Update1: FG to sell own stakes in privatised assets

The Federal Government is working out plans to divest own shares in privatised enterprises, Alex Okoh, newly appointed director-general of the Bureau of Public Enterprises (BPE) has said.

Okoh said that the BPE is presently undertaking a quick assessment of privatised enterprises, especially in the petro-chemical sector, with a view to divesting the Federal Government shares through the capital market.
In the petrochemical sector, the most prominent asset in which the FG still has significant equity stakes is the Eleme Petrochemicals, which has since been renamed Indorama Eleme Petrochemicals, after it was privatised. The government owns about 25 percent of the company’s stakes.
Eleme Petrochemicals is considered to be one the most successful privatised companies in the country.
The Federal Government also owns 15 percent stakes in Aluminium Smelter Company, Ikot Abasi and 28 percent stakes on Dowell Schlumberger Nigeria Limited, as well as in other privatised assets. Okoh did not state which of these assets would be placed on sale first.

Acting President Yemi Osinbajo had on 22 June, inaugurated the National Council on Privatisation (NCP) to restart Nigeria’s privatisation process. The last time the FG sold major assets was in 2013, when the power sector privatisation was concluded. Since then, no major assets sale has taken place, despite calls on the government to sell down stakes in major assets like NLNG to help it tide its financial difficulties.
Nigeria is hoping to raise N35bn from sale of assets to partly fund the N7.441 trillion budget for 2017.

The National Council on Privatisation is a think tank sponsored by the Nigerian government to determine the political, economic and social objectives of the privatisation and commercialisation of Nigeria’s public enterprises.

The NCP, which is chaired by the Acting President, in his position as Vice President, holds the authority to approve public enterprises to be privatised or commercialised, the legal and regulatory framework for the public enterprises to be privatised, as well as determine whether the shares of a listed public enterprise should be by public or private issue, or otherwise.

“The BPE is working with core investors in certain privatised enterprises sold by deferred public offering to ensure that they sell at least 20% of such entities to the market via public listing”, Okoh said, speaking at the 2017 annual national workshop of the Chartered Institute of Stockbrokers in Abuja.

He also said the privatisation agency would develop policies to attract additional private sector capital into the privatised companies.

The FG and states also have post privatisation stakes in the generation and distribution companies, even though they do not fall in the petro-chemical sector but analysts have advocated that the government stakes in them should be sold.

At the event, Okoh told the stockbrokers that public listings remain a strategic objective of the reform and privatisation programme of the Federal Government.

According to him, this would ensure that they are capable of moving privatised entities to the desired level in order to make them attractive for public listings.

In a paper titled: Creating An Enabling Environment For Public Listings Of The Economy’s Commanding Heights: The Case For Telecommunications & Energy Sectors, Okoh said developing policies to attract additional private sector capital into the privatised companies would eventually give confidence to the business and encourage listing.

“The BPE would ensure that technical partners are retained in the privatised enterprises over a long period of time”, he added. There would be continued engagement with the relevant authorities to seek certain waivers where required, to make public listings more easily achievable for the privatised entities.”

Okoh called for the establishment of an institutional framework to reach targets in both public and private sectors and to identify quick wins, medium term goals, long-term achievements.

Also speaking at the event, a former Director-General of the BPE, Benjamin Ezra Dikki, called on the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) to set up a committee to work on the possibility of getting the telecommunications companies in the country to list on the capital market.

 

Onyinye Nwachukwu, Abuja