and Old Oyo National Park. Also in the commercialization train are 11 River Basin Development Authorities (RBDAs). They are: Anambra-Imo, Ogun-Osun, Hadejia Jama'are, Sokoto Rima, Upper Niger, Lower Niger, Chad Basin, Upper Benue, Lower Benue, Niger Delta, Cross River and Benin Owena.