Growing the Economy through Privatisation

Fri, Apr 25, 2014

By publisher

6 MIN READ

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Olugbenga Obadara, chairman, Senate Committee on Commercialisation and privatisation has given reasons why the federal government is all out for privatisation of public enterprises

|  By Anayo Ezugwu  |  May 5, 2014 @ 01:00 GMT

LACK of maintenance culture in public enterprises is one of the reasons for the ongoing privatisation of such enterprises by the federal government. Olugbenga Obadara, chairman, Senate Committee on Commercialisation and Privatisation, made this known when he led his committee on an oversight visit to Olorunsogo Power plant in Ogun State.

He decried the poor maintenance history of the plant saying it greatly affected its operations. Obadara maintained that if there was adequate availability of power, there would be appreciable growth and development in small and medium enterprises and by extension growth in the Nigerian economy.

In his response, Deji Adeleke, chairman, Sepco-Pacific Partners Limited, owners of Olorunsogo Power Plant, said his company was well aware of the maintenance issue at the plant when it conducted due-diligence on the plant facilitated by the Bureau of Public Enterprises, BPE. He said that his company inherited equipments  that  did not have any major overhaul maintenance ever since the plant was commissioned seven years ago. He said this negligence was contrary to the recommendation of the manufacturers.

Adeleke disclosed that his company had embarked on an aggressive program which includes a major overhaul of the plant based on a medium to long-term plans. To effectively carry out the program, the Chairman said his company had engaged a Chinese firm, Huafeng Electric Power Technology Engineering Company, as Operation and Maintenance (O&M) operators of the plant.

He pointed out that the sum of $25 million had been earmarked for maintenance and replacement of transformers in the plant and that the transformers had  been purchased and were being imported to replace the two that were gutted by fire in September last year before his company took over the plant. He expressed optimism that in the next three months, all the eight turbines at the plant would work effectively and that the plant would meet its generation capacity of 336 megawatts, mw, for transmission to the national grid.

Earlier, the Senate Committee had paid a courtesy call on Senator Ibikunle Amosun, Ogun State governor. While exchanging views with the committee members in his office in Abeokuta, Governor Amosun noted that for Nigeria to develop, it must be private sector driven. He said that adequate power supply would guarantee the growth of the Nigerian economy and expedite the effective take-off of small and medium enterprises, SMEs in the country. He urged that investors in the power sector should be continually monitored and charged the Senate Committee not to relent on its oversight responsibility adding that the Privatisation Committee had a key role to play in ensuring that the private investors run the privatised businesses effectively.

It would be recalled that the BPE in December 2013 transferred the ownership of Olorunsogo Power plant to Sepco-Pacific Energy Partners Limited. Olorunsogo power plant consists of 8 PG6581B gas turbines with associated generators and auxiliaries. The plant has a generation capacity of 336mw.

In another development, the senate committee on Monday, April 21, gave reason why the federal government concessioned Nigerian ports. Accoering to it, the concession was to ensure efficient service delivery and to bring about massive infrastructural development at the ports. Senator Obadara stated this during the committee’s oversight visit to Tin-Can Island Port, Lagos. He noted that the aim was significantly achieved as services at the ports had not only improved but the ports were also contributing immensely to the revenue base of Nigeria.

Obadara said the concession fees paid by the concessionaires had contributed to the nation’s annual budget as against the pre-concession period when the federal government allocated huge sums of money to maintain the ports. “The federal government through the BPE concessioned the ports to ensure development and efficiency which, in turn, would  yield high revenue for government as it is  applicable in other countries with ports,” he said.

In his welcome remark, Fulwood Bizzaro, Port Facility Manager of Five Star Logistics Limited, concessionaire of Tin-can Island Port Roro Terminal, had told the lawmakers that despite several challenges, the concessionaire had ensured strict adherence to the agreements   it signed with the BPE and the Nigerian Ports Authority, NPA. Bizzaro said in line with the concessionaire’s development plan for the port terminal, it had developed 16-17 square metres of land for container and cargo stacking to handle the increase in vehicle importation in the country.

Receiving the Senators, Dimon Travers, general manger of Josephdam Port Services Limited, said the recent approval by the federal government for the company  to extend its  lease on Tin-Can Island Port Terminal ‘A’ by five years, had given them  the opportunity to fully comply with the tenets of the concession agreement and to also  develop the terminal. He expressed optimism that at the expiration of the concession period, the terminal would be fully developed and operated as a world-class terminal.

Travers said cargo throughput was expected to increase significantly in the next few years, adding that in the first quarter of 2014, there was 29 percent increase in cargo throughput as against the 12.6 percent in   2013. He revealed that his company had remitted all throughput and lease fees to the NPA up to the first quarter of 2014.

In his remarks, Habib Abubakar, managing director, NPA, said the authority was collaborating with the ports’ concessionaires to ensure that the ports were fully developed. He noted that a well developed port would bring about efficiency and guarantee high tonnage ‎in import and export services which would lead to increased revenue for the federal government. He disclosed that the NPA was in the process of drawing up a 25-year development plan for the ports.

The committee members also paid a courtesy visit to Babatunde Fashola, Lagos State governor, who expressed support for privatisation as it guarantees efficiency and service delivery. It would be recalled that the Federal Government in May 2006 concessioned Tin-Can Island Port Terminals for a period of 10 years.  In March 2014, the National Council on Privatisation, NCP, approved the extension of the concession period by five years due to some unexpected issues.