- Targets N268bn from sale of 20 enterprises
Ndubuisi Francis in Abuja
The Bureau of Public Enterprises (BPE) wednesday warned against the ongoing clamour for the federal government to re-nationalise already privatised power assets of generating companies (Gencos) and distribution companies (Discos).
BPE’s Director General, Mr. Alex Okoh, at an interactive session with journalists in Abuja, advised the government not to succumb to the pressure of re-possessing the privatised assets.
The federal government has been under pressure to revoke the ownership of the assets of the Discos from the investors and pay them off with N736 billion.
President of the Senate, Senator Lawan Ahmed, had also recently called for a review of the sale of the assets just as the National Economic Council (NEC) constituted an ad-hoc committee, headed by the Governor of Kaduna State, Mallam Nasir el-Rufai, to review the ownership of power discos.
According to Okoh, re-nationalising the power assets is not the solution but evolving a better investment option around the distribution value chain would pay the country better.
He said the matter had become a topical and emotive issue, adding that people have forgotten that the electricity sector was almost dead before the 2013 privatisation.
Okoh said : “I think the Discos have become a topical and very emotive issue. We forgot that the electricity sector was almost dead before it was privatised. Generation was at about 1,300 Megawatts (MW) before privatisation. We know what the state of the electric power industry was under the management of NEPA and PHCN.
“We must be extremely careful about these key national utilities. For a country that prides itself to be the biggest economy on the continent of Africa, electricity per capita is 150 kilowatts per hour (kw/h) for every Nigerian. The second biggest economy in Africa, South Africa, the electricity per capita is 4,437 kilowatts per hour. So that shows you what we are dealing with here. Until we resolve it, then we are not going to get anywhere in terms of economic growth in this country. 150kw/h electricity is totally a non-starter as far as I am concerned. So, I think we should be more concerted in our efforts to solve the power problem.
“The problem, as far as I am concerned is not about the privatisation of the discos, but looking at the entire value chain. But what I will not advocate as an individual is a re-nationalisation of the power sector
“If it is necessary to improve the distribution infrastructure, then let us determine what that investment is and look at the best way to provide investment for the distribution power chain and not to re-nationalise the power assets. I think it will be a fundamental error to go in that direction.”
He added that the Presidential Power Initiative, which is referred to as the Siemens ‘ Project, provided a credible way to address the challenges in infrastructure, transmission and distribution.
He also expressed optimism that by next year, end-to-end availability of power would hit seven gigawatts.
Okoh identified part of the problems in the power sector as excess capacity in generation with low capacity in terms of distribution while transmission is a serious constraint.
He noted that about 13.5 Gigawatts of electricity are currently being stored in the power pool but not more than five megawatts can be transmitted.
According to him, anytime an attempt is made to transmit over five megawatts, system collapse occurred.
Giving an insight into the activities of the privatisation agency this year, he said one of its priorities was to privatise or commercialise 20 government-owned enterprises, with proceeds expected to hit over N270 billion.
However, N3.9 billion is projected as cost of transactions, leaving a total of N268.3 billion, which would be remitted into the Consolidated Revenue Fund (CRF) as part of revenue to fund the 2020 federal budget.
A breakdown of the enterprises billed for privatisation and commercialisation shows that the energy sector, with a total of nine assets, has the bulk with five from development and natural resources.
NIPOST, which is one of the three titles slated for commercialization, is under the industries and communication sector.
Explaining the delay in the sale of the Bank of Agriculture (BoA), Okoh attributed it to ‘complexity’, noting that over the years, it had been poorly-managed.
He put its shareholders’ fund in the negating region of N15 billion, adding that in that state, it is difficult to sell.
He stated that the BPE was opening channels of discussions with the Central Bank of Nigeria (CBN) to write off part of NIPOST’s non-performing loans.
According to him, a minimum of N15 billion is needed to recapitalise BoA.
Okoh explained that his agency is desirous of helping the federal government overcome the fiscal challenges arising from revenue shortfalls.
He said: “We need to go outside the traditional source of revenue – oil. We have started looking at more creative IGR sources, including the latent and residual assets of government and how we can convert these assets into some form of liquidity to fund the budget. We also hope through our activities for the year to reduce the federal budget deficit. We are aware that about N2 trillion was budgeted for deficit and this will be financed through borrowing. The cost of servicing these debts is very high. So, we need to move away from those sources of funding the budget and begin to look at assets that are redundant and how to convert those assets to cash.
“We want to reduce government subvention to some of the entities that we are planning to privatise or commercialise in one way or the other in the course of the year. We are not only interested in privatising these assets and get the proceeds, we are also looking at reducing the subvention and the budgetary allocations that otherwise would have been provided for these enterprises.”