29 June 2014

Nigeria: From Sale of 122 Enterprises, Govt Rakes in N251.5 Billion

Abuja — From a total of 122 former government enterprises that were privatised in 13 years; that is from 1999 to 2012, the federal government has raked in a gross proceed of N251.5 billion while a net proceed of N147 billion has been remitted to the Privatisation Proceed Account domiciled with the Central Bank of Nigeria (CBN), the Bureau of Public Enterprises (BPE) has said.

This gross amount is however separate from the $2.5 billion that was paid by preferred bidders for 15 out of the 18 successor generation and distribution companies created from the unbundling of defunct Power Holding Company of Nigeria (PHCN) in the ongoing reform of Nigeria's power sector.

According to the Director General of the BPE, Benjamin Dikki, this gross proceed were realised from the sale of such government enterprises like Unipetrol, now Oando, Ashaka Cement, African Petroleum (AP) now Forte Oil, West Africa Portland Cement Company (WAPCO), Benue Cement Company (BCC), the National Oil and Chemical Company (NOLCHEM) now Conoil as well as the Cement Company of Northern Nigeria (CCNN), now Sokoto Cement.

Dikki said in a presentation he made at the inaugural annual lecture series of the Just Friends Club of Nigeria (JFCN) Friday in Abuja that with the federal governments' initiation of a privatisation policy, various economic sectors of the country that have had to go through the process now benefits from private sector capital injection and prudent management.

He noted that with privatisation, no treasury allocation has been made to the privatised enterprises which hitherto constituted themselves as drain pipes for scarce financial resources; while new operators of the enterprises now pay corporate tax to the government, invest heavily to rejuvenate underutilised and moribund assets which in turn help to improve Nigeria's socio-economic standing.

While reviewing government's involvement in business ventures, Dikki explained that the twin policy of direct investment in Nigeria's economy and indigenisation of the economy by government did not produce the desired economic result but rather encouraged corruption, misuse of monopoly powers and defective capital structure. "Billions of naira went into construction of refineries, steel plants and rolling mills, establishment of development/industrial banks, oil companies, telecommunication companies, electricity plants, airports and sugar companies.

These were managed as government owned companies and enterprises. Over $100 billion was invested to create over 600 ventures, although they employed less than 500,000 workers, they created over 5000 board seats," Dikki said. He further explained that: "Substantial part of the non-performing debts owed to the London and Paris Clubs were loans to privatised enterprises, yet workers were owed salaries with huge pension liabilities that was about N2 trillion while the enterprises consumed over $3 billion annually as subventions and subsidies."

Dikki also stated that tax deductions at source such as Pay As You Earn (PAYE), Value Added Tax (VAT) and company income tax were not remitted to the tax authorities and despite legalised monopolies, subsidies, duty exemptions, privileges and treasury supports, these privatised enterprises failed to yield dividends or service.

In his justification of the government's privatisation policy, Dikki said: "Usually, the BPE recommends an appropriate sale strategy to the National Council on Privatisation (NCP) for approval, taking into cognisance of the peculiarities of each transaction. Privatisation transactions go through series of open and transparent stages of due process. Eleme Petrochemical Company has being revitalised and producing at over 90 per cent capacity, cement companies have being revived, expanded and made profitable while the banking industry has being completely revolutionalised that we no longer use tally numbers."

"Oil service companies like Oando, Conoil and others have expanded and are now profit driven, there are remarkable improvements in investments and ports operations, the Nigerian Truck Manufacturing Company that was shut down is back and producing; you can see that any sector you liberalise and set free from government control, you enable the private sector to invest in the sector.

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