THE ongoing review of non-performing privatised public enterprises is a welcome step in the effort to ensure that the objectives of the privatisation programme are not derailed. If some of the privatised enterprises are not living up to expectation, the government has a responsibility to review their performance with a view to determining the way forward. This is more so with regard to the enterprises which have direct impact on the well-being of the people and the nation’s economy.
The National Council on Privatisation (NCP) says it has since inception successfully concluded the privatisation and reform of over 142 public enterprises. But, many stakeholders have been pushing for a comprehensive review of their performances under their new owners. Some have argued that part of the privatisation process was flawed, as there was a lack of proper valuation of some of the national assets sold to private investors, even as the competence of some of the investors has become doubtful and controversial. As a result, some of the companies under their new owners have failed to deliver efficient services years after they were privatised by the Federal Government.
It is good that the Bureau of Public Enterprises (BPE) has yielded to the public pressure to review the non-performing ones. According to the Director- General of the BPE, Mr. Alex Okoh, the review, among others reasons, is to ascertain the problems militating against their ability to deliver on target.
Disclosing the decision to the Senate Committee on Privatisation and Commercialisation, the BPE boss said the initiative is expected to positively impact on the overall growth of the economy, especially in the critical areas of power generation and supply, infrastructure, employment, wealth creation, food security and human capital development.
The country has not witnessed the expected delivery of efficient services which informed the privatisation of the enterprises in the first place. In fact, the performance of many of them leaves much to be desired. Many of the investors failed on some of the terms they agreed to and signed with the government. Meanwhile, some of the privatised firms in the power sector, the Distribution and Generation Companies (Discos and Gencos), have alleged that the government reneged on the performance agreements signed with them on power generation and funding.
Indeed, the power sector companies top the list of privatised enterprises that have made this performance review expedient. In 2013, when the Federal Government privatised and unbundled the state-owned Power Holding Company of Nigeria(PHCN) into 18 successor companies and subsequently sold them to private investors, it was believed that the sale would improve power supply. The Discos also promised to roll out meters and stop the exploitative estimated billing method.
Though there has been noticeable improvement in electricity supply in some parts of the country, it is glaring that the power generation and supply targets envisaged under the privatisation programme have not been met, four years after the exercise. It was on this score that the Nigerian Electricity Regulatory Commission (NERC) threatened in 2015 to revoke their licences. According to the immediate past government roadmap on power, the initial generation target was 5,000 megawatts (mw), which was expected to rise to 14,000mw by December 2013, and about 20,000mw in 2015. But, four years after, the supply still hovers around the initial 5000mw target.
Only recently, the Vice President, Yemi Osinbajo, urged majority stakeholders in the power distribution companies to recapitalise or sell their equity. In the same vein, the Minister of State for Budget and Planning, Zainab Ahmed, said the government was considering reviewing the power privatisation of 2013. But, the power sector national assets are not the only ones to be reviewed. Other underperforming privatised companies will also be examined. Many of these enterprises are very critical to the economic survival of the country. Therefore, the failure of some of them to deliver on their mandates calls for a review and appropriate intervention.
Moving forward, the current leadership of BPE should ensure a diligent assessment of the privatised companies and, most importantly, stay above any controversy in the review process. The whiff of controversy that still trails some of the privatised enterprises is an indictment of the BPE. It raises questions on the attention paid to due diligence and transparency in the exercise. The lacklustre performance of the enterprises is a lesson for the government. What is required now is utmost sincerity of purpose in the review.
Definitely, mistakes were made in some of the privatised public enterprises. To avoid further missteps, we urge the BPE to engage the services of reputable technical teams and consultants for the review.