Privatisation of Refineries, NITEL, FG Targets N535.3bn in 2014

The Director-General, Bureau of Public Enterprises (BPE), Mr. Benjamin Dikki, yesterday revealed that the bureau is expected to generate about N535.3 billion from definite privatisation transactions this year. Dikki said an additional N211.3 billion was expected to be realised from prospective transactions when executed.

The disclosure came as Vice-President Namadi Sambo assured the Senate Committee on Privatisation of federal government's determination to ensure the success of the privatisation programme.

It was further revealed that the federal government intended to go ahead with the proposed privatisation of four refineries including those of Port-Harcourt (1 and 2), Warri and Kaduna and also conclude the sale of SPDC assets.

However, Dikki said the sale of the refineries would only commence after due approval by labour unions which he said had already expressed their willingness to dialogue with government to develop appropriate business model for the refineries.

He said this will be followed up and should lead to the inauguration of the privatisation process in 2014.

To this effect, he said the steering committtee was expected to commence work and draft an appropriate framework for privatisation which would be acceptable to all stakeholders.

The DG also said it would commence the process of executing the Guided Liquidation of the Nigerian Telecommunication Limited (NITEL) and its mobile arm, Mtel, having gotten the necessary legal requirement as well as the appointment of a liquidator.

Speaking further on the proposed activities for the year, Dikki said prospective transactions in the nation's Capital Market Unit for 2014 would include an Initial Public Offer of the federal government's 24 per cent shares in the Transcorp Hilton Hotels; appointment of privatisation advisers to carry out private placement of federal government shares in NICON Insurance and Nigeria Reinsurance; conduct a quick assessment to carry out deferred public offer of Niger Dock Plc shares and to carry out a quick assessment to offer the remaining 30 per cent of federal government shares in Egbin Power Plc to the public. Other privatisation activities slated for the year would be to obtain financial statements and other data to determine the timing of the public offer of shares in the Power Holding Company of Nigeria (PHCN) successor companies and a quick assessment to start the deferred public offer in SAHCOL.

Meanwhile, among other things, the privatisation agency boss has also hinted that the agency was in a process of re-validating sales agreement with UC Rusal, the current management of the Aluminum Smelter Company of Nigeria (ALSCON) following the failure of the preferred bidder, BFI Group to pay the agreed price for the plant.

However, the dispute over the execution of the share purchase agreement between BPE and BFIG is still being debated at the Supreme Court.

In the electric power department, Dikki said the bureau would conclude the residual labour issues and also sell the non-operational assets at Oji and Calabar power plants; jointly conclude the privatisation of NIPP Plants with the NDPHC.

He said the BPE would also be working with relevant stakeholders in meeting the conditions standard for the declaration of Transition Electricity Market and to continue to handle post privatisation issues relating to the Discos, Gencos and TCN. The BPE boss said the agency and the National Council on Privatisation (NCP) would continue to use the reform and privatisation programme to institute corporate governance mechanisms to reduce government transfers to PEs and improve efficiency in the economy.

Meanwhile, Sambo, who spoke when he received members of the Senate Committee on Privatisation led by their Chairman, Senator Olugbenga Obadara, told the committee that the federal government had been working hard to ensure stable power supply across the country. Sambo admitted challenges in power generation, but said the issue of gas was not a constituent of the Ministry of Power but that of Petroleum Ministry.

He decried the issue of subsidised gas prices and observed that the International Oil Companies (IOCs) had not been investing in local gas supply. Sambo disclosed that the Nigerian National Petroleum Corporation (NNPC) and IOCs were investing in the Liquefied Natural Gas (NLG), which is sold at much higher rate.

The IOCs had argued that they could not invest in gas which sold at less than one dollar because it is less than the cost of their production. Sambo advocated for the development of a gas master plan which would be executed under a Public Private Partnership (PPP) arrangement due to its viability.

He stressed that with the 10 Niger-Delta Power Holding Company (NDPHC) thermal power plants, more pressure for gas requirements in millions of cubic feet is added. The vice-president told the committee that valid efforts are being made to invest in the development of Gas infrastructure.