Braving The Storm

 

With the controversy surrounding the proceeds from the sale of some federal government concerns, the BPE boss is in the centre of it all.

 

By Onu Okorie

 

To say that the Director General of the Bureau of Public Enterprises, BPE, Dr. Irene Chigbue is in the eye of the storm may be to state the obvious.

In recent times, the issue of the management of the privatisation of the state enterprises has been generating a lot of flake. While some stakeholders are of the view that the manner in which the deals involving the disposal of some state enterprises left a lot to be desired, Mrs. Chigbue believed that BPE under her management has given their best to meet their mandate and also help to drive the economic reforms programme of the government.

 

Chief among the issues that have become a source of controversy is that some public companies disposed by BPE were believed to be at a give away price. For instance, Aluminium Smelting Company of Nigeria, ALSCON at Ikot Abasi, Akwa Ibom State, which was built at the cost of $2.7billin was sold at $250million.

 

There is also the other issue of the management of the proceeds from the privatisation which some people believe that BPE is being economical with the truth about the proceeds.

 

Again, concerns are expressed that most of the companies that emerged core investors in these public enterprises lacked the technical and management competence to realise the dream of steering the companies forward.

 

Some of these companies especially those which were moribund and dormant for years require more than funds to revive. For instance, companies like, Nigerian Newsprint Manufacturing Company, Oku Iboku, in Akwa Ibom State has been moribund for donkey years before it was ceded to the core investors. Also, companies like Benue Cement Company, Gboko; Iwopin Pulp and Paper Company Limited; Nigeria Paper Mill, Jebba and Daily Times of Nigeria are examples of some of the companies that were already moribund before they were acquired by the core investors. These and other issues have been a source of concern for Chigbue whose organisation has been at the front burner in turning Nigeria’s economy to a private-driven one through the sales of public companies.

But the BPE boss who reacted to these issue recently said that those who are expressing negative concerns about BPE activities are either ignorant about its achievements or are myopic in their criticism.

 

According to her, “We do know the mandate we have been given by the people of Nigeria and the government of Nigeria, and we are doing our best to ensure we accomplish it. And we know we are making good progress. From March 2005, 61 companies and 121 transactions have been accomplished on the whole.”

 

While clarifying issues on the management of proceeds from the sales, Chigbue averred that there is enough mechanism put in place by the government to ensure that nobody tampers with the proceeds of the privatisation. For instance, the Ministry of Finance and National Council on Privatization exercise oversight functions on finance issues over BPE.

This involves scrutinising the records of BPE to ensure that public funds are intact. In addition, the account books of BPE are open to the office of the Accountant-General of the Federation to verify almost on monthly basis, the financial records to ascertain the records of proceeds of privatisation. Not only that, the office of Accountant-General of the Federation also conducts annual audit of the proceeds, despite the fact that there is the external auditors that audit and publish the BPE account annually. National Assembly Committee of both Senate and House of Representatives on Finance also do routinely ask for records of BPE Finance.

 

With these agencies in place to ensure straight records, Chigbue argues that it would take more than a Camel passing through the eye of a needle to divert the proceeds of privatisation. “I believe any of these agencies are the ones who have the authority to speak on the proceeds of privatisation because they have information on it and not only that, as they scrutinise the books and have access to them, they can authoritatively speak on the matter. This issue cannot be spoken about by anyone who has not studied the book because they can misinform the public,” she stated.

She however revealed that the proceeds of the privatisation has a special account with the Central Bank of Nigeria where it is deposited for government use. “I do want to assure Nigerians that the proceeds of the privatisation as deposited are intact. The law demands from us to put the money in CBN dedicated Accounts, and is from the CBN that it goes to the ministry of finance. Part of the money is usually appropriated annually by the National Assembly” she asserted.

Newsworld gathered from the Audit reports of BPE, that between 1989 and July 2007, the BPE realised N244, 271,424. as gross proceeds. Also, the net proceeds for the period under review was N133, 983,117,357. Between January 1, 2003 and March 31, a total of N219, 016,000 was received as revenue paid by investors or revenue received from other sources. During the period, the sum of 121,041,578,000.00 was expended for payment of terminal benefits to workers and creditors of privatized enterprises as well as payment to consultants as approved by the NCP and other transactions costs. The deduction also includes payment to other shareholders of privatised companies.

 

During the period 2003-2008, N74,791,465,000.00 was deposited in the Privatisation Proceeds Account. Within the same period, N56,836,000.000,00 was also transferred to the office of the Accountant-General of the Federation to enable the office effect the payment to terminal benefits to workers of Nigeria Airways in 2007/2008, N5,642,517,000.00 was paid to Nigerian Port Authority.

 

Another N21,778,000,000 was refunded on the cancelled transactions of Nigeria Unity Line and Bitumen Block earlier paid into the revenue accounts.

Chigbue also defended the fact that some of the companies privatised were undervalued based on the fact that such companies were dormant for years and were losing value before the investor acquired them.

 

She equally argued that such core investors have justified their stake by re-inventing such companies. For instance, ALSCON which had been dormant for years before it was privatised has brought life to the host community. Recently, the company said it was exporting about 70 tonnes of Aluminium to Spain and of course the coming on stream of the companies have provided jobs to many Nigerians. These and many other benefits have been coming the way of Nigerians as a result of the privatisation.

 

To ensure that the core investors adhere strictly to the guidelines stipulated for them while acquiring the companies, Chigbue said that BPE established a monitoring team that goes on fact finding mission on the privatised companies. And where there is established case of lack of performance or degradation of public assets, it would demand BPE and National Council on Privatisation to engage the company to help to refocus it.

 

However in a situation where the investors are unable to remedy the situation, they may be forced to commence the process of revoking the sale of the enterprises.

While inaugurating the National Council on Privatization, the former president, Olusegun Obasanjo said that it is estimated that successive Nigerian governments have invested up to N800 billion naira in public-owned enterprises. While the annual return on this huge investment has been below 10 percent, these inefficiencies and in many cases huge losses have constituted a heavy burden on the treasury of government.

 

While the state enterprises suffer from fundamental problems of defective capital structure, excessive bureaucratic control, inappropriate technological know-how and gross incompetence, it behooves on the government that in order to rescue the situation, privatisation is inevitable.

 

Hence, privatisation is one of the reforms undertaken to reposition most of the enterprises and to integrate our economy into the mainstream of world economic order.

 

 

 

The Burden Of Standard

The Standards Organization of Nigeria, SON battles to rid the country of sub-standard goods

By Anita Ochoga

One of the greatest challenges facing local economy is the infiltration of fake or substandard goods. Like a double-edge sword, such products have a two pronged danger. From one end, the consumers, who are attracted to it by the low cost it offers, suffer damages far above its gain. Local manufacturers are as well, undermined by the presence of substandard products, as consumers prefer it at the expense of locally manufactured products, which meets standard but costs more than the substandard.

Managing Director, PET Industries Nigeria limited, Mr. Peter Ekeji told Newsworld that 60 per cent of accidents that occurs on Nigerian roads are traceable to tyres, which unscrupulous tyre dealers sell to the unsuspecting public at a cheap rate. But it does not just end there, the collapse of houses, which has become the order of the day in different parts of the country has roots in substandard building materials, such as cement, iron rod and pillars. The damages that such incidents have caused cannot be over-quantified as the country keeps on incurring losses of human and material resources. Substandard electrical appliances have equally been the major cause of infernos both in public and private places, just as fake drugs leads to loss of lives.

Of recent, the activities of these unpatriotic elements have been on the increase making duties difficult for Standard Organization of Nigeria, SON. Director-General, SON, John Akanya told this magazine that though it has been tough setting standard agenda, but his organization is making progress. “There is no leaving any stone unturned, including the campaign publicity. Today, we have commenced airing of a 30 minutes weekly television programme to sensitize and educate the public on dangers of fake products in the market,” he said.

Akanya also told Newsworld that the drive to flush substandard products out of Nigeria market led them to destroy over N189.38m worth of substandard goods recently. In addition to that, chairman of SON governing  council, Chief Ebenezer Babatope said the agency, in collaboration with  other sister regulatory organizations have intercepted fake products that run into billions of naira in the last 3 months. According to him, “by setting up special task force for border operations at Seme,   Idiroko in Lagos , Port Harcourt in River state and Jibia in Katsina state, coupled  with renewed  and improved collaboration with sister  government agencies, it has resulted in attendant apprehension of substandard goods worth over N3 billion”. Newsworld investigation however shows that operators and stakeholders are coming to terms with the determination of SON to rid the country of sub-standard goods.

An importer, Chika Udeme said he lost goods worth N5 million early this year to the quality test of SON, as a result of which it was burnt and he has learnt his lesson. He however advised SON to ensure that there is no sacred cow, in the performance of its duties.

A university don, Dr. Emmanuel Enyitobi told this magazine that fake products are indeed enemies of economic development of any country. He said that once an economy is associated with substandard products, the implication is that it suffers rejection in the international market. This affects industrial growth negatively as goods cannot be exported any longer.

He also canvassed for effective public education on the dangers of fake products as a way of discouraging suppliers from the market. According to him, “by the time the public are effectively educated on the danger of substandard products, dealers will begin to suffer rejection of their products and of course, it will force them to improve on their standard. In fact, such campaign will assist to carry the masses along in the activities of the Standard Organization of Nigeria. For instance, if you remember what happened between Indomie and NAFDAC, when Indomie was associated with killing people, it took a lot of efforts before it was accepted again even after NAFDAC certified it”.

But while recounting their efforts at making a difference in the field, Akanya said, their activities are yielding result. “We are not just limiting ourselves to arrests and prosecution. We are also educating the public and the dealers as well. For instance, since the advent of the present government of President Yar'Adua, over 7236 SONCAP certificates and 2179 products certificates have been issued under the offshore conformity assessment programme,” he said. About 250 locally manufactured products have also been certified under the mandatory conformity assessment programme, MANCAP. SON has also stepped up campaign for people to appreciate the dangers posed by substandard product across the country.

On the international scene, Standard Organisation of Nigeria recently signed a Memorandum of Understanding, MOU with Ghana, Liberia and Egypt as part of the efforts to harmonize standards within Africa. Details of the MOU involve exchange of expertise, rationalization of use of equipment and enhanced standardization capacity in the continent including metrology.

Akanya also argued that their activities are yielding results following the rate of acceptability of the Nigerian-made products not only in the West African sub region but across Africa, including South Africa.