Assessing privatised enterprises

Last week’s disclosure that the federal government is set to conduct an impact assessment on some selected privatised enterprises under the reform and privatisation programme is, indeed, a welcome development. This move is inevitable in the drive to ensure that the objectives of privatization, namely, to achieve greater efficiency, cost effectiveness, profitability and maximum service delivery, among others, are achieved
The Bureau of Public Enterprises (BPE) will carry out the exercise in collaboration with the National Bureau of Statistics (NBS) and Nigeria Institute of Social and Economic Research (NISER).
Director General of BPE, Mr. Alex A. Okoh, who disclosed this at the inaugural meeting of the Assessment Technical Working Group (ATeWG) in Abuja said the essence is to enable the federal government showcase the impact or otherwise of the privatisation programme.
The director general, who was represented by the Director of Development Institutions and Natural Resources Department (DI & NR) in the bureau, Mr. Joe Anichebe, noted that, “After three decades of the privatisation programme, the bureau deemed it necessary to review the performances of the privatised enterprises to ascertain whether or not the targeted objectives of the programme have been achieved.”
The Assessment Technical Group, which is chaired by a Deputy Director in the bureau, Mr. Adbdul-Azeez Mu’azu Mafindi, has membership drawn from the NISER, NBS and BPE. The group is to carry out neutral assessment of the bureau’s concluded transactions to showcase the achievements and challenges encountered by the privatised enterprises as well as monitor the growth, and efficiency of privatised enterprises.
It is also to evaluate and assess the effectiveness of privatised enterprises using relevant and accurate data used in planning effective interventions. Assessment study will be carried out on  six sectors including the telecommunications sector, maritime sector (Ports), Eleme Petrochemicals Company, Cement Companies, Ground Handling companies (NAHCOL & SAHCOL), and the hospitality sector.
The BPE director general said December 2018 has been set for the final review of performance of Distribution companies (DisCos). He disclosed that following the interest shown by various stakeholders in the electricity industry and the general public with regards to the date for the final review of the performance of the privatised electricity distribution companies (DisCos), the agency fixed next month for the review.
It is being suggested that some underperforming power firms would be asked to recapitalise and look for more investors, who have the financial muscle to run the business.
Pursuant to the successful conclusion of the privatisation transaction for 10 of the DisCos, the utility companies were handed over to the core-investors on November 1, 2013.
The Performance Agreements signed in August 2013 provided, among other performance indices, that the core investors covenanted to achieve agreed reduction targets of aggregate technical, commercial and collection losses.
Blueprint recalls that BPE had in September told members of the House of Representatives that most of the Electricity Distribution Companies (DisCos) were technically insolvent.
Alex Okoh, BPE Director-General, addressed lawmakers at an interactive session held by the House Committee on Power.
Also at the hearing were critical stakeholders in Nigeria’s power sector, including Nigeria Bulk Electricity Trading Company (NBET), Electricity Distribution Companies (DisCos), and Generation Companies (GenCos).
He stressed the need for stakeholders to find medium and long-term solutions to the myriad of challenges facing the industry.He observed that the N701 billion subsidy provided by the government through NBET was part of government’s intervention towards subsidising the system.
He added that the challenges facing DisCos need holistic, sustainable solutions, including “adjustment in tariffs so that there will be regular light,” pointing out that Ministries, Departments and Agencies (MDAs) of government owe DisCos over N72 billion.
The federal government recently said that its huge investment in the power sector is not translating into improved power supply in the country because the power distributing companies, DisCos, have no capacity for effective distribution of electricity generated by the Transmission Company, claiming that the power distributing companies were rather blaming the government for the poor power supply in the country.
It is, therefore, on the backdrop of the sordid reality of the under-performance of the privatized companies that we welcome the federal government’s move to conduct an impact assessment on some of them. Besides ensuring that the companies operate in accordance with the terms of the performance agreement, the exercise will also go a long way to dispel the insinuation of massive irregularities in the privatization of the nation’s assets and commonwealth.

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