Dividends of Privatisation


WITH the successful privatisation of the power sector, electricity generation in the country is expected to improve. Benjamin Dikki, director general, Bureau of Public Enterprises, BPE, said that electricity generation would improve in the next few months as the new owners of the privatised successor companies would introduce maintenance culture that would entail the importation of spare parts to replace and refurbish the moribund components.

He stated this while presenting a paper titled “The Federal Government Privatisation Programme: The Journey So Far,” to the Course 22 of the National Defence Academy in Abuja, on Monday, November 4. He disclosed that the major work of the Bureau was the reforms of the various sectors of the economy to create an enabling environment for private sector investments by instituting sound sector policies; liberalisation of the sectors by abrogating monopoly laws; delineation of the roles of policy formulation from regulation and operations; establishment of appropriate legal and regulatory framework; mitigation of risks to encourage private sector investments and the setting up of independent regulatory agencies.

Dikki noted that the BPE had championed the telecommunications sector reforms that revolutionalised the country’s telecom sector with the enactment of the Telecom Act of 2003, which, according to him, led to the licensing of several service providers that had created many new jobs and an astronomical growth from a tele-density of 0.4 percent representing 450,000 telephone lines in 2001 to 82 percent, representing 123 million telephone lines as at June 2013.

He further noted that the BPE midwived the enactment of the Pension Reform Act of 2004 that led to the establishment of the National Pension Commission that entrenched a stable pension policy in Nigeria with the retirees now certain to get paid on retirement which has so far created over N3 trillion long-term investable funds for infrastructural development if the restrictions of the law are relaxed.

Dikki explained that the establishment of the Debt Management Office, DMO, is one of the outcomes of the reform works of the Bureau to curb arbitrary borrowing by public enterprises and government agencies. He enumerated the primary benefits of the ports reforms by the BPE on the economy to include, among others, faster ship turn-around times; faster cargo turn-around times; faster truck turn-around times; use of larger ships; increased port utilization efficiency; lower port operating costs and opportunities for inland distribution by rail while the secondary benefits, according to him, are increased competition; lower port charges; lower freight rates; increased private sector investments; labour force improvements and net financial transfers to the government.

To sustain the gains of past reforms, the BPE DG listed seven critical Bills targeted for passage into law which have been approved by the National Council on Privatisation for presentation to the Federal Executive Council, FEC. They are: Railway Bill; Inland Waterways Bill; Road Sector Reform Bill; National Transport Commission Bill; Ports and Harbour Reform Bill; Federal Competition and Consumer Protection Bill and Postal Bill.

Nigeria Needs More Japanese Aids

THE federal government is to collaborate with Japan to tackle electricity transmission challenges in the country. Both governments have agreed to deal with the setbacks in Nigeria’s transmission infrastructure when a delegation from Japan led by Ryuichi Shoji, Japanese Ambassador to Nigeria, visited the headquarters of the federal ministry of power in Abuja.


Shoji said that his country was ready to partner with Nigeria in the area of human capital development. He said Japan would do whatever was possible to impart to Nigerians the relevant knowledge needed to drive the power sector and, thereafter, transfer the technology to the citizens on the basis of equality rather than teacher-student relationship.

Another area of collaboration, he said, was the development of a robust master plan on which the electricity transmission infrastructure would be erected, using a template that would be beneficial to both countries. With the recent handover of the electricity generation and distribution companies to private investors following the unbundling of the Power Holding Company of Nigeria, the federal government is currently left with only the Transmission Company of Nigeria, which has since been given out on concession to Manitoba Hydro International of Canada on a management contract basis. The government has, however, continued to cry out over the decrepit transmission architecture in the sector due to decades of zero investment.

In his response, Chinedu Nebo, minister of power, acknowledged the assistance of Japan in developing a master plan through the Power Sector Reform and renewable energy project in the last one-and-a-half years, and prayed that the plan, which had a budget of $4m, should not only continue but be pursued with vigour.

The minister urged Japan to participate in the rural electrification initiative of the federal government, especially in making Nigeria to benefit from the $500m it earmarked for renewable energy in the next five years. He thanked Japan for providing $15m for the construction of the Katampe sub-station and urged it to consider similar reinforcement projects to help stabilise the power sector.

Nebo stated that through the grant of $25m provided by Japan, substantial work had been done on the Jebba Hydro Power Station, and expressed interest in the $100m concessionary grant the country was ready to provide. While declaring Nigeria’s happiness for Japan’s readiness to intervene in upgrading the transmission infrastructure in Lagos, for which the sum of $200m had been proposed, the minister said the state had been neglected for a long time.

Oil Theft Affects 2013 Budget

CRUDE oil theft in the Niger Delta has affected the revenue earned by the country this year.  Ngozi Okonjo-Iweala, minister of power, said Nigeria may witness as much as $12 billion shortfall in budget estimates this year as a result of persistent theft of crude oil. She said that government would draw down its oil savings in excess crude account to compensate for the drop in revenue to keep the budget deficit under control.


Okonjo-Iweala said savings in the special crude account have dropped by half as President Goodluck Jonathan’s administration tries to make up for the drop in oil revenue and fund a deficit that has reached 2.5 percent, according to the Central Bank of Nigeria. “With a 2013 budget based on a daily output of 2.53 million barrels and an oil price of $79 a barrel, Nigeria expected a revenue of almost $80 billion from exports. In the first half of the year, oil receipts amounted to $28.2 billion, more than $7 billion below the estimate, according to Central Bank figures. What is amazing now is that we’ve had this quantity of shock and we were able to weather it,” she said.

Nigeria depends on crude oil exports for about 80 percent of government revenue and 95 percent of export income. Criminal gangs tapping oil from pipelines for illegal sale have posed the biggest threat to output since a government amnesty in 2009 reduced armed attacks led by rebels fighting for greater control of the region’s resources.

Okonjo-Iweala is seeking to meet a budget deficit target of 1.9 percent of gross domestic product this year. The shortfall reached 2.5 percent in the second quarter during the peak of the output outages, according to data from the Central Bank.

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