The Director General of the Bureau of Public Enterprises (BPE), Alex Okoh has outlined out the efforts of the agency in the privatisaton programme and what is being done to revive privatised but ailing firms, such as the Ajaokuta Steel, ALSCON, NNMC, Iwopin Paper Mills and others.
In a recent interview with Vanguard, Okoh said the reform of Nigeria’s public sector enterprises has been progressing steadily over the years noting that the Bureau reformed various public institutions, enterprises, and assets, to the tune of about 232 enterprises and these cut across various sectors of the economy: banks, ports, insurance companies, hospitality businesses like Transcorp Hotel, and more recently, the power sector.
Pressed on the role of the BPE in the Ajaokuta Steel Mill which has remained on the drawing board with rising and fading hopes over the years, Okoh said, “Ajaokuta was not privatised, Ajaokuta was concessioned, and incidentally, unlike the ports, the concession was not handled by the BPE. It was handled by the Ministry. You see, the government is one.”
He added, “When a problem crystalises, the government must come together to resolve it. The matter itself also is subjudice at least when you are talking about the ownership, all the settlement arrangements around Ajaokuta, Delta Steel, and of course the Itakpe and they are all connected. All of those infrastructure and facilities are connected.
“There is an on-going effort to untangle and unbundle them because Delta Steel itself has gone to pursue a different track of resolution; but to just sort of combine with all of them and resolve the issues with Global Infrastructure Nigeria Limited.
“That effort is on-going to have a sort of out-of-court settlement. His Excellency, the President, has also set up an inter- agency committee basically to advise on the best way to resuscitate Ajaokuta itself following the out-of-court settlement with GINL.
“Thankfully, we are part of this committee at this point, and I think that we will be able to advise given our expertise as the government agency that actually has the mandate and the skills to handle such complex transactions, on how best to address Ajaokuta.”
The BPE director also clarified the issues surrounding the privatization of the Aluminum Smelter Company of Nigeria (ALCON) in Ikot-Abasi, Akwa-Ibom State which he described as peculiar and unfortunate.
In his words, “ALSCON is a peculiar and unfortunate situation. Of course you know that in 2005, there was an attempt to privatise ALSCON. That exercise led to the emergence of a company called BFI Group winning the bid at $410 million.
“However, the BFI Group could not pay for the assets as required under the RFP, so the government cancelled that bid and resorted to the reserved bidder. When we do privatisation, we have the highest bidder as the preferred bidder and then a reserved bidder.
“In the case of ALSCON, a company called RUSAL, a Russian company, was the reserve bidder. They were called upon to exercise the rights of the preferred bidder that could not be taken up and of course, they did.
“Following that, the preferred bidder, BFIG, went to court and that has been the unfortunate situation of ALSCON since that time. There are various litigations as far as ALSCON is concerned, and I am a bit careful myself so that some of my comments do not become subjudice; but just to give you the background as to why the asset seems to be castrated.
“At this point, the government is facilitating discussions with all of the parties to ensure that there is some amicable understanding that is reached so that the plant can be freed-up to fulfill the mandate of its establishment. For me, it just breaks my heart because it is a very important company- what you call one of the base industries, like Ajaokuta, because it enables other industries to thrive.
“If you are looking at direct job creation capacity, anything between 7,500 and 8,000 jobs can be created directly from the successful operation of ALSCON and then 30,000 indirect jobs, looking at the ancillary services that usually come up around such a major production facility.
“I have been to about two or three aluminum smelting companies in Europe, and they do not have the kind of the latest technology that we have in ALSCON.”
On the Nigerian Newsprint Manufacturing Company NNMC in Oku Iboku, Itu in Akwa Ibom State, and other print companies, the BPE boss said, “Well, I can say that NNMC, Oku Iboku, Jebba and Iwopin paper mills all fall into the same category. They are paper mills and one of the sectors that I said has experienced less success than we intended from the privatisation. Let me talk about Oku Iboku in particular because you mentioned it.
“NNMC Oku Iboku was set up before the creation of Akwa Ibom out of Cross River State. When Akwa Ibom was created, Oku Iboku plant happened to be in Akwa Ibom, while the plantation itself is situated in Cross River State.
“Without the plantation where pulp is produced, the factory is useless. Now, because they have now come under separate jurisdictions, trying to obtain the necessary concession arrangements over the pulp trees in Cross River became a problem.
“And because it took time for the core investor, Negris Limited, to be able to get that concession arrangement for pulp to run the mill, nothing has been going on in the factory. As a result of that, the factory itself was vandalised; there was asset stripping and all of that.
“So that became a vicious cycle and the company was accumulating a lot of debt. As a result of that, it could not go into operation because it did not have the pulp to feed the factory.
“The plant and running costs were mounting up to the point that AMCON had to step in and take over the loans from the banks to which Negris was indebted and under receivership management and AMCON had taken over the plant.
“We are in discussions with AMCON to see whether we can invite or attract a credible investor with both the technical competence and the financial capacity to make the necessary investment in refurbishing the plant.
“I have also personally discussed with the Cross River State governor with regards to being more understanding. He was reasonable and cooperative with regards to the concession.
“They were asking for about N400 million initially per annum on the concession for the plantation. But right now we are reaching some agreement with regards to a reasonable fee to be paid for the pulp plantation. But just as it is with things that are not put to use they will be abused. So, even the pulp plantation itself has seen a lot of encroachment, illegal logging and all of that.
“And if you are not replacing the trees it becomes depleted, after a while deforestation sets in. Incidentally, the same issue is what we have with Iwopin- between Ogun and Ondo states with regards to the plantation and where the factory is situated.
“We have set up a multi-agency committee to look at not just the paper mills, but all of the non-performing enterprises.”