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Privatisation: Opening A Window Of Opportunities In Nigeria (Reviewed, 20th Nov 2001) Tell your friends about this page! Email it to them.

Lime Valley, Solid Minerals Exploration in NigeriaToday, among developing countries a new wind is blowing. the wind of change, positive change. The wind of Privatisation. At present, privatisation occupies an important place in the efforts of many developing countries towards restructuring their economies. And in Nigeria, Africa's most populous state, privatisation is viewed as the only feasible means of saving the almost entirely dead public utilities such as telecommunication, electricity generation and distribution, mining and other activities that government fruitlessly engage itself in.  In Nigeria of today, privatisation is gradually been seen as the only means that will guarantee the most rapid and irreversible progress towards solving and surmounting the myriad of problems confronting public enterprises.

See lists of companies already (1) privatised and those (2) soon to be privatised. (Adobe Acrobat Reader required)

Taking a concrete step towards privations, the Federal Government of Nigeria in July 1996 promulgated the privatisation and commercial decree No. 25 in order to give the whole programme a concrete legal backing. The objectives of the programme as enunciated in the decree includes among other things: To restructure and rationalise the public sector in order to lesson the dominance of unproductive investment in that sector to re-orientate the enterprises for privatisation and commercialisation towards a new horizon of performance, improvement, viability and overall efficiency.

Atiku Abubakar, Nigeria's Vice President, Chairman, National Council on PrivatisationThe programme also aims at ensuring positive returns on public sector investments in the commercialised enterprises, check the present absolute dependence on the treasury for funding by otherwise commercially oriented parastatals and so their approach to the capital market as well as initiate the process of gradual session to the private sector of such public enterprises, which by their nature and type of operations are best performed by the private sector. The programme will also seek to create more jobs, acquire new knowledge and technology and expose the countries to international competition.

And by November the same year, government took a step further by approving the appointment of advisers for 12 companies scheduled for full privatisation under commercialisation programme. It also released timetable for the exercise. This however, generated some controversies with Nigerians arguing for and against privatisation. In the midst of arguments, apart from the arguments as to why privatise at all, which most of disputants don't seem to disagree with, the major point of disagreement it seem, centred on the process of processes being adopted by the Bureau of public Enterprises, (BPE).

In order to clear the air of most of the arguments that may tend to mislead people including foreign investors, government also laid open the BPE privatisation process. The programme, like many other of its kind in other parts of the world involves the following broad steps; announcement of planned privatisation transactions, selection of privatisation advisers; selection of core group/ strategic investors and initial public offer (IPO) where necessary. This is a standard process applied by the world bank in all the case of privatisation process in which it has been involved. And this same process has been successfully implemented in developing countries, such as India, Pakistan, Sri Lanka, Argentina, Bangladesh, Ethiopia and Uganda.

A Further breakdown of these processes reveals that the announcement of privatisation transaction involves announcing details of the implementation arrangements, timetable, scope of activities and information on the enterprises earmarked for privatisation. While the selection of privatisation advisers which is the next step after this, begins with the advertisement in both local and international newspapers and journals and the Internet, requesting for an Expression of Interests (EIOs) from consultants for the purpose of providing advisory services for the privatisation of specified enterprises. On receipt of the EIOs within the advertised deadline, the prospective advisers are then regarded as being pre-qualified based on the information provided. After the EIOs comes the next step which involves making a shortlist of the applicants and later sending request for proposal (RFP) to short - list firms. The RFP is a term of reference that lays the ground rules for the transaction, with background information on the specific enterprise to be privatised. After this, the short listed firms are then asked to submit separate technical and financial proposals to the BPE. The technical proposal describes how the assignment is to be done while the financial proposal will quote the fees and expenses to be paid for the services.

Considering this process, and the cost both to government and participants in the programme, one can not but conclude that it is indeed an expensive programme.

However, records show that privatisation has impacted on the economics of a number of countries especially through increased performance of privatised enterprises and the market capitalisation of the exchanges.

Thus, indicating that it is indeed worth all the trouble. For instance, in the early 1996, a landmark transaction took place in Kenya, where the first privatisation of African Airline, Kenya Airways was done. A holding of 26 per cent of the Airline's shares was sold to a major international Airline (KLM) and 48 per cent was offered to a combination of international Financial Institutions and the Kenyan public. In the process, 113,000 new shareholders were created while both offerings were heavily over- subscribed. This singular transaction helped transform the corporation (Airways) to a sound and profitable commercial enterprise.

The Nigerian government plans to do the same with Nigeria Airways, National Electric Power Authority, (NEPA), etc, and have now sold off their substantial shares in NOLCHEM and Unipetrol PLCs and in November 2001 NITEL, the National Telecommunications giant. It was sold to investors International for USD $1.317 billion. This is for a 31 per cent controlling stake. Looking at the abundant human and material resources in Nigeria and the viability of those corporations, it is clear that the government's efforts towards privatising these corporations has indeed opened a window of opportunities not only for Nigerians but also for foreign investors.

The National Council on Privatisation

The National Council on Privatisation (NCP) is the Policy making for Nigeria’s privatisation programme. It is headed by the country’s Vice-President, Alhaji Atiku Ibrahim as chairman, a clear indication that the Nigerian Government places huge importance on its privatisation exercise. Its Secretary General is Nasir el-Rufai who is also the Director General of The Bureau of Public Enterprises (BPE).

The Bureau of Public Enterprises is the implementing agency for the Privatisation programme of the Nigerian Government. It serves as the secretariat of the National Council on Privatisation. As is usually the case in most sell-offs, some people or bodies for various reasons have questioned its activities and some of its decisions. However, this agency so far, has performed creditably well and asserts its rights and duties wherever necessary.

See lists of companies already (1) privatised and those (2) soon to be privatised. (Adobe Acrobat Reader required) NITEL has now been bought by Investors International

Editor's Note:  is now know as Power Holding Company of Nigeria, PHCN from 2005

Bureau of Public Enterprises Contacts :

1, Osun Crescent, Off Ibrahim Babangida Way
Maitama District, P.M.B 442, Garki - Abuja. Nigeria.
Tel.: ( 234- 9) 4134636-8, 4134640-6
Fax: (234-9) 4134655, 4134657, 4134671-2
E-mail: [email protected], [email protected]

Website: www.bpeng.org

Top Picture: Lime Valley
Middle Picture: Atiku Abubakar, Nigeria's Vice President, Chairman, National Council on Privatisation

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