BPE Status Report - June 2003

The Presidency BUREAU OF PUBLIC ENTERPRISES
Status Report
June 2003
www.bpeng.org
The Bureau of Public Enterprises (BPE) is the secretariat of the National Council on Privatisation, the body charged with the privatisation of public enterprises of the Federal Government of Nigeria. This Status Report provides background information on the structure, operations and activities of BPE up to the period ending 30th June 2003. For further information contact us at: Bureau of Public Enterprises Hamza Zayyad House, 1 Osun Crescent, Off Ibrahim Babangida Way, Maitama District, P.M.B 442, Garki Abuja, Nigeria Tel: +234 9 4134636 - 46 Fax: +234 9 4134671 2 Alternatively, simply send your request to: info@bpeng.org
Bureau of Public Enterprises Status Report June 2003
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TABLE OF CONTENTS
A.
1. 2.
INTRODUCTION ..................................................................................4
Privatisation Policy ................................................................................................................... 4 1.1 The Rationale .............................................................................................................. 4 Institutional Arrangements For Programme Implementation .......................................... 7 2.1 The National Council On Privatisation (NCP) ..................................................... 7 2.2 Membership of the NCP ........................................................................................... 8 2.3 Standing Committees ................................................................................................. 8 2.4 Steering Committees ................................................................................................10 2.5 The Bureau Of Public Enterprises (BPE) ............................................................11
B.
1. 2.
THE SECRETARIAT - ORGANISATIONAL STRUCTURE ............ 13

Organisational Structure Pre-July 2002...............................................................................13 Departmental Breakdown of Scheduled Enterprises AS OF 1ST APRIL 2003 ............14 2.1 Director Generals Office .......................................................................................14 2.2 Organizational Support ...........................................................................................16 2.3 Infrastructure & Networks .....................................................................................20 2.4 Natural Resources ....................................................................................................21 2.5 Oil & Gas...................................................................................................................22 2.6 Services .......................................................................................................................23 2.7 Industry & Manufacturing ......................................................................................24 Current Staffing Situation in BPE .......................................................................................25 Director Generals Office .....................................................................................................26 4.1 Internal Support Functions.....................................................................................26 4.2 External Relations Support .....................................................................................27 4.3 Monitoring & Compliance ......................................................................................28 4.4 Oversight ...................................................................................................................28 Departments ............................................................................................................................29
3. 4.
5.
C. OPERATING ARRANGEMENTS FOR PROGRAMME IMPLEMENTATION ........................................................................................... 29

1. 2. 3. 4. 5. 6. Adviser Selection Process .....................................................................................................29 Terms of Reference................................................................................................................30 Cost Estimates ........................................................................................................................30 Selection Process ....................................................................................................................31 Success Fees ............................................................................................................................32 Transactions And Bidding Process......................................................................................34
D.
1. 2. 3.
STATUS OF PROGRAMME IMPLEMENTATION .......................... 41

Phase One................................................................................................................................41 Phase One Proceeds ..............................................................................................................42 Phase Two ...............................................................................................................................43 Phase Two Proceeds ..............................................................................................................46 Phase Three .............................................................................................................................47 3.1 Power Sector Reforms .............................................................................................47
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3.2 3.3 3.4
Telecom Sector Reforms .........................................................................................50 Oil And Gas Sector Reforms .................................................................................55 Ports Reform And Privatisation.............................................................................63
E.
1. 2. 3.
CONSENSUS BUILDING ACTIVITIES............................................. 66

INTRODUCTION ...............................................................................................................66 REVISION OF THE Communication Master plan ........................................................66 BENCHMARK QUALITATIVE AND QUANTITATIVE SURVEY .....................67
4. SELECTION OF A LONG-TERM COMMUNICATION AND MARKETING MANAGER ............................................................................................................................................68 5. 6. 7. INTERIM AWARENESS CAMPAIGN ..........................................................................68 CAMPAIGN MONITORING ...........................................................................................68 EXTERNAL AND GOVERNMENT RELATIONS ...................................................68
F. MULTILATERAL AND BILATERAL SUPPORT TO THE PRIVATISATION PROGRAMME ....................................................................... 70

1. World Bank Privatisation Support Project (PSP) ..............................................................70 1.1 PSP Components .....................................................................................................70 1.2 Status ..........................................................................................................................72 USAID Grant in Support of the Privatisation Programme.............................................72 Spanish Government Assistance for Privatisation ............................................................73 United Kingdom Department for International Development (DFID) .......................73
2. 3. 4.
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A. 1.
1.1
INTRODUCTION PRIVATISATION POLICY

THE RATIONALE
Experience worldwide has shown that Public Enterprises have failed to live up to expectations. They tend to consume a large proportion of national resources without discharging the responsibilities thrust upon them. More importantly, they fail to allocate these resources efficiently. One only needs to review the level of coverage of the National Electricity Power Authority (NEPA) and its inefficiency in providing electricity balanced against what NEPA draws from the Federal Treasury for this point to be settled. PEs consume about N200 billion of national resources annually, by way of grants subsidies, import duty waivers, tax exemptions, and the like. Data obtained from various government departments and estimates reveal that in 1998, Nigerian PEs enjoyed about N265 billion in transfers, subsidies and waivers, which could have been better invested in our education, health and other social sectors. Table 1 below shows the breakdown of these actual and shadow transfers: TABLE 1 - TRANSFERS TO PARASTATALS AND AGENCIES (1998) m Transfer/Waiver/Subsidy Amount (N bn) Percent of Total Subsidized Foreign Exchange (1) 156.5 59% Import Duty Exemptions 12.5 5% Tax Exemptions/Arrears 15.0 6% Unremitted Revenues 29.5 11% Loans/Guarantees 16.5 6% Grants/Subventions, etc 35.0 13% TOTAL N 265.0 100% Foreign Exchange allocation at N22 instead of the market rate of N86 prevailing in 1998. Source: Federal Ministry of Finance, Various Government Records The current move towards economic liberalization, competition and privatisation is partly informed by the gross failure of PEs to live up to expectations. In the case of Nigeria, it is clear that we cannot afford to spend or subsidize a few PEs with resources equal to more than twice the nations capital expenditure budget. Furthermore, donors and creditors expect us to direct our scarce resources to attacking poverty through investment in health, education and rural development social programme that will benefit millions of Nigerians, not just a few thousand urban elite that are employed by, or capture the subsidies granted to the public enterprises. Policymakers realize that no creditor will forgive our debt and no donor will offer aid, so that Nigeria will have resources to prop up the Nigerian Telecommunications Plc (NITEL), NEPA or Ajaokuta Steel. That is the stark reality that Nigeria faces today. There is virtually no public enterprise in Nigeria today that functions well. While they were created to alleviate the shortcomings of the private sector and spearhead the development of Nigeria, many of them have stifled entrepreneurial development and fostered economic stagnation. Nigerian Telecommunications (NITEL), National Electric
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Power Authority (NEPA) and the Nigerian National Petroleum Corporation (NNPC) are the best examples of these. Public enterprises have served as platforms for patronage and the promotion of political objectives, and consequently suffer from operational interference by civil servants and political appointees. Public enterprises have also contributed to income redistribution in favour of the rich over the poor, who generally lack the connections to obtain the jobs, contracts or the goods and services they are supposed to provide. The annual burden of over N200 billion that PEs imposes on the economy has become untenable, unbearable and unsustainable. PEs consumed nearly half of all the revenue made from the sale of crude oil since 1973. Estimates of the Vision 2010 Committee indicate that Federal Government investments in PEs stood at over US $100 billion in 1996. The return on these investments averaged less than 0.5% per annum. According to a TCPC Survey, public enterprises account for between 30 and 40% of fixed capital investments and nearly 50% of formal sector employment. Public Commissions and Study Groups have undertaken various studies on the performance of PEs in Nigeria. Adebo (1969), Udoji (1973), Onosode (1981) and AlHakim (1984) chaired these commissions. The findings of the studies were consistent in finding that PEs were infested with problems such as: Abuse of monopoly powers, Defective capital structures resulting in heavy dependence on the treasury for funding, Bureaucratic bottlenecks, Mismanagement, Corruption, and Nepotism.
The scope of the Privatisation Programme, which commenced in 1999, includes the partial or total divestiture of the shares owned by the Federal Government, its parastatals and other agencies in PEs active or dominant in at least 13 key sectors. The cumulative value of investment to be transferred from the public sector is in excess of $100 billion. Unfortunately, it is extremely unlikely that the Government will ever recoup these investments. A mere sample of some sectors and estimated values of FGN investment is summarized in Table 2 below: Table 2 FGN investments in selected PEs Sector Infrastructure/Utilities Upstream Petroleum Downstream Petroleum Steel/Aluminum/Mining Machine Tools/Minting Fertilizer Paper Enterprises 3 1 6 9 2 2 3 FGN Investment US $28 bn N/A US $17 bn US $14 bn US $650 mn US $850 mn US $1.4 bn
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Sugar 4 Vehicle Assembly 6 Media 3 Insurance 2 Oil Marketing 3 Cement 5 Transportation/Aviation 3 Commercial/Merchant Banks 5 Agro-Allied 5 TOTAL 62 N/A Not available Source: Federal Ministry of Finance, Other Government Records
US $1.8 bn US $1.7 bn N/A N/A N/A N/A US $1.9 bn N/A N/A About US $70 bn
One sees that the cumulative value of FGN investment by way of equity, loans and other transfers to these 62 enterprises is estimated at nearly US $70 billion nearly a third of Nigerias total oil revenue since 1973. As at December 2000, the total liabilities of 39 of these PEs were in excess of N1.1 trillion, with accumulated losses of N92.3 billion. Clearly then, there is abundant evidence that PEs have not served their customers, their employees, or the taxpayers well. The simple fact is that when the government owns, nobody owns; and when nobody owns, nobody cares. The experience in the last thirty years has been one in which the PEs have: Created economic inefficiency; Incurred huge financial losses; Absorbed disproportionate share of credit especially in the form of Paris and London club loans, as well as domestic loans and advances; and Contributed to consistent fiscal deficits.
Over time, political and personal considerations have proved to be significant influences on numerous PEs policy matters (including investment, tendering, siting, pricing, choice of machinery, employment levels, and management appointments). All have been unsustainable, and achieved at significant cost to the Treasury. The benefits of privatisation are immense, and the sooner these are realized, the better. Privatisation, in whatever forms chosen, will: Reduce corruption; Modernize technology Strengthen domestic capital markets; Dismantle monopolies and open markets; Promote efficiency and better management; Reduce debt burden and fiscal deficits; Resolve massive pension funding problems; Broaden base of ownership Generate funds for the Treasury Promote corporate governance Attract foreign investment Attract back flight capital
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2.
INSTITUTIONAL ARRANGEMENTS IMPLEMENTATION
FOR
PROGRAMME
The Public Enterprises (Privatisation and Commercialisation) Act 1999 provides the enabling legislation for the implementation of the privatisation and commercialisation programme. In order to ensure effective coordination and proper implementation of the programme, the enabling act also provides for the establishment of the following institutions/bodies:
2.1 THE NATIONAL COUNCIL ON PRIVATISATION (NCP)
The NCP is the apex body charged with the overall responsibility of formulating and approving policies on Privatisation and Commercialisation. The major functions and powers of the NCP include:
To determine the political, economic and social objectives of Privatisation and Commercialisation of Public Enterprises. To approve policies on Privatisation and Commercialisation. To approve guidelines and criteria for valuation of public enterprises for Privatisation and choice of strategic investors. To approve public enterprises to be privatised or commercialized. To approve the legal and regulatory framework for the public enterprises to be privatised. To determine the mode of sale of shares of a listed public enterprise and advise the Federal Government accordingly. To approve the prices of shares or assets of the public enterprise to be offered for sale. To approve the appointment of privatisation advisers and consultants and their remuneration. To appoint as and when necessary Committees comprising persons from both the public and private sectors with requisite technical competence to advise on the Privatisation or Commercialisation of specific public sector enterprises. To approve the budget of the Council. To approve the budget of the Bureau. To receive and consider for approval audited accounts of the Bureau.
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To receive and review periodic reports from the Bureau on programme implementation and give appropriate directions.
2.2
MEMBERSHIP OF THE NCP
The NCP has two classes of members statutory and co-opted members. The thirteen statutory members have voting rights and are listed in the enabling legislation. The coopted members are Ministers overseeing relevant enterprises pipelined for privatisation, and have no voting rights. The statutory members of the NCP are: (i). (ii). (iii). (iv). (v). (vi). (vii). (viii). (ix). (x). (xi). (xii). (xiii).
2.3
the Vice President, as Chairman; the Minister of Finance, as Vice Chairman; the Attorney-General of the Federation and Minister of Justice; the Minister of Industries; the Minister of National Planning; the Secretary to the Government of the Federation; the Governor of the Central Bank of Nigeria; the Special Adviser to the Head of State on Economic Affairs; Mr. Akin Kekere-Ekun, Managing Director, Habib Bank Nigeria Ltd; Dr. Ejike Ignatius Onyia, Chairman, MGF Petroleum Nig. Ltd.; Mr. Nze Clement Maduako, President, NACCIMA; Comrade Adams Oshiomhole, President, Nigerian Labour Congress; and the Director-General of the Bureau of Public Enterprises
STANDING COMMITTEES
In order to ensure adequate coverage of its Terms of Reference and easier execution of its mandate, the NCP has formed five Standing Committees, each having its specific Terms of Reference derived from those of the NCP. These Committees and their specific Terms of Reference are: Technical Committee: (Chairman: Mr. Akin Kekere-Ekun, Managing Director of Habib Nigeria Bank Ltd.)
To provide the necessary technical inputs to the NCP to enable it make decisions on privatisation transactions.
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To review information memoranda of public enterprises to determine their state of readiness for privatisation or commercialisation. To determine and recommend to council actions required to bring enterprises to the point of sale or otherwise. These actions may include recapitalization, liquidation and sale of assets. To determine criteria for qualification of core investors To review proposals for shortlist core investors and supervise public opening of core investors bids. consultants To review shortlist of firms qualified for appointment as To submit periodic reports on its activities to the Chairman of Council.
Policy and Monitoring Committee:
(Chairman: Obong Ufot Ekaette, Secretary to the Government of the Federation)
To identify, initiate and review all policy issues dealing with the privatisation and commercialisation of public enterprises. To monitor policy implementation and issue guidelines where necessary to the Bureau and the Sector Steering Committees. To review all policies initiated by the various Sector Steering Committees, the Secretariat and the public enterprises, harmonize and coordinate such policies and advise Council accordingly. (Chairman: Mallam Adamu Ciroma, Honourable Minister of
Finance Committee: Finance)
To review the financial management systems of the Bureau to ensure their adequacy for the purpose of achieving sound financial practices throughout the duration of the programme. To review, approve and monitor the budgets of the Council and Bureau on an annual basis. To determine the approval limits of the Bureau. Bureau. To determine and approve banking and investment policies of the To approve assets acquisition and disposal by the Bureau.
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To review and approve any bi-lateral or Multi-lateral grants or credits to the privatisation programme.
Publicity and Mobilisation Committee :
(Chairman: Professor Jerry Gana, Honourable Minister of Information and National Orientation)
To review the programme, identify the various stakeholders, liaise with various Committees of Council and the Bureau and assess the needs for publicity and communications. To review strategies for implementing the programme and any surveys and studies on the effectiveness of current publicity and mobilization efforts. In collaboration with coordinating consultants devise new strategies to increase awareness and support for the programme for the areas identified. To set targets for increasing public awareness and perception and molding public opinion to ensure wider support and participation in the programme. (Chairman: President, Nigerian Association of Chambers of Commerce, Mines, Industry and Agriculture)
Transaction Marketing Committee:
To review key issues and dynamics of the programme and review the design and timing of each transaction. To review and discuss the situation analysis of each enterprise as prepared by the communications and marketing consultants. In conjunction with the communications and marketing consultants to assist in marketing the transaction through activities complimentary to the overall marketing plan.
2.4
STEERING COMMITTEES
The privatisation programme involves certain sectors of the economy that would require some reform and restructuring prior to or along side the divestiture transaction. Consequently, eleven (11) Sector Steering Committees were formed by the NCP to carry out this task. The Committees, which are chaired by the relevant Ministers or senior private sector managers, are: (i). Electric Power Sector Steering Committee (ii). Oil and Gas Sector Steering Committee
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(iii). (iv). (v). (vi). (vii). (viii). (ix). (x). (xi).
Telecommunications Sector Steering Committee Agriculture and Water Resources Sector Steering Committee Hospitality/Tourism Sector Steering Committee Industry/Manufacturing Sector Steering Committee Insurance Sector Steering Committee Transport Sector Steering Committee Solid Minerals Sector Steering Committee Aviation Sector Steering Committee Basic Metals Steering Committee
In addition, four specialized ad-hoc committees have been established to address certain crosscutting issues that impact upon the implementation of the programme. (i). (ii). (iii). (iv). Cross-Debt Resolution and Reconciliation Committee; and Committee on Pension Reform; Competition Policy and Anti-Trust Reform Committee; National Depository for Nigeria Capital Market.
The first two ad hoc committees have since completed their assignments and have submitted reports that are to be developed into White Papers. The third committee, the Competition Policy and Anti-Trust Reform Committee, has developed a policy on Competition and is in the process of considering a draft Competition Bill that will provide for the establishment of a Federal Competition Commission. The membership of the all of the Committees is broad and represents all key stakeholders drawn from public and private sectors, unions, academia, and nongovernmental organizations (NGOs) in each of the affected sectors.
2.5 THE BUREAU OF PUBLIC ENTERPRISES (BPE)
BPE is the Secretariat of the NCP and is charged with the overall responsibility of implementing the policies and decisions of the Council. The functions of the Bureau as provided for in the Act include:
implementing the Councils policy on privatisation and commercialisation preparing public enterprises approved by the Council for privatisation and commercialisation advising Council on further public enterprises that may be privatised or commercialized advising Council on capital restructuring needs of the public enterprises to be privatised ensuring the update of accounts of all commercialized enterprises for financial discipline making recommendations to the Council on the appointment of Consultants, advisers, investment bankers, issuing houses stockbrokers, Solicitors, trustees,
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accountants and other professionals required for the purpose of either privatisation or commercialisation
ensuring the success of the privatisation and commercialisation exercise through effective post transactional performance monitoring and evaluation providing secretarial support to the Council, and carrying out such other duties and responsibilities as may be assigned to it from time to time by the Council and its respective committees.
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B.
THE SECRETARIAT - ORGANISATIONAL STRUCTURE
In July 2002, BPE the operational structure BPE was transformed. This process of restructuring was considered necessary in view of the need to ensure speedier and more efficient service delivery of privatisation transactions and underline the commitment of the Federal Government to the implementation of the privatisation programme. The reorganization process has transformed BPE into a more focused, more motivated and more proficient organization, with a management team that is more accountable and performance-oriented and staff that are driven to succeed. To achieve this, BPE has moved from a functional structure, with a single Operations Department and five functional departments, to a divisional structure with six sectorfocused operations departments and a single central unit providing general support to the departments. This has effectively resulted in the creation six self-contained, semiautonomous units with clear sectoral transactions mandates. 1. ORGANISATIONAL STRUCTURE PRE-JULY 2002.
Director General's Office
Operations
Planning & Monitoring
Council Affairs
Finance & Administration
Legal Services
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2.
DEPARTMENTAL BREAKDOWN OF SCHEDULED ENTERPRISES AS OF 1ST APRIL 2003

DIRECTOR GENERALS OFFICE
2.1
Director General Special Assistant I Aishetu Kolo Special Assistant II Abdu Muhtar
Environment Abuja Stock Exchange Ajaokuta Steel Pensions REITs NEPA Board Mint Board Int. IPOs/Diaspora Executive Assistants
Competition Reform Cross Debt Reconciliation Other Cross Cutting Issues NITEL Board Other Boards Policy & Monitoring Committee Technical Committee Personal Assistant
IDA Credits & Grants Roz Ben-Okagbue
Monitoring & Compliance Aisha Umar-Dahir
Internal Audit Dikko M. Abdullahi
General Counsel Abdulrazaq Oniyangi
Central Procurement IDA Accounts DFID Grant Spanish Grant Other Grants Contracts Monitoring
Research & Library Compliance & Due Process Departmental Planning & Monitoring
Legal Secretariat Council Secretariat
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2.1.1
General Counsel
Director General
Deputy Director General Counsel/ Council Secretariat
Legal & Secretarial Support
Council Secretariat
Drafting & Opinions Central Litigation Agreements Management Committee
NCP Meetings NCP Committees
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2.2
ORGANIZATIONAL SUPPORT
Director Organizational Support
Executive Assistants
Snr Communications Adv Roy Nygaard
Human Resources Ibrahim Jalingo
Communications & Marketing Ibrahim Babagana
External Relations Joe Anichebe
Finance & Accounts Roz Okagbue [Transition]
Information Technology Engr. A. Aziz
Central Admin R.G. Omotowa
Recruitment Training
Labour Adviser Campaign Mgt Salisu Nuhu Events Mgt Publications Investor Marketing
Finance Accounts
Media Mgt Issues Mgt Rapid Response Binational Commission NIPC Liaison Other governmental NASS liaison Labour
Applications System Admin Training
Facility Mgt Protocol Drivers Receptionist Paper Mills {Transition}
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2.2.1
Organizational Support
Deputy Director
Deputy Director Central Admin.
Deputy Director Information Technology
Head Human Resources
Facilities Management Reception Protocol Drivers Other
Applications Development
Training Unit
System Administration
Pensions Group Personnel Management
Website Lotus Notes Database Developer EDMS/Project Central
Network Administration Help Desk
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2.2.2 CENTRAL SUPPORT
Deputy Director Communications & Marketing

Admin. Support
Deputy Director Finance & Accounts
Finance External Relations Publications
Accounts
Campaign Management
Events Management
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2.2.3
External Relations
Director Organizational Support I. N. Chigbue
Deputy Director External Relations Joe Anichebe Assistant
Media Relations
Issues Management
Adviser Stakeholder Relations
BPE Spokesman Media Management
News Coverage Rapid Response
Labour
Share Purchase Loan Scheme
Government Relations
Outreach Focus Groups
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2.3
INFRASTRUCTURE & NETWORKS
Director Tij ani Abdullahi Executive Assistant Secretary
Communications Emeka Obi
Power Lanre Babalola
Transport Hassan T. Usman
Aviation Yusuf Adamu
Departmental Support Fati Abubakar
Subscribers Marketing Documentation Logistics & Other
Tariff/SPE/Restructuring Audit/Restructuring NERC Other
Seaports Railways Other Transport
NAL FAAN & NAHCO NAL subsidiaries
Finance/Accounts Planning & Monitoring Legal Compliance Admin & Supplies Stakeholder Relations Transaction Services Other
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2.4
NATURAL RESOURCES
Director Modupe Abiodun-Wright Executive Assistant/Secretary Enterprise Assistant
Team I A. A. Ityokyaa
Team II E. O. Azodo
Team III Lai Yahaya
Team IV O. Ikuerowo
Departmental Support Edwin Azodo
NIOMC (Itakpe)
National Uranium Co. Nigeria Coal Corp. Nigeria Mining Corp,
RBDAs
Oil Palm Companies
Finance/Accounts
Steel Companies
Planning & Monitoring
Legal Services
Admin & Supplies
Other
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2.5
OIL & GAS
Director Bolanle Onagoruwa Executive Assistant
Commercialisation & Distribution O. Adido
Refineries Ayo Edu
Petrochemicals & Gas Eyo Ekpo
Departmental Support Yunana Malo
PPMC
Kaduna Refinery WARCo

Warri Refinery
Eleme Petrochemicals
NNPC
Oil Service Co.s Nigerian Gas Co.
Finance/Accounts Planning & Monitoring Legal Services Admin & Supplies Stakeholder relations
Portharcourt Refinery (I & II)
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2.6
SERVICES
Director A. A. Udofiah Executive Assistants
Financial Services D. Morakinyo
Media & Others Ijeoma Nwogugu
Culture & Tourism A. A. Adesokan
Departmental Support Chinelo Anohu
Afribank Nigeria Re Assurance Bank Bank of Industry NARDB Federal Mortgage Finance Federal Mortgage Bank NICON Insurance Niger NSITF
Daily Times NNN NTA FRCN NFC NAN National Hospital Federal Medical Centre Stallion Properties Niger Delta Development Authority Federal Housing Authority NSPMC
Hotels - Durbar(1) - Sofitel(2) International Conference Centre National Arts Theatre LITFC National Parks (2) Stadia (3) TCN Capital Hotel Nicon Hotel Nigeria Hotels Ltd TBSIL
Finance & Accounts Planning & Monitoring Legal Services Stakeholder relations Admin & Supplies
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2.7
Industry & Manufacturing
Director I. S. Njiddah Executive Assistants Transaction Adviser Rajai Masri
Transitional Enterprises Baba Mohammed
Team I Musa Zakari
Team II Ibrahim Kashim
Team III Abdul-Muzakkari Fagge
Departmental Support Baba Mohammed
Nigerdock MV Abuja
Sugar Co.s (I) Sugar Co.s (II) Other Manuf. Co.s EMCON Nigeria Machine Tools
Vehicle Assembly Plants (I) Vehicle Assembly Plants (II)
Fertilizer Cement/Offshore Investments Paper Mil s
Finance & Accounts Govt./External Relations Legal Services Planning & Monitoring Admin. & Supplies
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3.
CURRENT STAFFING SITUATION IN BPE
As at 1st January 2003, the BPE had total staff strength of one hundred and seventy-four employees. In addition there were twenty-two consultants (fifteen local core team staff and four expatriates hired as part of the USAID technical assistance programme as well as three consultants funded by the World Bank). The distribution of employees by grade level and qualifications is summarized below: (i) By Grade Level: No. of Staff Management Staff (DG, Directors, 37 Deputy Directors and Asst. Directors) Mid-level (Chief Enterprise Officers, 130 Asst. CEOs, Principal EOs, Senior EOs, Enterprise Officers) Support Staff (Enterprise Assistants 17 and drivers) TOTAL 184 (ii) By Qualifications: No. of Staff First Degree or its Equivalent and 156 above Other Qualifications 29 TOTAL 184 % of total 84.8% 15.2% 100% % of total 21% 70% 9% 100%
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4.
DIRECTOR GENERALS OFFICE
The role of the Director Generals office is essentially to ensure that the departments receive whatever high level assistance they require to fulfill their mandates. This means providing:
support: in key areas that are more efficiently handled centrally like facilities management and public relations, strategic planning: to ensure that a watertight BPE ship is steered in the right direction, and oversight: which is necessary to ensure that the programme is implemented with the same degree of transparency and due process across all departments.
4.1
INTERNAL SUPPORT FUNCTIONS
Central Administration The Unit is charged with the following tasks: -Maintenance of BPEs facilities; -Security of the premises and the assets; -Insurance of BPEs assets; -Management of the central store and supplies; -Control over the pool cars; -Liaison with the D (OS) to manage the protocol travels and passages functions in the BPE. -Day-to-day Administrative matters. Responsible for the maintenance of BPEs facilities, central stores and supplies and other day-to-day Administrative matters. Responsible for the maintenance of BPEs facilities, central stores and supplies and other day-to-day administrative matters. IT Responsible for the management and maintenance of the local area network, systems administration, applications development and BPEs intranet and Internet presence. Finance & Accounts Processing payments, monitoring budgets, treasury and managing placements. Human Resources The Unit is charged with the task of managing the people working with the bureau, by providing them with essential services so that they can collectively contribute to the attainment of the goals of the organization. This includes:
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-Staff recruitment -Staff training -Staff Pension scheme -Disciplinary matters -Staff promotion, as well as routine administrative issues. General Counsel and Council Secretariat The Unit is responsible for the management of all legal matters involving the NCP and the Secretariat and provides support services to the Legal Officers of the Departments. It is also responsible for all matters relating to the National Council on Privatisation (NCP), including its meetings. Its specific functions are to: -Conduct research and prepare legal opinions on issues relating to the privatisation programme. -Analyse cases involving Council and the Secretariat and recommend counsel for consideration and appointments. -Prepare agreements for transactions involving the DGs Office and finalise agreements prepared by legal officers of the departments. -Keep in safe custody all legal documents and agreements signed with consultants/third parties. -Provide support services to the departmental legal officers. -Schedule meetings of NCP in consultation with the Director-General and Vice Presidents office. -Provide logistics for activities of the National Council on Privatisation and make necessary arrangements for its meetings. -Record the minutes of NCP meetings and maintain in safe custody minutes of such meetings. -Collate, arrange and update various memos and briefs for the consideration of Council.
4.2 EXTERNAL RELATIONS SUPPORT
Media relations and issues management Liaising with the media, managing their expectations and handling burning issues through damage limitation and rapid response initiatives on a daily basis. This function includes stakeholder relations (primarily handling Labour unions and other interest groups). Communications and marketing This covers the management of the national campaign, community outreach initiatives and the various workshops and conferences held during the year. It also covers international marketing through the dissemination of regular updates on the program, providing regular content for the website and strategic use of bilateral relations opportunities to market the program.
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4.3
MONITORING & COMPLIANCE
Programme planning Providing overall direction to BPE with respect to the implementation of the programme. In particular, synthesizing the various individual work plans of the departments and ensuring that there is general coordination of goals and objectives. This function will also involve drawing up the performance and accountability agreements for the departments as well as developing targets against which they will be judged. Monitoring Monitoring the progress of outputs against departmental plans, targets and the performance/accountability agreements. In particular, this function will include reporting on a regular basis to NCP, donor agencies and others on the progress of the programme and ensuring that agreed processes and procedures (esp. in relation to procurement) are adhered to. This function also includes the pre- and post-transaction monitoring of enterprises. Research Providing the tools to assess the impact of the programme (i.e. reliable data) and acting as the Know-how unit for BPE. Anti-corruption Developing procedures and process manuals for all operations of BPE and then ensuring that these agreed processes and procedures are complied with. Generally, (i) raising awareness on corruption and provisions of the Anti-corruption Act; (ii) designing approaches for monitoring compliance with the Act and (iii) receiving and investigating complaints lodged in respect of violation of the Act.
4.4 OVERSIGHT
Internal Audit Ensuring that payment requests have the necessary supporting approvals and that the procurement of goods has followed the required due process before payments are made. IDA Credit Unit BPE has agreed to establish a dedicated IDA credit unit. The functions would include: Coordinating the development of a revised work plan and IDA and DFID procurement plans, including the training plans, study tours etc in the procurement plan, consistent with the work plan ensuring that the disbursement plan is realistic and consistent with the procurement plan;
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ensuring that financial planning and management is consistent with the procurement plan and in accordance with WB requirements; priorising workflow to BPEs procurement unit and IDA to ensure that urgent issues are treated promptly; day-to-day keeping track of the implementation of the procurement plan to immediately identify and resolve delays on either the WB or BPE sides; ensure that the contract monitoring and payments process is working correctly; project reporting: quarterly reports, audits, and compliance with legal covenants; to facilitate communications between BPE management, consultants and World Bank technical staff.
5.
DEPARTMENTS
Departments have all the functions needed to achieve their objectives including some functions to be centrally overseen by the DGs office. The outcome of the new divisional structure has been the unbundling of BPE into 6 mini-BPEs each fully accountable for about 1/6th of the reform, privatisation and commercialisation mandate of the organization. This has:
diversified accountability from the apex to six strong and empowered Directors who will be held accountable and who have become more focused on results, and Forced the Directors to ensure they acquire resources, assign responsibilities and manage accountability effectively within their organizations. FOR PROGRAMME
C. 1.
OPERATING ARRANGEMENTS IMPLEMENTATION ADVISER SELECTION PROCESS
To provide assistance in the preparation and conduct of divestiture transactions, BPE routinely engages firms and individuals as advisers to help in various activities which include: policy advice; institutional and public enterprise reforms; sale preparation, transaction and implementation; management/engineering services; procurement services; and social and environmental studies. BPEs objective in this regard is to ensure that selected advisers provide professional, objective, impartial advice at all times and hold the interests of the Federal Government of Nigeria paramount. Further, the NCP is keen to ensure that fraud and corruption is eliminated in the process, requiring that the BPE as well as the consultants involved in the implementation of the privatisation programme should observe the highest standard of ethics during the selection and execution of all contracts.
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The BPE policy on the selection process is guided by five main considerations which include the: (i). (ii). (iii). (iv). (v). need for high quality services to ensure the successful conclusion of the eventual divestiture; need for economy and efficiency in the process selection; importance of transparency and accountability in the selection process BPE interest in encouraging the development and use of Nigerian consultants and domestic capacity building; and opportunity for value-added through the training or transfer of knowledge to BPE staff and/or Nigerian consultants.
In July 2000, the NCP approved new guidelines for the selection and employment of Consultants by BPE for the implementation of the Privatisation programme . In most cases, the process to be applied is the Quality and Cost Based Selection (QCBS) scheme that follows closely the methodology applied by the World Bank and recognized as international best practice. QCBS is a competitive process that takes into account the quality of proposal submitted by the short-listed firms and the cost of services to be provided, in the selection of the successful consultant. Critical to the effective implementation of the privatisation programme is the appointment of consultants for all facets of the advisory services required. In many cases, where the World Bank funds the process of selecting consultants, the process follows the World Banks published procurement guidelines. In other cases, consultants are required to follow the process below, which effectively mirrors the World Banks procurement guidelines. 2. TERMS OF REFERENCE
The selection of Advisory Services will commence with the definition of the required services and the development of Terms of Reference (TOR). The TOR will include the following:

Background; Information to facilitate the consultants preparation of their proposals. This could include relevant studies; Specify transfer of knowledge or training as an objective where necessary; Specify details of the number of staff to be trained Specify the estimated staff and time required for the assignment Specify the expected outputs reports, data, maps, surveys, etc.
These TOR shall not be too detailed and inflexible to allow competing consultants to propose their own methodology and staffing. 3. COST ESTIMATES
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The development of the TOR will be followed by the preparation of cost estimates for the assignment. Cost estimates will be based on BPEs assessment of the complexity of the assignment, the duration, personnel and envisaged deliverables. This will include professional fees, foreign and local costs, reimbursable, incidental costs, office equipment and overhead costs. 4. SELECTION PROCESS
The process of selecting a Privatisation Adviser, normally based on Quality and Cost Based Selection (QCBS) method, entails the following sequential steps: Drafting and publishing the Advert for the Expressions of Interest (EOI); The harvesting of the EOIs, containing responses on the basis of published pre-qualification requirements after a minimum of 30 days. Evaluation of applicants CVs and other submissions listed in the EOI. A shortlist of not less than three firms, consortium or individuals is drawn from the list of applicants (that is, respondents to the General Procurement Notice who must be on the list of Consultants). The shortlist is subsequently sent to the Technical Committee of NCP for approval and the World Bank, for no objection comments, where World Bank financing is involved. Following the acceptance of the shortlist, a Request for Proposal (RFP) is sent out to the short listed firms requiring them to submit their proposals. Specified in the RFPs is the requirement that both the Technical and Financial proposals must be submitted at the same time, in separate sealed envelopes. To expedite negotiations with the winning bidder, a draft contract is included in the RFP package. A period of between 45 days to 60 days is allowed for the preparation and submission of the proposals, depending on the nature of the enterprises involved. A pre-proposal workshop is held, not later than two weeks to deadline on submission of proposals, to enable the prospective Advisers express their concerns and obtain clarifications on the RFPs issued to them. On receiving the Technical Proposals and upon the expiration of the due date, the Technical Proposals are opened before a selected evaluation team of five or seven people consisting of professionals. These proposals are subsequently evaluated using the criteria enunciated in the RFP. Subsequent to the approval of the evaluation results by Technical Committee and receipt of the no objection from World Bank (World Bank funded transactions), the qualified firms are invited to attend a public financial bid opening. Public opening of the financial proposals. The quoted prices (and all relevant details such as tax elements, success fees, minimum time of completion where the RFP so specify) are announced publicly. A printed copy of the bid
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prices, as announced and so endorsed by representatives of the firms present is sent to firms whose financial bids were opened. Based on the evaluation/scoring criteria stated in the RFPs, the weighted scores of the financial bid prices are equalized with that of the technical scores to arrive at the final weighted scores and ranking of the firms for the purpose of the final selection. Equalization Report presented for Management Committees/NCP Technical Committees approval and World Bank no-objection. Negotiations with the selected firms in order of ranking by NCP Technical Committee/BPE. If there is a breakdown in the negotiations, the next most qualified firm will be negotiated with until an agreement is eventually reached and signed with a selected firm. Award of the Privatisation Advisory Contract with the contract documents perfected by BPE Legal Department
5.
SUCCESS FEES
As a general policy, NCP may pay a success fee to the privatisation adviser. Such fee payable should implicitly reflect the advisers intellectual output (the transaction structure), project management, and the ability to attract a field of investors to bid for the privatised entity and thus generate competition. The success fee shall only be payable to the privatisation advisers upon final receipt of proceeds from the successful bidder. The objective of the success fee is to serve as incentive to the adviser to go the extra mile in ensuring that the transaction is successful. In addition, in the negotiation of advisory fees, due regard is taken of the need to ensure that advisers also take a share of the risk in the event that a transaction does not succeed. NCP may also pay a finders fee of no more than 0.5% of the eventual purchase consideration to any agent that successfully attracts and advises the winning bidder. In such a case, all prospective bidders shall be asked ab initio to state the name of such agent/adviser. The criteria for payment shall be stated up front and publicly disclosed, and upon success with its bid, the agent/adviser shall be paid accordingly. A typical QCBS process consists of the following steps; preparation of Terms of Reference (TOR); preparation of the cost estimates and the budget; advertisement inviting Expressions of Interest (EOI); preparation of the shortlist of consultants; and preparation and issuance of Request for Proposal (RFP) which includes a Letter of Invitation (ITC), Information to Consultants (ITC), and the proposed Contract. Other actions involved in QCBS process include receipt of proposals; evaluation of technical proposals; and consideration of quality; evaluation of financial proposals; final evaluation of quality and cost; and negotiations/award of the contract to the selected firm. The process typically applied by BPE is shown below:
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Adviser Selection Procedure

Advertisement for Expressions of Interest (EOIs) published in local and international press
Expressions of Interest submitted to BPE
EOIs evaluated by BPE Evaluation Team
Applicants pre-qualified and short-listed
Shortlist submitted to NCP Technical Committee for consideration and approval
Requests for Technical and Financial Proposals (RFPs) issued to approved shortlist of applicants
Proposals submitted by short listed applicants
Technical Proposals evaluated by BPE Evaluation Team Public opening of Financial Proposals
NCP Technical Committee and BPE conduct negotiations with short listed applicants
Approval and ratification of selected adviser by NCP Technical Committee and full NCP meeting
Adviser appointed
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6.
TRANSACTIONS AND BIDDING PROCESS
Since its commencement in 1999 the second privatisation programme has been executed with all sense of transparency, accountability and professionalism consistent with the stance of the present administration. This posture has engendered credibility with which the implementation of the programme has been pursued so far. The Privatisation transaction involves two major processes: (i) (ii) Actual transfer of substantial equity stake plus Management control of the public enterprise to a strategic investor; and An initial public offer of another block of shares on Nigerian and International capital markets.
The selection of Core investors is done in an open international competitive bidding process designed to ensure that only the most qualified bidder is chosen. The selection process starts with the invitation (through advertisement in the local and international journals and magazines) of interested core investors to submit Expressions of Interest (EOIs). This is sequentially followed by other stages in the process including Evaluation of EOIs received, issuance of bidding documents and information memoranda to qualified bidders, due diligence for all bidders, return of bids, public opening of bids, negotiation with bidders, review of final submissions of the bidders recommendations, final approval, announcement of winning bid and payment by the winner. A generic flowchart depicting the detailed core investor selection process is shown below. The NCP has approved that transactions will follow the process outlined below. Again, it is clear that not all transactions can be exactly alike and slight variations to the approved processes will be inevitable in view of the particular nature of the enterprise, local and international market conditions, the level of investor appetite, policy considerations and, most importantly, the advice of the transactions advisers who will be required to structure and implement a privatisation transaction strategy in line with international best practice. In cases where there is a need to vary the standard process to be followed, this variation will be considered and approved by the NCP and will then be communicated to all bidders as early as possible in the process and certainly before the actual bidding process commences. An outline of the typical transactions process is as follows: (i) Advertisement for expressions of Interest (EOI)
Prospective Core/Strategic Investors express their interest in response to an advertisement, which is usually placed in UN Development Business, and local and international media and a period of not less than thirty days given for responses. For the very small transactions, where international investor interest is unlikely, the focus of advertisements will be on local media.
(ii)
Submission of Expression of Interest
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All interested investors must abide with advertised requirement such as submission deadline, reporting structure, etc. (iii) Evaluation of EOIs
The Evaluation is a pre-qualification exercise for determining which of the applicants are qualified to proceed to the next stage on the transaction schedule. The nonqualified applicants are promptly informed of their non-qualification, while the primafacially qualified ones are required to pay the registration fees specified in the advertisement in order to proceed to the next stage. It is at this stage that BPE and its advisers will commence the process of conducting due diligence on the prospective core investor. At this stage, only outline information is available on the bidding consortium, but as the process progresses and once technical bids are submitted (see below) more detailed investigations will be conducted. However, it is important to emphasize that such diligence is a continuous process that commences once EOIs are received until the final shortlist of pre-qualified investors is drawn up. (iv) Bidding Documents
The bidding documents lay down the ground rules for the transaction. The documents include a detailed outline of the bidding procedure; The Information Memorandum, which provides background information on the enterprise the proposed contracts and other relevant bidding documents. (v) Due Diligence Exercise
This is the Data Room process where prospective core investors have access to relevant information and documents of the enterprise being privatised. The Data Room will be open for a minimum period of four (4) weeks during which the prospective core investors are expected to carry out a comprehensive due diligence of the company including meetings with management of the enterprise/BPE/Privatisation Advisers and visiting field sites (where applicable). In addition, BPE responds to requests for information and addresses concerns and questions the bidders may have about the proposed transaction. (vi) Submission of Bids
Once bidders have had an opportunity to fully scrutinize the enterprise, they are invited to submit technical and financial bids (in separate sealed envelopes), as well as a bid bond in an amount to be set from time to time by the NCP and the level of which is determined usually on the basis of the size of the transaction. The bonds will be callable in the event that a prospective bidder defaults in its obligations to NCP. The bonds have 180 days tenor. All late bids are rejected and returned unopened.
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(vii)
Evaluation of Technical Bids
Two evaluation teams are constituted, one comprised of members of the NCP/BPE and the other comprised of the transactions advisers. The teams separately consider the technical bids following criteria that have been predetermined and that were communicated to the bidders in the bidding documents. The prospective Core Investors whose Technical proposals meet the minimum scores are qualified to proceed to the next stage, while those below will be declared unqualified and their financial proposals returned unopened. (viii) Financial Bidding Round NCP has approved that, where feasible, price will be the single determining variable for selection of the bidder to purchase governments equity in any particular public enterprise. Accordingly, once the technical bids have been evaluated, all those bidders that have been assessed to be technically qualified proceed to the financial bidding round when financial proposals are opened. Prior to opening the financial proposals, bidders submit their confirmation that their financial bids will be unconditional and will remain valid for a set period, usually 180 days, from the date of the bid opening. Next, the sealed financial bids, which had at an earlier stage been submitted in separate envelopes together with the technical bids, are opened in public. This opening will usually be televised live and will always take place in the presence of all bidders, the international diplomatic community, representatives from print and broadcast media and members of the general public that choose to attend. NCP also reserves the right to invite one or more additional round of bidding after the public announcement of the originally submitted bid. The decision to do this will be made well before the bidding process starts and will be announced clearly in the bidding documents sent to all bidders. This will ensure that the right to call for an additional bidding round is not exercised with a view to favoring any particular bidder. The additional bidding round will take place on the same date and at the same venue as the opening of the initial financial bids, and will also be televised live and take place in the presence of all bidders, the international diplomatic community, representatives from print and broadcast media and members of the general public that choose to attend. The process of bid revision takes place in the open. Bidders are given a period of time, typically 30 minutes, within which to consider their revised proposals. Bidders are escorted to open but partitioned compartments where they may huddle and discuss their revised bids. However, during the process of considering the revised bids, consultations between bidding consortia are not allowed. Any such consultations may result in the disqualification of the offending party. Revised bids are indicated on pre-printed forms, signed by an authorized representative of the bidding consortium and sealed in an envelope for submission in public to NCP/BPE, whereupon the revised bids will be opened and announced in public and made available for review by the public.
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Bidders are reminded that revised bids must be given with the full authority of each bidding consortium. Bidders will have been advised before hand that the key decision makers within their consortia should be present for the additional bidding round and should provide a written Power of Attorney confirming their authority to submit revised bids on behalf of the entire consortium. Downward adjustments of the bids quoted in the first round are not allowed. Bidders may therefore either waive their right to increase their bids from those quoted in the previous rounds, or elect to increase them. In the event that they waive their rights, their bid in the first round shall remain applicable. All financial bids submitted in the second and any other subsequent rounds, must also be provided free of any and all conditions. The bidder offering the highest price will be deemed the Preferred Bidder and the bidder offering the next highest price the Reserve Bidder. No price negotiations are permitted after the announcement of the Preferred Bidder. (ix) Signing of Final Documents
Discussions with the Preferred Bid on the outstanding terms of the contracts commence immediately after the announcement of the Preferred Bidder. As the proposed contracts were sent to all bidders as part of the bidding documents, there is usually little to negotiate and major changes to the contract are not entertained by NCP. Generally, details of all the final transactions documents must be agreed within 10 working days of the date of the financial bid opening. In the event that such discussions break down, NCP is free to commence discussions with the Reserve Bidder. (x) Financial Close
Typically, upon signing of final documents, the Preferred Bidder will be required to pay the purchase consideration within a short period. In certain cases, usually where the transaction is large, the Preferred Bidder will be required to pay a deposit, usually of around 10% of the purchase consideration, immediately and then the balance within a predefined period of time. Generally, the period within which the payment of purchase consideration is required will tend to depend on the size of the transaction, outline valuation of the enterprise and the advice of the transactions advisers who will take cognisance of conditions in the local and international money and capital markets to determine an appropriate period that is fair to the Preferred Bidder. The period set will have been communicated to all bidders with the bidding documents. In the event that the Preferred bidder is unable to pay within the stipulated period the NCP will seek to reach financial close with the Reserve Bidders. If discussions with the Reserve Bidder also fail, or if the Reserve Bidder is equally unable to raise the required funds, the transaction is deemed to have failed. In cases where there is only one bidder remaining in the race and that bidder fails to pay within the designated period, the NCP reserves the right to extend the payment period. The length of the extension should not be too long and will be determined upon the advice of the transactions advisers. The bidder will also be required to pay a penalty by
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way of a charge based on a default interest rate above the relevant Treasury bill rate quoted by the Central Bank of Nigeria or above LIBOR. This rate shall be applicable from the commencement date of the extension until the date of receipt of the payment. (xi) Transfer of Management Control
During the interim period, from the time the Share Sale Agreement is signed and full purchase consideration is paid, and upon which management control is ceded to the Preferred Bidder, an Interim Management Board will be put in place to run the enterprise, in order to preserve the value of the Enterprise. Upon the payment of the purchase of consideration, control will be transferred to the Core/Strategic Investor, and the shareholders would constitute a new Board of Directors. Other privatisation includes methods that the BPE hopes to exploit further include: i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii. Debt/ Equity swap Exclusive Management Employee Buy Out Mass privatisation Sale by share issue Minority stake sale to employees Sale of minority stakes by tender (placement) Contracted method: Lease of existing assets Asset sale Liquidation at the point of sale Contracted: Concession Unbundling (and sale by a method as above) Liquidation and break-up of enterprises.
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Core Investor Selection Process Part I

Advertise invitations to all prospective core investors to submit expressions of interest (EOI)
Evaluate EOIs
Qualified?
Inform applicant of non-qualification
Issue Bidding Documents, Bidding Process Guidelines & Information Memorandum to qualified Bidders
Allow at least 4 weeks due diligence period for all bidders
Verification of Bidders Credentials Bidders submit Technical and Financial Proposals
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Core Investor Selection Process Part II

Evaluate Technical Proposals
Shortlist qualified bidders
Qualified bidders invited to public financial bid opening
Financial bid opening
Declaration of Preferred and Reserve Bidder
Signing of Final Documents
Financial Close
Commence Transitional Procedures and Transfer of Management Control
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D. 1.
STATUS OF PROGRAMME IMPLEMENTATION Phase One
The privatisation of enterprises slated in the first phase is all but complete. These enterprises, which were divested through public offers or a combination of public offer and core investor sale, are: NAL Merchant Bank, International Merchant Bank (IMB), FSB International Bank Plc, Unipetrol Plc, African Petroleum (AP) Plc, Assurance Bank, National Oil and Chemical Company Plc (NOLCHEM), West African Portland Cement Co (WAPCO) Plc, AshakaCem Cement Co. Plc (AshakaCem), Northern Nigerian Cement Company Plc (CCNN) and Nigeria Cement Company (Nigercem) Plc. Following these transactions, around N20billion was remitted to the treasury, far exceeding initial expectations. The case of Benue Cement Co. (BCC) is yet to be resolved for the core investor to take over and the parties are trying to resolve out of court. The remaining shares reserved for the staff of BCC, which the staff failed to take up, have been sold to institutional investors. Also, Afribank is a spillover enterprise whose privatisation is far advanced but is yet to be concluded due to legal and regulatory hurdles. Transaction process on Calabar Cement Company (Calcemco) concluded in September 2002 with Flour Mills & Holsm as the core investor a proceed of N1.04 Billion was realized and FGN share was N 206 Million.
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PHASE ONE PROCEEDS
NAL IMB UNIPETROL FSB ASHAKA CCNN NOLCHEM AP WAPCO BCC
Core Investor Proceeds NIL NIL 1,593,750,000 NIL 1,572,187,500 622,761,278.82 7,412,916,000 2,308,824,000 1,798,550,000 918,316,128.20
Public Offer Post Offer Proceeds Proceeds (States) (a) 573,000,480.25 255,775,729 11,262,696.75 1,116,635.25 435,801,067 10,157,105 1,258,520,369.40 132,441,208.20 369,142,669.50 72,028,910.25 44,941,345 3,165,857.50 979,913,750 305,455,000 272,240,265 195,777,900 808,307,115 31, 660,035 NIL NIL
Post Offer Proceeds (IIs) 59,4,295,165 2,205,379.80 12,785,215 256,445,978.87 94,170,688 10,531,507.07 117,337,775 102,011,379.58 213,185,819.16 32,960,867
Sale on NSE Floor NIL 778,369.60 NIL 39,447,024 NIL NIL 200,626,884.53 NIL 167,184,623.06 NIL
Total Proceeds 1,423,071,374.25 15,363,081.40 2,052,493,387 1,686,854,580.47 2,107,529,767.75 681,399,988.39 9,016,249,409.53 2,878,853,544.58 3,018,887,592.22 951,276,995
TOTAL
N 16,227,304,907.02 N 3,944,822,642.90 N 1,007,578,380.20 N 1,435,929,774.48 N 408,036,901.19 N 23,831,979,720.59
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2.
Phase Two
The second phase is concerned with public enterprises engaged in sectors where the prices of their respective output/services are largely market-determined. A number of enterprises in this Second Phase have recently been privatised. These include Festac 77 Hotel, Nigerdock Limited, Electric Meter Company of Nigeria (EMCON), Niger Insurance, Nigeria Cement Company Limited (NIGERCEM), Savannah Sugar Company Limited, National Truck Manufacturers, Kano, Nigeria Reinsurance Corp, Niger Insurance Plc, Ikoyi Hotel, MV Abuja, National Fertilizer Company (NAFCON), Kano Central Hotel, Ikoyi Hotel property located in Lagos (Caterers Court and No8 & 10 Lees Road, Ikoyi) and Capital Hotel Plc (owners of Sheraton Hotel and Towers, Abuja) Due to the poor reception to the Daily Times public offers, the secretariat has recommended a core investor sale to Mr. President. His approval is being awaited. However, public offers for Nigeria Re-Insurance Plc and Capital Hotel Plc. will be carried out later. Other second phase enterprises to be privatised, most of which are now at advanced stages of divestiture, are as follows: i) Financial Services: ii) Nicon Insurance Corporation Abuja Stock Exchange Bank of Industry Nigerian Agricultural and Co-operative Bank
Culture and Tourism Durbar Hotel Ahmadu Bello stadium, Kaduna Liberty Stadium, Ibadan Nnamdi Azikiwe Stadium, Enugu Nicon Hilton Hotel Capital Hotel Plc. Nigeria Hotel Plc. Abuja International Hotel National Arts Theatre Lagos International Trade Fair Complex Tafawa Balewa Square Investment Ltd.
iii)
Media Companies New Nigerian Newspapers Ltd (Public Offer)
iv)
Transport and Aviation Nigeria Airways Limited and subsidiaries
Bureau of Public Enterprises Status Report - May 2003
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v)
Nigerian Aviation Handling Company Federal Airports Authority of Nigeria Nigerdock Nigeria Plc (Public Offer) National Inland Waterways Authority Nigeria Unity Line
Vehicle Assembly Plants ANAMMCO Leyland VWON PAN Steyr Nigeria limited
vi)
Paper Mills NNMC, Oku Iboku NPM, Jebba IPPC, Iwopin
vii)
Sugar Companies Nigeria Sugar Co. Bacita Lafiagi Sugar Co Sunti Sugar Co.
viii)
Agro-Allied Ihechiowa Oil Palm Co. Ltd. Ore Irele Oil Palm Co. Ltd Ayip Eku Oil Palm Co. Ltd Nigerian Romanian Wood Industries
ix)
Steel and Aluminum Ajaokuta Steel Co. Ltd. Delta Steel Co. Ltd Jos Steel Rolling Mill Co. Ltd. Katsina Steel Rolling Mill Co. Ltd Oshogbo Steel Rolling Mill Ltd. Aluminum Smelter Co. Ltd.
x)
Mining and Solid Minerals Nigerian Coal Corporation and subsidiaries Nigerian Mining Corporation and Subsidiaries Nigerian Uranium Company Limited Nigerian Iron-Ore Mining Company Limited
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xi)
Others Nigerian Security Printing and Minting Co. West African Refinery Sierra Leone NIPOST Central Packages company, Ilupeju Opobo Boat Yard Abuja Environmental Protection Board Chemical Company of Senegal Premier Breweries Plc
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PHASE TWO PROCEEDS
ENTERPRISE Niger dock Limited FESTAC'77 Hotel
BIDDING DATE January-02 January-02
GROSS PROCEEDS N 3.50 Billion N 1.01 Billion
CORE INVESTOR Global Energy / McDermott UAC Properties Plc conversion to shopping and hotel in progress IILL(Failed to conclude)
NITEL (Unconcluded) Non - Refundable deposit Assurance Bank Nigeria LTD Nicon Hilton Hotel (Unconcluded) Bid Bond Proceeds Capital Hotels PLC Nigeria Reinsurance Corporation Niger Insurance PLC Savanna Sugar Company Limited National Trucks Manufacturing, Kano Electricity Meter Company, Zaria National Fertilizer Company of Nigeria Nicon Hilton Hotel, Abuja TOTAL
February-02
N 15.40 Billion
February-02
N 0.85 Billion
Parmex / Gensec Consortium
October-02
N 0.32 Billion
Africa Properties Limited
October-02 December-02 December-02 December-02
N 4.5 Billion N 1.01 Billion N 0.62 Billion N 1.35 Billion
Hans Gremlin Nigeria LTD Management Buy Out Management Alliance Company Limited Dangote Industries Limited
December-02 December-02
N 0.80 Billion N 0.40 Billion
Art Engineering Limited Dantata Industries
March-03 April-03
N 10.28 Billion N 7.54 Billion N 50.40 Billion
Sino Africa Limited Nimex Investments Limited
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3.
PHASE THREE
Phase Three of the programme comprises the privatisation of major enterprises in the monopoly sectors of the economy, which require major pre-divestiture sector reform, including NEPA and the NNPC subsidiaries. Mr. President, formally in Phase Three, accelerated the sector reform and divestiture of NITEL, as a sign to the national and international community of the Federal Governments political will and commitment to its privatisation and economic liberalization programme (see Telecoms Reforms below). Sector Reforms The implementation of Phase Three of the privatisation programme requires sector reform and restructuring, prior to or side-by-side with the divestiture transaction. In the monopoly sectors like electric power and telecommunications, sector reforms are undertaken in a logical sequence as follows: i) ii) iii) iv) Policy Formulation or Review Legal/Regulatory Framework Design Restructuring and Liberalization Privatisation Transaction
Some of the Sector Steering Committees earlier inaugurated have reached advanced stages of their assignments. So far actions taken in the four key sectors of power, telecoms, ports and oil and gas are as summarized below:
3.1 POWER SECTOR REFORMS
In order to attract private sector investment and sustain the development of the power sector to ensure uninterrupted and efficient power supply in the country, the NCP defined the objectives for power sector reform as follows: To promote competition to facilitate more rapid provision of service throughout the country; To create a new legal and regulatory environment for the sector that establishes a level playing field, encourage private investment and expertise, and meet social goals; To restructure and privatise the National Electric Power Authority (NEPA); and To encourage the successors to NEPA to undertake an ambitious investment programme.
In order to carry out the twin processes of restructuring and privatisation of the power sector, the NCP Electric Power Sector Reform Implementation Committee (EPIC) was inaugurated in February 2000. The following steps were also taken: EPIC with the advice of reputable power sector consultants (NERA) put together a Power Policy, which was approved by the Federal Executive Council on 28th March, 2001 (see below) Legal Regulatory Consultants were appointed in April 2001
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Draft Electric Power Sector Reform Bill was approved by FEC and submitted to National Assembly for enactment in September 2001. Appointment of Restructuring Blueprint Advisers in November 2001. Appointment of Due Diligence Advisers in August 2002
On 07 January 2003, the Vice President of the Federal Republic of Nigeria and Chairman, National Council on Privatisation inaugurated the new Board of Directors of NEPA. The main objective of the Board was to ensure the implementation of the Power Sector Reform Programme of NEPA and to ensure the continuance of public power supply in line with the power sector reform and privatization programme. The Board is comprised of 10 members and has set-up various committees and set-up teams to work hand in hand with the BPE in undertaking the reform of the Nigerian Electricity Sector. Power Policy The Policy envisages a 3 stage legal and regulatory reform of the power sector as follows: Transition Stage - characterized by private power generation through Independent Power Producers (IPPs) and Emergency Power Producers (EPPs); corporate restructuring, unbundling and privatisation of NEPA through sale or license of all thermal plants to private operators or concessionaires and transfer of management, ownership and control of selected distribution companies (discos). Medium Term (after the unbundling and privatisation of NEPA is completed) - Characteristics that are contemplated will include competition among generating companies; energy trading between generation and distribution companies primarily on the basis of bilateral contracts through contact exchanges and sales; payment of full price by generators for natural gas and other fuels; and, sale of energy by companies generating power in excess of their needs to distribution companies Long run Competition Structure - It is envisaged that during this phase, the various power generation, transmission and distribution companies will be operating optimally. Additionally, there would be economic pricing of electricity to cover the full costs of supply, including expectation of a reasonable, risk-adjusted rate of return on capital; opportunity for large industrial consumers to choose their suppliers; a well developed wholesale market with formal membership rules, procedures, etc.; and, full retail sales competition. Legal and Regulatory Reform The Electric Power Implementation Committee (EPIC), with the aid of its consultants, has made considerable headway in defining the legal and regulatory architecture for power sector reform. Key features of his architecture are as follows:
The market design structure and regulatory framework are interrelated aspects of the power sector reform programme that are documented in the Electric Power Sector Reform Bill presently in the National Assembly for passage and enactment. The passage of the Bill is paramount to the establishment of a transparent power sector in Nigeria, whilst the market rules are the key to operation of the market.
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The Power Bill Presently before the National Assembly has the following objectives: to provide for the formation of companies to take over the functions, assets, liabilities and staff of the National Electric Power Authority, to develop competitive electricity markets, to establish the National Electricity Regulatory Commission; to provide for the licensing and regulation of the generation, transmission, distribution and supply of electricity; to enforce such matters as performance standards, consumer rights and obligations; to provide for the determination of tariffs; and to provide for matters connected with or incidental to the foregoing. The creation of a new Electricity Supply Industry (ESI) requires predictable and efficient rules, sometimes called the rules of the game for any company operating (connected) to the grid or operating in the Market. The Market Rules and Grid Code are in quite an advanced stage. Notwithstanding this, the Market Rules and Grid Code require further review to adapt them to Nigerias electricity system realities to reflect issues of compliance and enforcement. Detailed procedures, for instance, thermal variable cost nomination, hydro operation and dispatch are required to complete the rules and codes. Once the Market Rules and Grid Code are completed and drafted, the approval by NERC is required to formalize it as the regulatory framework for the Power sector, to complement the new Bill.
Corporate Restructuring of NEPA. PricewaterhouseCoopers (PwC) and other consultants commenced work in November 2001 on preparing a blueprint for the restructuring and unbundling of NEPA. Essentially, NEPA will be unbundled along functional lines namely, generation, distribution and transmission. A special purpose entity will also be established to assume NEPAs major financial and trading liabilities and some of the current energy-purchasing obligation. On August 26th, 2002, the NCP approved the implementation blueprint for the restructuring. This restructuring will involve the creation of six Generation Companies (Gencos), in line with NEPA existing generating installations with the exception that Kanji and Jebba will be one Gencos since they both drew from River Niger, an independent transmission company, that is also responsible for System and Market Operation; and eleven (11) Distribution/Marketing Companies (Discos) matching existing zones (with the exception of Lagos, which will be split into two due to size of the load). The objective is that each one of these companies will be (or become) a commercially viable independent company. It is envisaged that this restructuring programme will conclude in late-2002 and be followed soon after by a shadow-trading period and before the divestiture of Government interest in 2003 and 2004 in the discos followed by the Gencos. As the restructuring blueprint has been approved by NCP, activities in the early part of 2003 will focus on implementation of the blueprint and the actual creation of the new business units as envisaged. The BPE is working hand in hand with both the Ministry of Power & Steel and NEPA along side the newly inaugurated NEPA Board to ensure effective implementation of the reform programme.
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Rural Electrification Policy and Strategy Consultants Part of the medium-term objectives of reform program for power sector prepared is rural electrification aimed at expanding access to electricity by the rural communities in a cost effective manner. This entails the drafting of a comprehensive Rural Electric Policy and establishing a Rural Energy Fund to implement this policy. BPE working in close collaboration with the Federal Ministry of Power & Steel is now in process of retaining advisers to undertake this work. NEPA Due Diligence As a precondition to the physical unbundling of NEPA, it is considered that a Due Diligence Audit of NEPA would be beneficial. The objective of the due diligence audit is to assist and advise the Federal Government in determining the precise operational status of NEPA and place a value on existing assets ahead of its restructuring and eventual privatisation. KPMG Professional Services (KPS) have been retained to undertake this assignment in August 2002. This assignment is in its final stages. NERC Set-up On 1st April 2003, the Bureau retained the services of Mercados Energeticos to review and execute its options with respect to Governments decision to establish the National Electricity Regulatory Commission (NERC) and prepare it to operate in line with global best practice ESI norms, practices and procedures. The consultants would ensure that the Governments policy requirements with respect to organizational development, operational and financial management support necessary for the establishment and operations of NERC are met. The assignment is currently on going. Power Sector Adviser To assist the Bureau in coordinating the activities of other consultants and relevant Government agencies in the implementation of the Power Sector Reform programme, Michael Dodwell of BPI, United Kingdom was retained on 17th February 2003. The consultant is specifically assisting the Bureau review the work carried out by other consultants as well as manages and oversees the implementation of the tasks of other consultants. The consultancy is also on going. Other consultancies at the conclusive stages of being engaged are for the following: Rural Electrification Adviser SPE Adviser Tariff Design
3.2 TELECOM SECTOR REFORMS
Telecommunications Policy The Telecommunications Sector Reform Implementation Committee developed and produced a new National Telecoms Policy that provides for a dynamic private sector
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driven industry. It was this Policy that created the enabling environment for the telecom revolution that is transforming Nigeria today. Prior to the approval of the Telecoms Policy by the NCP and then Federal Executive Council in September 2000, Nigeria had the third lowest tele-density in the whole world. NITEL had an installed capacity of about 750,000 lines, while only about 400,000 lines were actually in use. There were correspondingly, about 50,000 analogue phone users and an even lower number of subscribers for the Private Telecom Operators. Before the GSM operators entered the telecom market, the waiting period in Nigeria for a phone line was several weeks if not months, and the connection fee was amongst the most expensive in the world. Just over a year after the auctioning of Digital Mobile Licenses to three operators, close to a million people have been connected. Legal and Regulatory Framework A consortium comprising Booz Allen & Hamilton/Clifford Chance/ Afriprojects/ Udo Udoma & Belo-Osagie was appointed as advisers to review the legal/regulatory framework of the sector and prepare a draft Telecommunications Bill for presentation to the National Assembly. The Terms of Reference for the Consultants were to: (i). Review the existing laws and regulations in the telecommunications sector; (ii). Prepare an overview report on the legal and regulatory framework in the sector with comments on: Nigeria Telecommunications policy The Nigerian Communications Commission Decree 1992 Public Enterprises (Privatisation and Commercialisation) Act 1999 Other relevant Acts, legislation and regulations with direct relevance to the telecommunications sector Regulatory instruments such as orders, operating licenses, tariff filings and interconnection agreements. Existing procedures for policy making, rule making, licensing, appeals, consumer affairs, etc.
(iii). Prepare a new legal framework for the Nigeria Telecommunications Sector; (iv). Prepare a new law for the Telecommunications sector which addresses the rights and responsibilities of the Ministry, Nigeria Communications Commission and licensed operators; (v). Provide support to the regulatory agency in drafting and finalising the new licenses for NITEL, M-TEL and other licensed wireless operators;
(vi). Prepare appropriate subsidiary legislation and amendments to the existing legal and
regulatory framework and other regulatory instruments regarding: Numbering plan Spectrum management; and Internet services
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The consortium deployed cross-country experience in over 30 nations and, using the Telecoms Policy as the foundation, developed the Bill. The consortium held various consultations with NCC, NITEL, the Ministry of Communications and other stakeholders in the industry. By late 2000, the consultants submitted the first draft of the Bill to the Steering Committee and this draft was accepted and approved for public discussion by the President-in-Council on 27th December 2000.The approved draft was published in various national newspapers and copies were distributed far and wide for public debate. Following inputs from federal agencies, State Governments, the National Assembly, the Judiciary, trade unions and other interest groups, the Bill was revised and re-revised, culminating in the production of a fifth draft which was debated and finalized at a National workshop held on 3rd and 4th April 2001. Following the workshop, the approval of the Bill was obtained from NCP and recently, the clearance of the Federal Executive Council before onward passage to the National Assembly. The Bill was forwarded to the National Assembly in the third quarter of 2001 and is still awaiting final passage. Privatisation of NITEL In accordance with the spirit and letter of the Telecoms Policy, Mr. President directed in 2001 that NCP ensure that NITEL (and M-TEL) be privatised by the end of that year. As such, the NITEL/M-TEL privatisation became the flagship transaction for 2001. In accordance with the timetable for the privatisation of NITEL, the Bureau received bid proposals for a 51% equity stake from three potential core investors. These core investor groups were: Investors International (London) Limited (with TDC, a subsidiary of Portugal Telecom, as operator) Newtel Limited consortium (with Detecon, a subsidiary of Deutsche Telecom, as operator) Telnet Nigeria Limited consortium (with Korea Telecom as operator)
All three proposals, which were submitted by the three bidders before the expiration of the deadline given by BPE, were submitted in two envelopes (for Technical and Financial proposals) under the bid process and evaluation criteria approved by the National Council on Privatisation. BPE opened the Technical Proposals in the presence of representatives of the three consortia and the technical evaluation was completed on 12 th November 2001. The sealed financial proposals of the consortia were then opened in a live televised event on 13th November 2001, witnessed by all stakeholders and representatives of the international diplomatic community and Transparency International. After the opening of initial financial bids, bidders were given 30 minutes to submit revised offers. These offers were as follows: Investors International (London) Limited US$1.317 billion Newtel Limited consortium Telnet Nigeria Limited consortium US$1.072 billion US$1.310 billion
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The preferred bidder was declared to be Investors International (London) Limited (IILL) and the reserve bidder was declared to be the Telnet Nigeria Limited consortium (Telnet). IILL paid 10% of its bid price on 12th December 2001 but failed to pay the remaining 90% as required by the deadline of 12th February 2002. Following the laid down procedure, IILL was deemed to have lost its deposit and the Reserve Bidder was invited for negotiations. Negotiations with Telnet were inconclusive and the consortium finally declined to take up the offer. Accordingly, the option of selling 51% of NITEL to a core investor remains open to the Federal Government and will be exercised when market conditions deem it feasible. Management Contract As a result of the inconclusiveness of the Core Investor Sale transaction for NITEL, and in order to ensure that NITEL keeps pace with the rapid transformations in the telecoms market, the FGN decided that the management of the company should be placed in private sector hands through a competitively tendered management contract. The appointment of a reputable telecom firm to come and manage NITEL, will help bolster the confidence of the Nigerian public in the telecom utility, thus increasing the publics interest in its shares. The rationale was that under a new competent management that is focused and given specific mandates to deliver, NITEL would be able to embark on a new expansion programme, enabling it to generate new profits. The potential manager would be a reputable telecommunication company that will assume the management and operational control of NITEL for a period of two to three years. The potential manager is expected to compete effectively with the telecommunication markets introducing sales and marketing expertise, increase range of products, transfer technologies and skills and strengthen management. In May 2002, advertisements were placed in foreign and local newspapers calling for the submission of expressions of interest (EOIs) from reputable world-class telecommunication firms interested in operating NITEL under a management contract for the next two to three years. In order to afford additional time for reputable companies to apply, the Transaction Advisers, PricewaterhouseCoopers (PWC) advised that the deadline for the submission of EOIs be extended by 2 weeks. It was thus extended to June 28, 2002. The extension was advertised in the Financial Times. Following the advertisements, 14 EOIs were received by the June 14, 2002 deadline. After evaluation, the following bidders were short-listed based on the earlier published evaluation criteria and were subsequently invited to submit their bids for the NITEL Management Contract. The short-listed bidders included: 1. 2. 3. 4. 5. Africa Access and Lucent Technologies BT Teleconsult Keppel T&T Netcom ZTE Consortium Pentascope International
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6. 7. 8. 9.
SaskTel International TCIL Bhawan and BNSL Technologia das Communicacoes Telenor Management Partner AS and Swedtel AB
Following the pre-qualification of the short listed prospective operators, Confidentiality Agreements were sent to the prospective operators in preparation for the data room due diligence. The Confidentiality Agreement was to ensure that prospective operators do not disclose any privileged information to a third party. Seven (7) companies out of nine signed the Confidentiality Agreement while two (2), BT Teleconsult and Keppel T & T withdrew form the process. The due diligence process was to enable the prospective operators assess NITELs facilities, network and resources before submitting their technical and financial bids. The prospective bidders were issued transaction Information Memorandum on September 4, 2002 and electronic copies of data room documents to enable them conduct due diligence on NITEL. Securities features were installed in the CD-ROMs to prevent the documents from being circulated to the unauthorized parties printed or saved on the bidders computer system. The due diligence commenced on 16th September 2002 and ended on 14th October 2002. The pre-qualified managers requested for an extension of time for submission of their bids. An extension was subsequently granted until November 14. The following five (5) consortia took part in the process; - Africa Access / Lucent / BT - Pentascope - TCIL / BNSL - SaskTel / IBM - China Netcom The pre-qualified firms concluded due diligence on 4th November 2002, and technical and financial proposals were submitted on 15th November. As part of the due diligence process, all the firms were in Nigeria for meetings and site visits at NITEL. The technical proposals were evaluated immediately and have since been concluded. Pentascope was selected as the Management contractor, the management contract was signed on March 18, 2003. Pentascope assumed full responsibility of NITEL April 28, 2003.They are providing the key financial officers and chief technical officer. The management contract is for a period of three (3) years. NITEL IPO The Secretariat had sought and received approval from the NCP for the Initial Public Offer of a portion of the Federal Governments Shares in NITEL Plc to form part of
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Governments strategy for divesting its shareholding in NITEL. The Secretariat was of the view that the sale of NITEL shares to the public should be done in multiple tranches due to the limited absorptive capacity of the domestic capital markets. It was also envisaged that sometime in the future there would be a tranche of NITEL shares for cross-border listing on one of the international stock exchanges. In order to facilitate the Public Offer of these shares, the Council had approved the appointment of a team of flotation advisors for the transaction. The IPO transaction was not a fall back measure following the collapse of the core investor transaction but had always constituted an integral part of the privatisation strategy for NITEL. Given the collapse of the core investor sale, Council felt it could achieve the same objective of fostering NITEL from the bureaucratic and in efficient management that had left it a shadow of its full potential by entering into a Management Contract agreement with a credible and well-experienced international telecom operator. The Secretariat had anticipated opening the Public Offer by May 2003, however having signed the contract with the Management operator in March 2003, and being that the new management of NITEL would sign off on the offer documentation. It became clear that the profit projections that would be used in the offer documents would have to be projections drawn up by the Management contractor and contractually the contractor is required to provide a business plan/profit projections within 90days of assuming office. With the need to use the new business plan, the audit period under review would be extended to cover the period to Dec 2002. A revised timeline has been drafted factoring in the conclusion of both the business plan/ profit projections and the Dec 2002 audit at the end of July 2003. It is envisaged that the offer will open in September 2003.
3.3 OIL AND GAS SECTOR REFORMS
OBJECTIVES The FGN has assigned very high priority to petroleum sector renewal and reform. Specific objectives include: Revitalization of the sector and an end to public sector losses through redesign of and adequate staffing and resourcing of policy and oversight agencies and restructuring and disposition of public sector assets to the private sector. Continued expansion of upstream activities, emphasizing private sector participation and additions to oil and gas reserves. Resolution of NNPCs JV funding difficulties, including a re-examination of NNPCs level of equity participation in the JVs. Enhanced upstream oversight capacity, particularly with respect to cost containment and the monitoring of revenue flows.
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Improved transfer of upstream managerial and technical know-how to the Nigerian community and increased Nigerian capacity and content in the sector both directly, and as suppliers of goods and services. Urgent amelioration of adverse social and environmental impacts of upstream operations. A sustainable clean physical environment, social equity, and an end to violence in the oil producing areas. Increased emphasis on the recognition of the interests of host communities in oil producing areas, and articulation of a framework for the sustainable development of said areas. Downstream self-sufficiency, ending product imports and restoring export capacity. An end to subsidies to the refining sector and significant efficiency gains through privatisation and expanded private sector participation in both existing and new refining capacity. Consolidation of product price liberalization initiatives. Enhanced competition in both refining and retailing. Effective regulation of transport and storage infrastructure in both the oil and natural gas industries, including reasonable tariffs and rules of access protecting against anti-competitive abuse and promoting competition. Enhanced security in the operation of oil products infrastructure. Greater attention to environmental and Health Safety & Environment priorities in the downstream sector. An early end to gas flaring and expanded private sector investment in the gas sector for both exports, regional and domestic markets.
REFORM INITIATIVES To set the pace for reform of the petroleum sector, the FGN, through the Vice President, in April 2000, established the Oil and Gas Sector Implementation Committee (OGIC) with 6 sub-committees. They have each submitted reports, which have been harmonized and will provide framework for new policy: The Structure of the Industry Legal and Regulatory Matters Upstream Operations Downstream Issues Non-Core Investments Gas and Petrochemicals
The sector reform will be implemented in the following sequence:
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Transition to full deregulation REFORM AGENDA (iv) Market liberalization Policy review and formulation Review of legal and regulatory framework Privatisation
PRIVATISATION
Pre-conditions for Privatisation Preconditions include the deregulation of petroleum products market by the removal of all barriers to internal trade, exports or imports of refined products through: Freeing of crude oil prices, so that refineries will pay the equivalent of world prices for crude. International market parity pricing and appropriate downstream tariffs Establishment of an Independent Regulatory Commission for the Sector A regulated open access pipeline and storage depot system A legal and regulatory framework that will assure private investors of competition on a level playing field.
The Federal Government of Nigerias interest in the downstream sub-sector is made up of the following fully owned subsidiaries of NNPC, which are all slated for privatisation: Four refineries, located in Port Harcourt (2 refineries, old and new), Warri and Kaduna. Petroleum and Pipelines Marketing Company Limited (PPMC) made up of over 5000 kilometers of products pipelines, 17 depots and 3 refinerybased product tank farms, two jetties and one export terminal Nigerian Gas Company Eleme Petrochemicals Company Limited.
In the upstream sector, the eleven (11) oil service companies, in which the FGN holding is not more than 36%, will be privatised. BPE has been invited to visit Petronas, Malaysia from the 27th to the 29th of January 2003. The visit is in compliance with the objective of the FGN to gain an understanding of the structure and workings of the Malaysian oil & gas industry to benchmark Nigerian oil service companies against their Malaysian counterparts. This would help put in place a framework that will encourage them to operate with efficiency, profitability to their shareholders, accountability to regulatory agencies, transparency in their operations, and enhancement of local capacity in the oil and gas sector. Other assets scheduled for privatisation include HYSON (Nigeria) Limited, in affiliation with Carlson Bermuda Limited. The Federal Government has also scheduled its investments in West Africa Refinery Company (WARCO), Sierra Leone, for privatisation.
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Objectives Of The Privatisation Strategy For The Downstream Oil And Gas Sector The objectives of the Privatisation strategy for the downstream oil and gas sector are as follows: To create a competitive industry framework through sector reform and privatisation, thus mobilizing private investment. Competition will improve customer service levels and prevent price abuses To improve the regulatory framework and liberalize prices and imports To diversify supply sources and improve transparency To create adequate margins for all stakeholders and attract investments into the sector To eliminate petroleum products scarcity and set the stage for coordinated export to the West African sub-region.
The above initiatives will create the necessary environment for privatisation and provide the background for the objectives of the sub sectors of the downstream sector, which are given below: Objectives Of The Privatisation Strategy For The Refineries The refineries will be privatized partially with strategic interest going to a core investor with expertise in running a world-class refinery. Each core investor will submit an investment plan as well as a Social Plan. The sale would most probably be sequenced as the investor pool for refinery privatisation offers are unlikely to be able to absorb 3 refinery offers in one year Objectives Of The Privatisation Strategy For Products Pipelines And Marketing Company (PPMC) The strategic plan proposes that PPMC pipeline network system, marine and truck bulk transport assets and infrastructure be unbundled and privatised through the sale of several large share blocks, with the largest shareholder becoming the operator (Logistics Company). The logistics company will transport products by pipeline, marine vessels and trucks between depots nationwide on behalf of Oil Marketing Companies, on open access, non-discriminatory basis, but will not be allowed to own or sell products in its own right. The plan also proposes that PPMC depots be privatised as Regional Storage Depot Companies (RSDCs), which will offer product reception, storage and distribution services to all licensed oil marketing companies on non-discriminatory basis. The RSDCs will not be allowed to own or sell products in their own right and products handled will remain the property of oil marketing companies. Also a Regulatory Commission will be established to deal with access and related issues and to set pipeline and depot tariffs, according to agreed formulae. The Oil Marketers will be allowed to purchase products either from the international market or from the privatised domestic refineries at international market (import parity) prices. They will be able to instruct the logistics company and the regional storage depot companies at which terminal or depot, product is to be supplied and when. The Logistics
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Company and depot companies will have the right to reject cargo, which do not meet quality standards. Privatisation Strategy For Eleme Petrochemical Co. Limited (EPCL) The TOR and advert for EOIs in respect of Privatisation Advisory Services were drafted and submitted to the World Bank in December 2002. The Bank responded with a No Objection for the TOR and advert but objected to a fast track method of privatisation, as major restructuring will be required for the successful privatisation of the enterprise. The adverts will be placed in domestic and international dailies and publications. COMMERCIALISATION NNPC itself is slated for full commercialisation. In view of the fact that the downstream assets are scheduled for privatisation, the commercialisation of NNPC will focus primarily on upstream operations, and other assets of NNPC. The commercialisation exercise will commence after the privatisation of the NNPCs downstream assets. Upstream Federal Government of Nigeria upstream assets include: Exploration and production operations, which are dominated by NNPC joint ventures (JVs) and more recent production sharing contracts (PSCs) with major foreign oil companies such as Shell, Chevron, Texaco, Exxon Mobil and TotalFinaElf. Six JVs account for close to 95% of Nigerias current production. NNPC holds an average 58% equity interest in these JVs, but leaves the management of operations in each to the participating international oil company. NNPC does not hold an equity interest in the newer PSCs and the entire financing burden falls on NNPCs partners. The Nigerian Petroleum Development Company, (NPDC), NNPCs wholly owned exploration and production subsidiary, which holds and operates a number of licences, although its operations are small relative to overall upstream activity.
Other Assets include: NAPIMS, the investment services arm of NNPC, established for the purpose of monitoring and controlling the financial flows associated with the sale of NNPCs share of the joint venture production, as well as NNPCs share of joint venture operating costs and capital expenditure. Integrated Data Services Ltd (IDSL), an NNPC subsidiary incorporated in 1998 to offer geophysical, geochemical, seismic and other related services in the upstream sector of the oil industry. Nigeria Engineering & Technical Co. Ltd (NETCO), a subsidiary of NNPC, established in 1989 to provide an effective and reliable engineering base for the NNPC group, and the entire oil and gas industry
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Information Systems Department, described as the information nervous system of NNPC. National Strategic Seismic Data Storage (NSSDS), a seismic data bank. Petroleum Research Centre (PRC), and the Research and Development Division (RDD) of the NNPC. Duke Oil, a market monitoring company. Housing Estate Management
APPOINTMENT OF ADVISERS The Bureau of Public Enterprises, has appointed the following advisers: I. Downstream Strategic Adviser
Tom Houston & Associates was appointed in August 2002. The Adviser commenced work on the 26th of August 2002, and has since submitted his final report with recommendations, which articulates strategy for sector reform of the downstream. His TOR included; Provide recommendations with regard to regulatory requirements of sector: Regulatory agency Appropriate tariff structures and access rules for use of downstream infrastructure Appropriate-pricing system for crude oil delivered to domestic refineries and for products market Protection against anti-competitive abuses etc
The services of Tom Houston & Associates have been extended to include the preparation of terms of reference for legal/regulatory advisers, provide support for selection, evaluation and negotiation for consultant Start Date, Jan 2003. II. Policy Adviser
The firm of Nexant Ltd was engaged with effect from October 2002 to provide policy advisory services with respect to the Oil and Gas Sector. Their inception report was submitted in November 2002, the first draft of the Policy is due in January 2003. The terms of reference for its 20-week assignment include the following: Critically review and comment on existing and proposed sector policies, including the various reports and recommendations of the OGIC Subcommittees.
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Comment on the wisdom or otherwise of adopting these policy recommendations for inclusion in a National Energy Policy. Review the existing laws governing the Petroleum sector vis--vis the proposed sector policy and recommend appropriate amendments or necessary additions that will subsequently have to be made to the laws by consultants to be appointed separately for that purpose. Based on the above, and the sector objectives listed in the Terms of Reference, prepare a draft national policy and action plan for the petroleum sector, paying particular attention to the goals and requirements of a liberalized, competitive, private sector-led sector. In this context, highlight appropriate future post-privatisation structures and roles for the Government, regulatory agencies and NNPC. Make recommendations on any additional work or consultancies, which may be required. Throughout the assignment, consult as necessary with key stakeholders from Government, the legislature, national enterprises, the private sector and civil society. Participate in, and prepare presentational materials for planned Stakeholder Workshop. Coordinate closely with any ongoing parallel or complementary initiatives, e.g., planned downstream strategy advisory, power sector reform, and downstream natural gas strategy.
Other Advisers that will be appointed include: III. Legal / Regulatory Framework Adviser Start Date, 2nd Quarter 2003.
A consortium will be selected as legal/regulatory advisers for the downstream oil & gas sector. Their TORs will include: Review of existing legal/regulatory framework Designing regulatory framework for the downstream, including transitional initiatives (IMPP model & tariff and open-access study). Drafting a new petroleum (downstream) sector reform bill. Developing an implementation plan for startup and Year 1&2 of operation for new regulatory agency. Long Term Policy And Strategic Adviser- Start Date, 1st Quarter 2002
IV.
The services of a Long Term Strategic Adviser will be procured to provide continuous support throughout the privatisation programme.
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V. VI.
Implementation Advisers For The Establishment Of The Regulatory Commission For The Sector Are Due To Be Appointed In 2003. Long Term Communications And Marketing Adviser- Start Date, 1 Quarter 2002
st
The adviser will be appointed without any prejudice to the overall BPE Long Term Communications and Marketing Adviser. VII. Social Plan Consultant
The adviser will be selected subject to the effectiveness of the social plan of EPCL. VIII. Privatisation Advisers
The services of privatisation advisers for the following enterprises will be procured: o Eleme Petrochemicals Company and Oil Servicing Company - Start Date, 2nd Quarter 2003 o Port Harcourt Refinery I and II & Product and Pipelines Marketing Company - Start Date, September/October 2003 o Privatisation Advisors for West African Refinery Company, Limited Sierra Leon SGS Inspection Nigeria Limited was appointed as technical advisers on 13th November 2002, to carry out a preliminary technical assessment. They submitted their interim report on the 21st of November 2003. Also, First Interstate Bank and Messrs Renner-Thomas and Co. were appointed in December 2002 as Financial/Lead Adviser and Legal Advisers respectively and will commence work on the 20th of January 2003.
STAKEHOLDER ISSUES An all parties meeting consisting of the Oil and Gas Labor unions (NUPENG and PENGASSAN), Hon Minister of Labor, NNPC and BPE was held with the NCP Chairman sequel to the two-day warning strike by NUPENG and PENGASSAN to protest the privatisation of NNPC downstream sector. Subsequently, a standing technical committee on the privatisation of NNPC downstream assets comprising of the Ministry of Labour, NUPENGASSAN, NNPC and BPE with the Hon Minister of Labour as Chairman, was established to resolve perceived differences; so far the committee has held one meeting.
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3.4
PORTS REFORM AND PRIVATISATION
BPE and the Transport Sector Reform Implementation Committee (TSRC) have proposed a programme for the reform and privatisation of the Ports sector that comprises the following steps:

Formulation and implementation of a new Transport Policy for Nigeria; The review of the existing Nigeria Ports Authority (NPA) Act 1999 and the establishment of an appropriate legal and regulatory framework; The creation of a regulator for the sector; Restructuring NPA, including the corporatisation of port services and terminals; and The issuance of concessions for port services and operations to private sector operators.
The primary objectives of the port reform programme are:

To create a new legal and regulatory environment for the sector that establishes a fair and open business environment for all operators, Provide a framework for improved services provision, Restructure NPA and facilitate the creation of a sector regulator, Encourage competition wherever possible in the sector, Facilitate infrastructure development; and Provide the framework for private sector led growth through expanded domestic and foreign investment.
In accordance with the above, BPE has appointed advisers to assist in managing and executing the Federal Governments ports sector reform policy and the concessioning of some or all of NPAs operations. STAGE OF PROGRESS (PRIVATISATION ADVISERS) Terms of reference (TOR) and Advertisement for Expression of Interests (EOIs) for the privatisation advisory services on the ports were prepared and finalized in February 2002 World Bank No Objection was obtained in March 2002 Advert for EOIs from prospective advisers was placed on 2nd April, 2002 in the international and local print media, and the World Bank Development Business 21 EOIs were received from the prospective advisers as at the submission date (May 2, 2002). 18 EOIs were evaluated and 3 disqualified for non-compliance with the requirements in the advertisement. The evaluation report was approved by the Management/Technical Committee and sent to the World Bank for No Objection in June 2002. The World Bank No Objection on the EOIs evaluation report and the draft Request for Proposals (RFP) were obtained on 24th July and August 2002 respectively.
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RFPs were issued on 12 August to the following Short listed Firms o o o o o o Africa Merchant Bank Consortium PWC London Standard Bank London Ports Advisory Consortium Capital Bancorp Consortium, and CPCS Transcom Consortium
Proposals from the short listed consortia were received on 25th September 2002, while the evaluation of the proposals commenced on 30th September 2002.
During the last quarter of 2002, the report of the evaluation of the technical proposals was sent to the World Bank Country Mission for No Objection in order to proceed to the next stage - the opening of Financial Proposals of the following pre-qualified firms, which obtained minimum qualifying scores of 75%: PricewaterhouseCoopers CPCS Transcom Consortium Standard Bank Consortium. The Evaluation Report has been referred to the World Bank Headquarters in Washington D.C. for No Objection in accordance with the Banks guidelines. A procurement plan for the 2003 has been prepared and reviewed with the World Bank. Approval of the procurement plan is expected this month.
MARKETING COMMUNICATION For appropriate publicity of the restructuring and reform of the ports sector, Rosabel Advertising Limited as short term Marketing/Communications Adviser through a competitive bidding. Rosabel has commenced the assignment; the inception report (situation analysis) is expected by the end of February 2003. CONSULTATIONS WITH LABOUR UNIONS IN THE PORTS SECTOR BPE has emphasized the need to engage constructively the Labour Unions. The Labour Unions involved in the privatisation of the ports are: Maritime Workers Union of Nigeria (MWUN) NPA Senior Staff Association (NPASSA)
The building of consensus and partnership with the ports workers started by the inclusion and subsequent participation of the representatives of the Labour unions as active members of Transport Sector Reform Implementation Committee (TSRC), which
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was established in September 2000, with the Honourable Minister of Transport as Chairman. The TSRC at its first meeting of October 12th 2000 created five subcommittees, which include the sub-committee on Nigerian Ports Authority (NPA). As regards continual dialogue with Labour unions, focus group discussions were held between the unions and BPE at Port Harcourt, Delta and Lagos. These crucial meetings have immensely assisted in facilitating open and frank discussions with the unions leaders. In August 2002, one-on-one meetings were held with all the relevant stakeholders in the Nigerian ports sector. During the period, interactive sessions were held with Joint Dock Labour Industrial Council (JODLIC) and other dockworkers representatives. Between March and August 2002, three zonal workshops were held in Port Harcourt, Calabar and Asaba while a National workshop was held in Lagos to enhance wide spread consultations with Labour unions, littoral communities and other stakeholders in the ports sector. Representatives of the workers attended, presented papers and participated in-group discussions during the workshops.
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E. 1.
CONSENSUS BUILDING ACTIVITIES INTRODUCTION
The Communication and Marketing Unit of the Bureau of Public Enterprises has greatly expanded its mandate since the restructuring that took place in mid-2002. Following the overall restructuring, the Unit itself was reorganized and is now composed of three divisions, namely Campaign Monitoring and Events Management, and Government Relations, and Media and Publications, each of which has a specific purview based on the needs of the BPE, its stakeholders and various publics. With that, ongoing activities currently being implemented by the C&M Unit can be broken down as follows: Revision of the Communication Master Plan Benchmark Qualitative and Quantitative Survey Selection of a Long-Term Communication and Marketing Manager Interim Awareness Strategy Campaign Monitoring External and Government Relations
Details on each of these broad areas of activity are provided in the narrative below. 2. REVISION OF THE COMMUNICATION MASTER PLAN
In August 1999, Council approved the adoption of a Marketing Communications Master plan for the Privatisation Program. Against the background of a number of key issues, which were identified as likely to impact upon the implementation of the Privatisation Programme, the Master Plan established the following: Broad Goals; Communication Objectives; Key Communication action programme; and Implementation arrangements.
This Master Plan was developed before the commencement of the actual awareness activities. After one year of implementation and the deployment of additional human resources in the management of the communication activities, it was felt that there was a need to review the master plan. This review was designed to draw from the experiences of the first year of programme implementation and to properly define the roles of the various functionaries involved in the management of the Communication activities. As a
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result of this review, a Revised Master plan was prepared and subsequently approved by Council. The last phase of the Master plan concluded in March 2002 and since then the Communication and Marketing Unit of the BPE has been engaged in formulating a fundamentally new strategy aimed at enhancing public awareness and consensus building efforts. The new communication program, which will be funded under the IDA credit and is now in the early stages of procurement, is being developed to achieve the following broad objectives:
Generate and sustain, at all levels of society, greater awareness and support for the Federal Government of Nigerias privatisation program, with emphasis on the Power, Oil, Port and Railways sectors; Design and put in place mechanisms to foster transparency and increase public trust in the privatisation process; Attract potential investors, domestic and international, to participate in specific business opportunities available through the privatisation program; Build capacity, in form of a fully trained team, to further develop and implement the communications program of BPE beyond the Consultants assignment; and Achieve measurable success in shaping public attitudes in favour of privatisation and minimizing opposition to the exercise.
It is expected that the next phase of the communication program will launch in the middle of June 2003. 3. BENCHMARK QUALITATIVE AND QUANTITATIVE SURVEY
The overriding objectives of the research project are to: Test public attitudes, awareness, support and concerns vis--vis the FGNs privatisation exercise; Determine benchmarks against which to evaluate the progress of subsequent communication, consensus building and awareness activities; Identify sources through which the Nigerian public most regularly receives information on privatisation and determine its attitudes towards these sources; Provide the NCP and BPE with recommendations on how to incorporate the outcomes of the research in the next phase of the FGNs public communication programme; Suggest possible messages that correspond to the views and opinions collected as part of the research project; Track progress of the communication programme and conduct a further benchmark study (upon request by the FGN).
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The survey is intended to update data obtained through a previous survey conducted in 2000, while providing baselines conducive to tracking subsequent implementation of the awareness program. At the time of writing, both the qualitative (focus group discussions, in-depth interviews) have been completed and an interim report submitted. It is expected that the research contractor, Adam Smith Institute has presented its final report, including findings and recommendations. We are awaiting their final report. 4. SELECTION OF A LONG-TERM MARKETING MANAGER COMMUNICATION AND
In an effort to ensure proper management of the enlarged communication and marketing function, the BPE has requested for, and received, IDA permission to retain the services of long-term public relations professional. At the time of writing, 6 RFPs were sent out which 5 submitted. The RFPs have been evaluated and a report has been submitted to the procurement unit for submission to World Bank for No Objection. 5. 6. INTERIM AWARENESS CAMPAIGN
THIS PORTION OF THE AWARENESS CAMPAIGN IS INTENDED TO BRIDGE THE GAP BETWEEN CONCLUSION OF THE LAST SEGMENT OF THE MASTER PLAN AND LAUNCH OF THE NEXT PHASE OF THE COMMUNICATION PROGRAM, WHICH IS ANTICIPATED IN MID-JUNE 2003. KEY COMPONENTS OF THE INTERIM STRATEGY ARE A GREATER FOCUS ON GRASSROOTS MOBILIZATION, IMPROVED AND INTENSIFIED USE OF RADIO AS A MEANS OF COMMUNICATION, WELL-TIMED APPEARANCES ON STRATEGIC TELEVISION PROGRAMS, AND SYSTEMATIZED NEWSPAPER ADVERTISING. WE HAVE STARTED IMPLEMENTING THE CENTRAL RADIO PROGRAMME. ENTERIES FOR THE LOGO COMPETITION HAVE BEEN EVALUATED AND REPORT IS ALMOST READY. WE HOPE TO CONCLUDE THE ESSAY WRITING COMPETITION VERY SOON.
6.
CAMPAIGN MONITORING
As part of the Unit reorganization, significant attention was given to the need to properly and efficiently manage the various awareness campaigns and activities commissioned from time to time by the BPE. To date, the C&M Unit is monitoring the marketing aspect of the Privatization Share Purchase Loan Scheme (PSPLS) and is also going to monitor the NITEL IPO. . 7. EXTERNAL AND GOVERNMENT RELATIONS
A significant and very important component of a successful public awareness and consensus-building program is the ability to properly communicate with various stakeholders and publics. Such interaction is meant to enlighten audiences and, hopefully, engage them while generating support and understanding for the privatisation program. As part of this function the C&M Unit has identified a range of population groups with which it has either initiated or entrenched a relationship. Among these are:
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State governors; Traditional and religious leaders; Local governments; High school students; Students of tertiary institutions; and, Labour unions.
Additionally, the Unit has arranged a bi-lateral visit from a Senior Economist with the Gambian Divestiture Agency; the Senior Economist Baboucarr Koma successfully concluded his one-week study tour between January 20 24, 2003. Koma areas of concentration while on the BPE study tour include: (i). To have an in-depth look at the privatisation process of Nigeria. (ii). To study the relationship between the privatisation agency and the government such as memorandum of understanding and legislation defining such relationship. (iii). He visited a former public enterprises that has been privatised i.e. FSB international Bank. Also, the unit is currently organizing a summit of the African Privatisation Network (APN) Conference scheduled for September 1-5, 2003 of which the BPEs Director General is Chairman. The objectives of this Conference is to bring together all African Privatisation agencies and the need to stimulate, encourage, and promote active participation of the private sector enterprises to balance the state owned enterprises in Africa economies.
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F. 1.
MULTILATERAL AND BILATERAL PRIVATISATION PROGRAMME World Bank Privatisation Support Project (PSP)
SUPPORT
TO
THE
The World Bank Group was invited by the Federal Government in September 1999 to provide advisory transactional and financial assistance to the successful implementation of the privatisation and commercialisation programme. Pursuant to this several missions of the World Bank, its private sector arm IFC and its investment guarantee arm MIGA have visited the country to undertake studies, reviews and audits of some key sectors of the economy. Following discussions on the reports of the various missions, the World Bank to provide a Credit to assist the Nigerian Government to enable it develop and implement its homegrown privatisation programme. This Credit, of US$114 million over a period of about five years, is being granted to FGN on IDA terms, which implies payment of 0.75% per annum as interest with a grace period of 10 years and repayment period of 35 years.
1.1 PSP COMPONENTS
The PSP consists of provision of financial and technical support in the following areas: Privatisation Programme
The carrying out of the Privatisation Programme through the preparation and execution of divestiture transactions for about one hundred Public Enterprises. The carrying out of studies to prepare evaluations, design compensation and severance policies, analyses business environments, and establish coherent policies to ensure effective implementation of the Privatisation Program. Strengthening NCPs capacity to carry out the privatisation programme through provision of technical advisory services, training and study tours for NCP, BPE and other involved in the programme. The carrying out of a public awareness and stakeholder communication programme to develop consensus for reform among policymakers and civil society, and improve the general publics understanding and acceptance of the objectives and benefits of the programme. The carrying out of a review of the options for the establishment of a legal and institutional framework for competition policy.
Telecommunications Sector Reform
Preparation and adoption of a new national policy on telecommunications for privatisation, competition, licensing of new
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entry and regulation of the telecommunications sector, through provision of advisory and consulting services.
Review, development and implementation of legislation to establish a detailed regulatory framework for the telecommunications sector, preparation of implementing rules and regulations, and preparation of licenses. Institutional strengthening of Nigerian Communications Commission (NCC), including design of an organizational structure, reorganization of NCC, development of business plans, work plans and budgets, development of a financing plan and establishment of financial controls, installation of a management information system, preparation of a human resources development and training plan, and design of dispute resolution, interconnection, tariff regulation, licensing and other systems for NCCs operations. Development of a rural telecommunication strategy and design and implementation of a rural demonstration project. Carrying out of a radio-spectrum management study, and acquisition, installation and putting into operation of new radio-spectrum monitoring equipment systems.
Power Sector Reform
Establishment of a new policy and regulatory framework for the power sector. Establishment of the Nigerian Electricity Regulatory Commission (NERC) as an autonomous regulatory agency, preparation of implementing rules and regulations, and support for commencement of operation by NERC. Restructuring of NEPA to establish separate generation, transmission, distribution, and system control entities, and design of wholesale market operations, through the provision of advisory and consulting services. Privatisation of power generation and distribution entities, including promulgation of service quality standards for transmission and distribution, review of compliance with environmental standards, and drafting of concession contracts and share purchase agreements, through provision of advisory and consulting services. Development of a strategy to extend the national power grid to towns and rural communities, and development of a rural electrification policy for non-grid electricity supply.
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Strengthening power generation by contracting out existing and new plants to private operators under Rehabilitate-Operate-Transfer, emergency power programme and similar arrangements, based upon competitive bidding, through the provision of advisory and consulting services.
Lagos Water Private Sector Participation
Private sector participation in the operation of Lagos State Water Corporation (LSWC), including strategic review of the policies and regulatory framework for the urban water sector, due diligence, financial and legal restructuring, asset valuation of LSWC, and carrying out a Labour programme, through provision of advisory and consulting services. Acquisition, installation and operation of equipment for repair of essential plant, and provision of essential services, to enable continued production of potable water, including improvement of the customer database, billing and collections.
1.2
STATUS
The PSP Credit became effective in the last quarter of 2001 and all disbursement conditionalities were met in May 2002. Accordingly, funds disbursement has commenced, resulting in the more efficient application of monies for the implementation of the privatisation programme. 2. USAID Grant in Support of the Privatisation Programme
In October 2001, USAID approved a technical assistance grant of $8.2 million to BPE. This grant was an extension of the earlier grant of $1million approved in July 2000, through which consultants were provided to the Bureau. The scope of assistance includes the following: Core Team: reversing the Nigerian brain drain by hiring a group of young and dedicated Nigerian professionals, trained in the best Universities locally and abroad, and with extensive international private sector experience in such areas as investment banking, law and economics to bolster the efforts of BPE to implement transactions. Institutional and Selected Policy Support: strengthening the capacity of BPE to manage the privatisation programme through the provision of technical assistance by short and long term expatriate advisers. Support of Key Priority Sectors: (e.g. power, telecom and transport) covering support for policy, legal and regulatory reforms and developing and implementing the privatisation programme. Also, selected policy support for privatisation (e.g. labour, environmental, public enterprises debt).
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Consensus Building: providing for public enlightenment, media events and workshops for key stakeholders to increase awareness of the programme and ensure wider participation of all Nigerians. The grant is due to expire at the end of March 2003.
3.
Spanish Government Assistance for Privatisation The Spanish Government through its Embassy in Nigeria are providing limited financial assistance to the successful implementation of the privatisation programme through the sponsoring of investment feasibility studies to be conducted by Spanish consultants. Following the identification of appropriate areas for such studies, the Spanish Government is still in the process of determining the modalities of the identified assignments.
4.
United Kingdom Department for International Development (DFID)
The British Government has agreed to provide a grant of approximately US$10 million to BPE to cover such areas as: i). ii). iii). iv). Institutional support for BPE staff; Technical assistance in the implementation of the transport, power and oil and gas sector reform programme; Technical assistance in the establishment of the Nigerian Electricity Regulatory Commission; and Assistance in NCPs consensus building activities.
The grant is to be managed and administered by the World Bank. Final approval for the grant was received in January 2003.
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BPE Status Report - June 2003

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The Presidency BUREAU OF PUBLIC ENTERPRISES

Bureau of Public Enterprises Status Report June 2003

THE SECRETARIAT - ORGANISATIONAL STRUCTURE ............ 13

C. OPERATING ARRANGEMENTS FOR PROGRAMME IMPLEMENTATION ........................................................................................... 29

STATUS OF PROGRAMME IMPLEMENTATION .......................... 41

3.2 3.3 3.4

CONSENSUS BUILDING ACTIVITIES............................................. 66

F. MULTILATERAL AND BILATERAL SUPPORT TO THE PRIVATISATION PROGRAMME ....................................................................... 70

Bureau of Public Enterprises Status Report June 2003

INTRODUCTION PRIVATISATION POLICY

Bureau of Public Enterprises Status Report June 2003

Bureau of Public Enterprises Status Report June 2003

INSTITUTIONAL ARRANGEMENTS IMPLEMENTATION

Bureau of Public Enterprises Status Report June 2003

MEMBERSHIP OF THE NCP

Bureau of Public Enterprises Status Report June 2003

Policy and Monitoring Committee:

(Chairman: Obong Ufot Ekaette, Secretary to the Government of the Federation)

Finance Committee: Finance)

Bureau of Public Enterprises Status Report June 2003

Publicity and Mobilisation Committee :

Transaction Marketing Committee:

Bureau of Public Enterprises Status Report June 2003

(iii). (iv). (v). (vi). (vii). (viii). (ix). (x). (xi).

Bureau of Public Enterprises Status Report June 2003

Bureau of Public Enterprises Status Report June 2003

THE SECRETARIAT - ORGANISATIONAL STRUCTURE

Director General's Office

Planning & Monitoring

Finance & Administration

Bureau of Public Enterprises Status Report June 2003

DEPARTMENTAL BREAKDOWN OF SCHEDULED ENTERPRISES AS OF 1ST APRIL 2003

IDA Credits & Grants Roz Ben-Okagbue

Monitoring & Compliance Aisha Umar-Dahir

Internal Audit Dikko M. Abdullahi

General Counsel Abdulrazaq Oniyangi

Legal Secretariat Council Secretariat

Bureau of Public Enterprises Status Report June 2003

Deputy Director General Counsel/ Council Secretariat

Legal & Secretarial Support

Drafting & Opinions Central Litigation Agreements Management Committee

NCP Meetings NCP Committees

Bureau of Public Enterprises Status Report June 2003

Director Organizational Support

Snr Communications Adv Roy Nygaard

Human Resources Ibrahim Jalingo

Communications & Marketing Ibrahim Babagana

External Relations Joe Anichebe

Finance & Accounts Roz Okagbue [Transition]

Information Technology Engr. A. Aziz

Central Admin R.G. Omotowa

Applications System Admin Training

Facility Mgt Protocol Drivers Receptionist Paper Mills {Transition}

Bureau of Public Enterprises Status Report June 2003

Director Organizational Support

Deputy Director Central Admin.

Deputy Director Information Technology

Head Human Resources

Facilities Management Reception Protocol Drivers Other

Pensions Group Personnel Management

Website Lotus Notes Database Developer EDMS/Project Central

Network Administration Help Desk

Bureau of Public Enterprises Status Report June 2003

2.2.2 CENTRAL SUPPORT