The Bureau of Public Enterprises (BPE) is hopeful of raising some N266.852 bn privatisation proceeds across twenty transactions this year to partly fund the N10.5 trillion 2020 national budget signed into law last December by President Muhammad Buhari.
The optimism on the revenue projection was raised Alex Okoh Director- General of BPE, in Abuja on Wednesday, after difficulty by government to effectively sell some of its assets in previous years.
In 2018 and 2019, N350bn was projected from sale of some assets but did not happen.
“We have push back from the MDAs over sale of some of the assets. Now we have assessed all the risks and we will mitigate that with stakeholders’ meeting “, he said.
According to him, the N266.8bn is to be realized from conclusion of sale of Yola Electricity Distribution Company, Afam Power Limited and Afam three fast power; sale of Nigeria Integrated Power Project ( NIPP) ; sale of additional shares of Geregu to Amperion power, NMC houses- mineral house located in Ikeja, Lagos; sale of 11 remaining non-core assets of Nigeria Mining company ( NMC houses); Tafawa Balewa square complex; NIPOST and sale of remaining shares ( IPO) of Nigeria Reinsurance among others.
Okoh put total expected privatisation proceeds at N270.7 billion , but expenditure will take some N3.9 billion, leaving net balance of N266.8 billion to be paid into consolidated revenue account.
The twenty transactions are categorised into five divisions- energy (9) transactions with target revenue of N268.3 billion and expenditure of N2.1 billion; Development Institutions & Natural Resources ( 5 ) transactions with expected revenue sum of N440 million and an expected expenditure of N942.3 million; Infrastructure & Public Private Partnership ( I%PPP) with 3 transactions with nil revenue but N626.2 million expenditure; 2 Industries communication transactions with total expenditure of N220.1 million and post transaction management (1) transcription with revenue projection sum of N1.9 billion and expenditure sum of N45 million.
“We have concluded Afam transaction with a bid of N105 billion for which was won by the Transcorp consortium, so we are negotiating transaction document especially the purchasing agreement, once that is signed hopefully before the end of this month, that will kick in 25 percent payment and then they have 180 days within which they will have to pay the 75 percent.
“We are also close to closing YOLA, the winning bid is N90 billion, won by Quest Electricity company, we are also negotiating the transaction document, so this will happen within this fiscal year.”
Reacting to heightened calls on government to hand over power assets, particularly the Distribution Companies to new investors for effective management, Okoh said the best option will not be to re-sale of Nigeria’s power assets, saying it will amount to a fundamental error.
Okoh believes that Discos are failing because the market dynamics of maintaining power is faulty and that there is need to adjust the price structure.
His position comes contrary to opinions, particularly the National Economic Council, NEC last month which announced move to reverse the 2014 power privatization following recommendations being proposed by its Governor Nasir el- Rufai led committee.
But Okoh said the problem of Nigeria’s power sector is not about the privatasation but the design of the sector reform programmes and implementation.
“I do not support the re-nationalization of power assets because it will be a fundamental error to resale,” he told reporters.
“Implementation has been the problem and there has to be a concerted approach to the implementation of the power reform programme.
“This is not the time trade blames.”
“The World Bank Power Sector Recovery Programmes is a good one we need to ensure to implement effectively,” Odoh added.
He said already there are various government initiatives to address this issue.
“The presidential power initiative which we refer to as the Siemens project actually provides a credible way to address the challenge same in the infrastructure, the transmission and distribution.
“What this promises is that by the end of 2021, end to end availability of power would be 7,000 megawatts. Part of the challenge in the power sector is that there is excess capacity in generation, low capacity in distribution and the transmission is a serious constrain at the end.
He said the country’s current power pool is about 13,500mega watts but transmission can only will not more than 5,000mw. “This continues to lead to frequent system collapse while the capacity to distribute is also seriously constrained.”
He said the mismatch in capacity in the general value chain is being resolved and that by the end of 2021, 7,000mw of the generation capacity should hopefully flow to end users without transmission and distribution constraints.
“By 2023, we would scale that up to 11,000 mw, and post 2023, we want to scale that up to 25,000 mw.”
According to him, “that’s the plan and it has to be a strategy concerted effort by all stakeholders in the power chain.
On status of the protracted sale of Bank of Agriculture (BOA), he said the delay is a result of the complexity of the transaction and that BPE had underestimated the enormity of the challenge.
He however noted that BPE was in talks with the Central Bank of Nigeria ( CBN) with an understanding to write off part of its huge Non Performing Loan (NPL) put at about N97 billion. The bank’s shareholders fund is put at negative N35 billion.
“BOA is a complex transaction due to poor management over the years. We under estimated enormity of the challenge. We have taken a decision to keep BOA, so hopefully we can concluded the recapitalization this year “,Okoh assured.
Responding to specific issues on poor performances of privatised enterprises conducted by BPE, Okoh admitted cases of glaring failure in some enterprises with particular reference to Nicon insurance and Nicon Luxury hotel which he blamed on the selection of the core investor.
He admitted that BPE could fail in sufficient diligence on prospective core investors bidding for government assets, but that the privatization process is being worked on.
Onyinye Nwachukwu, Abuja