CONFRONTED with a depleted treasury, huge debts, record unemployment, and vanishing investment, President Bola Tinubu’s intention to revive the privatisation programme is the right call. The PUNCH, quoting Bloomberg, reported midweek that there are plans by the three-month-old government to sell at least 20 national assets to catalyse economic growth. Tinubu should speedily execute a transparent privatisation programme to revive the troubled economy.
The Federal Government is reportedly interested in selling part or the whole of its stakes in the four moribund refineries of the Nigerian National Petroleum Company Limited, the National Integrated Power Projects in Omotosho, Geregu, Ihovbor and Calabar, the Tafawa Balewa Square complex, Lagos, and some other comatose assets. Some other state-owned companies are slated for concessioning.
The goal is to raise money and “improve on the governance of these entities,” an official explained. This is a constructive idea; it will stimulate economy if effectively and transparently implemented. A United Kingdom government study found that privatisation impacts positively on GDP growth, boosts employment, productivity, taxes, and exports.
Nigeria should urgently revive it. The country is littered with the carcasses of many failed SOEs and wobbly public commercial assets perpetually marked by incompetence, corruption, waste and colossal losses. A long running national privatisation plan became almost dormant in the last decade.
With the refineries recording zero production, Nigeria, a leading crude oil producer, is notoriously a mass importer of petroleum products with devastating effect. The country lost $43 billion to this quirk in 2021. Fuel subsidies set the economy back by N13 trillion 2005-2021, the Presidency said. Other NNPC assets like pipelines and depots are also dilapidated.
The NIPPs, commissioned in 2004 and jointly funded by the three tiers of government, have missed their target of generating 20,000 megawatts by 2020. Invariably, the economy stumbles along with less than 5,000MW available daily. The African Development Bank said households and businesses spent $14 billion to maintain standby generators annually. With alternative power arrangements adding over 40 per cent to costs, the Manufacturers Association of Nigeria laments that Nigerian products are uncompetitive, fuelling imports and joblessness.
The vision to manufacture steel products from the Ajaokuta Steel Complex and its associated companies to catalyse industrialisation is stillborn. Idle, after over 40 years, and gulping over $10 billion, successive governments have inked several dubious concession deals that eventually failed.Nigeria imports steel products worth $3.3 billion annually. The airports, seaports, and other assets are either lying fallow or operating sub-optimally and recording losses.
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There is no better option than privatisation and liberalisation.Before the telecommunications sector liberalisation in 2001, NITEL, the sole national operator, in 40 years, provided only 400,000 functioning fixed telephone lines, and 200,000 internet users. From 1996 to 2000, ICT contributed 0.16 per cent of GDP. Post-liberalisation, the Nigerian Communications Commission said telephone subscription was 225.82 million in March, and internet users 159.59 million in May. ICT provided 10.24 per cent of GDP in 2021.
Previous governments’ intent to raise funds from privatisation to fund the annual budgets did not materialise. A plan to generate N434 billion to fund the 2021 budget by privatising five of the 10 NIPPs plants crashed. Other assets listed for auction remained untouched.
Instead of taking the privatisation route to raise funds, free the state of needless expenditure, attract domestic and foreign investment, boost production and create thousands of jobs, the government borrows. The national debt stood at N49.85 trillion by March 2023.
Britain privatised 12 regional electricity companies in 1990. Today, the ‘Big Six’ energy companies efficiently supply 77 per cent of all the country’s households with electricity and gas. The privatisation of the British Airports Authority transformed UK’s municipal airports into thriving commercial companies.
Tinubu should not wait for 18 months to execute the privatisation agenda. He should proceed with haste and within six months sell the four refineries. Thereafter, he should liberalise all sectors, including railways.
Unlike the dodgy electricity privatisation of November 2013, Tinubu should ensure strict transparency and target established reputable international operators to avail the country of foreign direct investment, technical and managerial expertise, as well as renewing investor-confidence in Nigeria.
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