BPE targets N493bn from privatisation of government assets
...says no plans to sell TCN
The Bureau of Public Enterprises (BPE) is hopeful of generating over N493.40 billion net revenues this year from the privatization of up to 36 government assets to help fund the N13.6 trillion current budget.
Alex Okoh, BPE Director-General, BPE who announced this Monday in Abuja said the targeted projects have been categorised under five segments with 22 of them carried over from 2020.
Okoh said Energy component has been projected to generate some N484.476bn; Industries and Communications, N9.239bn; while Post Transaction Management would bring in N212.458bn.
But the Development Institutions and Natural Resources would rather come at a cost of N148.887bn; and Infrastructure and Public Private Partnership, N626.2bn as approved by the National Council on Privatisation (NCP).
“The country’s fiscal space is getting increasingly constrained, as a result, government cannot provide the resources required to meet all of its obligations and bridge the huge infrastructure gap, therefore, the most feasible option is to attract private investments,” Okoh stated at the press meeting.
Meanwhile, the BPE has so far generated about N1 trillion from 234 concluded transactions of previously government-owned enterprises from various sectors, including in agriculture, banking and insurance, cement, energy construction and services, as well as hotel and tourism. Others include Industry and manufacturing, oil and gas, port, power, mines and steel, automobile, paper and packaging, sugar, as well as telecom.
Okoh, however said the BPE dropped its initial plan to privatise the nation’s four refineries following the Federal Government decision to rather rehabilitate them.
“We have four refineries in the country with a total capacity of about 480, 000 barrels and they are all at various stages of oil production. Warri’s production capacity today is around 5%, Port-Harcourt would be around 19% and Kaduna zero.
“Our plan initially was to suggest to the Federal government to privatize these refineries, especially given the fact that we already have private investors going into the space. Dangote is looking at about 600,000 to 650, 000 barrels a day, the combined refining capacity for all of our core refineries as government is not even up to one. So we are going into a space where competition will kill you.
“But NNPC believes that the plants can be rehabilitated and they have gotten government approval to go ahead and rehabilitate them. So we have dropped the privatisation from our 2021 plan and following with key interest how the rehabilitation programme of the NNPC will go from here.
On Ajaokuta Steel Company, Okoh said efforts are being made to especially resolve the litigation issues which would then pave the way forward for the moribund asset.
He equally explained that the government could not conclude the earlier, Initial Public Offer (IPO) plans for Nigerian reinsurance, SAHCOL, Eleme petrochemicals and Machine tools Osogbo due to market volatility.
“We wanted to phase the process, so we started with SAHCOL which is an aviation ground handling company privatized in 2009 or thereabout. The response wasn’t too encouraging and for us, we adjudge the Capital market to still be a bit uncertain in terms of being able to give or retain value, it’s still quite highly speculative now and the other companies especially Eleme petrochemicals were very nervous having seen the outcome that was not so good for SAHCOL. So, we slowed down until the stock market becomes more stable before we proceed with the other public offers.”
He also emphasized the federal government resolve to divest 100% of its holding in the five National Integrated Power Plants (NIPPs) put up for sale, following relevant approvals, and now at the stage of Expression of Interest.
The five NIPPs are: Benin Generation Company Limited at Ihovba, Edo State; Calabar Generation Company Limited, Cross River State; Geregu Generation Company Limited, Kogi State, Olorunsogo Generation Company Limited, Ogun State and Omotosho Generation Company Limited, Ondo State.
Okoh said the rationale for privatisation is particularly to ensure they are efficiently run, as well as generate revenue for the government.
BPE’s current initiative in its 2021 work plan and additional roles in the Public-Private Partnership (PPP) space is, therefore, poised to impact the economy positively, according to the DG.
“This is in the areas of infrastructure development, improved health care service delivery, power generation and supply, employment creation, food security and human capital development,” he said.
At the meeting, Yunana Malo, Director, Energy Department, BPE said there are no plans to privatise the Transmission Company of Nigeria (TCN), even though transmission has been the weakest link in the power sector value chain since onset of the reforms.
He said: “Government is not thinking of privatizing TCN, but how private capital can be brought into the transmission component without giving out the ownership of the transmission component.
“So, we are thinking of concessioning segments of the transmission area so that we can have somebody building the high tension lines and covering areas that have not been reached or to maintain the existing ones to the maximum value.
“So, the idea is not to privatize, but to reform and make it more efficient, bring in private sector operational modalities within the transmission company.”
Malo further clarified that the Federal Government’s 40 per cent stake in the Distribution Companies (DISCOS), remains intact and protected by BPE.