36% privatised enterprises are failing – BPE
At least 36percent of the privatisation deals handled by the federal government have not lived up to expectations the Bureau of Public Enterprises, BPE, has revealed.
Director General of the Bureau Mr. Alex Okoh, made the assertion at the end of ‘Anti-Corruption and Bribery’ workshop organized by BPE in conjunction with the Australian High Commission and Malkara Consulting in Abuja.
Lamenting some of the failures recorded in privatisation deals in the past, the DG said a number of the public enterprises sold to private businesses are now facing challenges that are impeding their growth and the objective for selling them.
Okoh however assured that those enterprises would be reviewed so that they could be helped to do better. “We reckon that about 36percent of the enterprises that have been privatised so far are challenged in one way or the other. So, those are the ones we want to concentrate on. We want to understand what the issues are; why they did not meet the objectives of privatisation.
“We don’t want to abandon them; we want to bring any kind of intervention that is necessary to put these enterprises back on the path of profitability so that they can render the services for which they were privatised.”
The BPE boss however ruled out the possibility of going back to review any transaction that had been concluded in the past except for any glaring case of abuse of process.
Going forward, he added that the concern of the bureau was to put in place a process that would ensure that the right thing was done in the eyes of the public so that this would reduce suspicions that enterprises were being sold to the cronies and friends of people in government.
On privatisation of the power sector in Nigeria, Okoh told journalist that the Federal Government is considering a number of options, including cost-reflective tariffs and injecting new investors into the electricity distribution and generating companies so as to revive the firms.
The DG said the options under consideration by the government included the proposal to dilute the investment of the current core investors in the power companies by bringing in new investors as well as increasing tariffs to enable the operators to recover costs and invest in new equipment.
He stated, “It is one of the options (new investors). It is not the only option we are considering; we don’t believe that is the only solution. “If you bring in new investors and you don’t correct the market distortions, it will still be the same result.
“The options include setting the right cost or price framework for the market. If a market cannot guarantee price recovery; as an investor, you come into a business and you cannot recover the cost of doing that business, the likelihood is that you will not do the business in the first place.
“So, there is a whole suite, a whole bouquet of interventions and initiatives that we are looking at, including cost-reflective tariffs. In the case where that is not possible, we are looking at other compensation strategies that we can put in place for the Discos.”