Economic Confidential, July, 2009

EXCLUSIVE INTERVIEW

We Are Adopting New Approach to Privatization - DG BPE

Dr. Christopher Uloneme Anyanwu, the new Director General of the Bureau of Public Enterprises (BPE), was the acting head of the Department of Public and Private Law at the University of Nigeria, Nnsuka before his recent appointment. A man with an activist’s personality with a definitive purpose to deliver on his new assignment is straight forward and frank on issues bordering on privatisation. He is a strong believer in the idea of PPP from outright sale of public enterprises that will allow for the participation of the people in the destiny of the organisations. His concern is that no one is to be retrenched or sacked. This populist demeanour is borne out of his desire for the well being of the ordinary man.  In an exclusive interview with the Economic Confidential, Dr. Anyawu talks on his vision in the privatisation process through his agency, BPE amongst other issues. Excerpts:

EC: What Can you say about BPE?

The Bureau of Public Enterprises (BPE) is like an engine room to the economy of Nigeria, since it deals with all the enterprises, all the endeavours of the founding fathers of this country till date, in terms of business and economy, so, that is the significance of the Bureau in the Nigerian setting and the economy. I must say that the BPE is an institution with highly professionalized, highly trained staff and they work through established procedures and within the short period I came here, I have introduced a system of moving people around so as to depersonalize activities here. When you depersonalize activities, you check corruption, so I can almost say that that this institution is corruption free, and it can not be corruptly influenced from the leadership to the bottom, because, you don’t meet the same person on the same table everyday you come. That is just one thing I have achieved. With that, I think, efficiency is possible as an institution. It will not be out of place to see the BPE as reform institution that wants to do away with corruption and corrupt influences in economic activities.

EC: Can we know your vision for the agency?

As to my vision, the appointment came suddenly, it marched version of my routine; I have been teaching for about 16 – 17 years, I taught for about 13 years in the law school and about five years in the University (University of Nigeria Nnsuka – UNN), before this appointment suddenly came and disrupted things, I took it in my stride as a challenge, it is not as if I had much choice, because, the challenge has been thrust on my shoulders and as a young and focused man, if you undertake a challenge you must ensure that it succeeds, so that is why I have undertaken the challenge. I am still articulating any strategy that I may have to make the bureau function more efficiently and achieve the goal of those who founded it and satisfy the Nigeria public and government. I am articulating very carefully the vision that I may have, but things are shaping up and as the coast becomes clearer that is, as I have brace myself to the job, I have observed significant challenges that I must address.

EC: How did issue of privatization come to be?

ANS: The privatization process did not originate from Nigeria, it probably originated from Britain under the Margaret Thatcher’s administration, so the exercise as we have carried it out so far has its significant flaws, it may not be seen easily by somebody who has not paid attention to it, or somebody who is not a professional or who is not an expert say in law, economics or accountancy etc. It is not easy to detect them but I easily detect them because of the background I am coming from, we have an eye for details and research. In fact, before now I had supervised first degree’s, master’s degree’s and even PhD degree’s projects or thesis on this area – Privatization. So, I see these deep flaws and I have braced myself up to the challenges of correcting most of them. Nobody is to be blamed for these flaws, like I said, privatization did not originate from Nigeria, so what we have been doing must be seen as experiments, the only important thing is that we must ensure that as we experiment, the fallouts or any mistakes made do not affect the economic policies of the government. So, I am to face those errors where they exist without letting them affect the economic policies of Nigeria, for instance, calling on the government to bring money because a privatization process has failed – as in the case of NITEL, we must correct it without asking government to bring out penny. That is why there is need to be careful in handling these things, another instance in the case of Ajaokuta Steel, you can not go to government to say there is a mistake, pay some money – it is a shame, it is criminal and it is an offence. Because, if you do things tidily, the fallouts of it may not impact on anything, because, it is our duty to tie up everything we are doing in an agreement carefully crafted so that the mistakes do not draw anybody back if at all they occur.

EC: There is always fear of retrenchment in every privatization exercise. How will you address it?

ANS: That is why I am looking at some of those privatized enterprises that have not worked, to see a way that we will help them, or rework them. The purpose of government is not to sell enterprises to people and let them stagnate or die; it is not the purpose in any part of the world. In places like Ukraine, Russia or China the purpose is to get these enterprises to work again and employ the people who were there and make money for government, so, it is not for government to make money from them. One thing we have gotten very wrong is the idea of selling enterprises in order to put money in the pocket of government and sending workers away, it is not proper, what does government need the money in its pocket for, if the workers are sent away in the streets? This scenario is not proper. We may have to refocus the entire privatization process, so that, when you privatize any enterprise, the workers are retrained in order to find relevance, by so doing their careers continue. It is not a question of pay them off. In Russia and Ukraine, they give you the whole enterprise, perhaps for one dollar, then invest in it, get it working, employ the workers and make profit for yourselves and pay the government its own dividend.

EC: People say labour always sabotages privatization process. How are you going to contain them?

ANS: It is not only the labour union that may sabotage privatization, I have found out that there are some fixed interests in almost every institutions that work against the public good. Can they always work against the populist’s policies? So the labour issue is understandable, I have addressed that issue, but as a driver in this bureau, if they understand my vision, they will know that I am fully on their side and so if we convince them of our genuineness and the intension of the government, they will cooperate. I always tell people for instance in that Power Holding Company of Nigeria (PHCN), you won’t say we do not deserve to have light 24 hours for all industries to work, if we can achieve steady power supply through privatization, why don’t we go for it? And why did NEPA/PHCN fail? It failed because of bureaucracies of government and inability to coordinate workers and all that. So, these are some problems that we must face and we must contribute towards solving. The workers, I am sure if you properly engage them as I always do, they will not be obstacles, they will be willing to put in their best, it is their synergy that will drive the whole process forward. If you privatize and there are no workers, how will it work? You can not rely on computers to operate themselves, you need workers to man them. So, taking care of the needs of workers is critical to the success of any programme at all, especially the privatization programmes.

EC: How are you going to address issues of failed privatization?

ANS: We are addressing the issues of failed privatization, it is an enormous job, we must address them to ensure that government policies succeed. It is not all about privatizing; it is about success of government policies. And the policy of government is quite clear on privatization, it is to provide more jobs, to create world class standard in every field of endeavour in Nigeria, I mean international best practices. For instance, privatization seeks to achieve 24 hour supply of electricity and the provision of portable water as it is in some settled economies. The government is saddled with too many things; doing business, doing governance – formulating rules, this will cause confusion for the government. But if you privatize and challenge individuals or corporate entities that are best suited for different endeavours, you will be able to achieve those things that we think are impossible.

EC: Which companies are difficult to privatize?

ANS: I do not see impossibility in any of them, there is not difficulty in any of them, be it refineries, oil and gas, or whatever. If they are working in other economies – Malaysia, Singapore and India, why won’t they work here? And they are working through privatization and Public Private Partnership (PPP).

EC: How many companies are due for privatization?

ANS: Before the end of next month (July 2009) we will privatize SACHOL, and we will re-privatize NITEL before the end of September 2009.

EC: What can you say about legal empowerment of BPE?

ANS: There are enabling laws on privatization; the National Council on Privatization (NCP) is Chaired by the Vice President of the country, Vice Chaired by the Minister of Finance, members include the Secretary to the Government of the Federation and Ministers. They have the legal powers to bring new enterprises and new endeavours into the list for privatization, concession or commercialization – full or partial, as already contained in the 1999 act. So, it is an ongoing thing, although there appears to some overlapping and conflict of roles in the establishment of Infrastructure Concession Regulatory Commission (ICRC), we are addressing the conflicts so that we can harmonize the respective roles.

EC: How are you going to resolve NITEL stalemate?

ANS: There is no stalemate in the privatization of NITEL. If you want to do a careful privatization, it takes a process and the process culminates in, perhaps, the highest bidder, the best investor possible, whom every body has seen is capable of running the firm or taking it over – is transparently chosen. So it takes a process, that is why we have gone on road shows, advertising the enterprises that are available for privatization in Nigeria, we have gone to Dubai, the United Kingdom, the United States of America, we are going around to showcase the potentials of NITEL. With that, we want the key global players to come and invest so as to make it work again.

EC: How will it be divided?

ANS: This time we are doing what has not been done before and that is to sub-divide the components, sub-divide NITEL into various business units and possibilities, that does not stop a core investor from acquiring the entire NITEL as an entity. We have sub-divided NITEL in order to also give opportunity to those who may want to take the components. Some new licenses will emerge out of the new mobile networks, and the purpose also is to get cheaper telephone tariffs for Nigerians and create a robust competition, when there is that robust competition, the tariffs will be lowered. These are the overall strategies that we are adopting. People say we are unbundling, (unbundling is when you corporatize, that is when you create different corporations from an entity) but we are not doing that. For instance, registering CDMA of NITEL as a corporate entity, registering MTEL as a different entity, NITEL analogue as another different entity – we are not doing this. Instead we did it technically, so that whoever anybody, be it an operator or an existing company can acquire them and develop them. We are giving that opportunity to prospective operators for the first time in privatization. NITEL has been privatized four times in the past, it is only this time that we are giving prospective operators this opportunity because this will help us to know the value of each of the component units, so as to know what should be paid by whoever wants to acquire them as a whole and this will be done transparently. I know that there are many people who do not see any good intension in what other people say, probably because of their limitations and fixed interests, but that is wrong. We have our credibility at stake and we must ensure that at least the process is done transparently.

EC: About the troubled Ajaokuta Steel. What have you to say?

ANS: On Ajaokuta one point is clear, BPE did not privatize Ajaokuta, it was done by the Ministry. No Ministry has the institutional capacity to carry out a transparent and effective concessioning or privatization of any public enterprises – put it down in black and white. The ministries are not institutionally equipped to ensure a smooth and transparent privatization, commercialization or concessioning of enterprises. They are only institutionally equipped to help government formulate policies and execute them. And I would assure you that any privatization carried out by the ministries is bound to have problems. Remember that I had first admitted that there has been flaws in the ones we have done due to learning process, but one difference you may draw between ours and theirs is that we can not ask government to bring a penny to pay banks for the NGN70billion they contributed to buy NITEL, we can not do that because we tied the agreement up neatly, so that if it goes sourly, the government the government does not loose and we will have an opportunity to correct the mistake. Perhaps in the case of Ajaokuta which was done by the ministry, the government may be called upon to make compensation or take responsibility for one liability or the other. Ajaokuta case is in the Arbitration Court in the United Kingdom, anyway I am not in that picture, but my emphasis is that, we at BPE can not accept this; what ever we do can not bring liability to government even if things go wrong. We are going to maintain and improve on this position during my tenure, to ensure that government’s position is very well protected in every agreement, because, in this experimental period – since I said we did not originate privatization, human situations are not perfect, more so in trying to experiment with things we did not originate, mistakes are bound to occur, but the mistakes should not bring uncomfortable fallouts for government, that is why you have not seen anybody in court challenging NITEL, because we tidied it up, we even went as far as getting power-of-attorney from investors – those who want the shares of NITEL, to re-privatize and pay them off, and that is what we are doing. If you allow the ministries to use the ICRC to carry out privatization (as they are all rushing to do now), there are bound to be more problems. And what happens when the minister is replaced? The new minister will try to find the flaws in the past arrangement and try to correct them and the problem will keep recurring, but the process is more likely to work if the BPE which is a neutral professional body carries out the privatization.  If we place the two institutions side by side – Ajaokuta and NITEL, you will see that the difference is clear.

EC: Can you clarify further on Indigenous Reserve?

ANS: The BPE has a vision on certain aspects of the economy in the process of privatization, commercialization or concession. Certain aspects of the economy must be left for Nigerians to develop, steel is one of such. Steel is the launch pad for technological take off of any country, so, you can not rely on an investor from Britain, India or America to come and develop steel and make Nigeria a key player, it is not possible because they will come here use their technology, fence you off, make their profit and go away, at the end of the day we still do not know what is happening, but if you let the indigenous investors to try their hands co-opting experts from all parts of the world, try their hands on it, make their mistakes, learn from them, at the end of the day we can produce steel and railings, it sometime may be at some cost or loss, but the important thing is that we do it and it provides the launch pad that we need. After steel is electric power, these are the conditions that must be controlled effectively for the country’s economy to stand and progress, so whom do you rely on, a core investor brought in from outside? You will not succeed. So these are the policies that I have, and we are articulating to bring to the attention of government and policy makers with time. I hope that we succeed in doing that.

EC: What is the cost of revamping the ailing companies?

ANS: We do not want government to embark on turn around revamping, let the prospective investors see the state of the enterprises, they will compete and whoever has the best expertise and financial muscle will take over, do the rehabilitation and make it work. The assets are already owned by the government; it is the management expertise that is critical most of the times – your ability to manage better than the other person. So that is why we put it through a process of “let the best person emerge”. And you do not look at finance all the time, you look at who can do the project, like in the case of NITEL, there are proposals to engage this or that, and since I am a member of the technical board and we are driving the process of privatization, I will not succumb to any threat, for instance, employ this or that consultant, ask government to bring money to pay – No! I will not do that. What I will do is this, even if it means funding it from here; get the NITEL engineers back, challenge them as a taskforce to go and get these facilities working up to a level, once they are working up to some degree, then we will privatize them. So it ought to happen in every other public institutions, so the idea of government revamping these institutions may sometime bring us backward. Government should channel its resources towards providing more conducive atmosphere for privatization.

EC: What are your challenges?

ANS: I have an attitude to work and that is the same attitude which most people adopt; I will do my best, but if you make the conditions impossible for me to do my best I will quit, that has been my attitude. Out there, Prime Ministers and presidents show their readiness to serve by putting in their best, but once you make the conditions impossible for them, they will quit. The purpose of public service is to transparently achieve, where you can not achieve, then you quit. I do no have personal interests in these things, when I leave here, I will go back to the classroom or law practice, I have a PhD degree in law, I will function well, there is no court that I have appeared that has not asked me what I am doing in the classroom and that I should be in the courts. But then, if you are challenged with public service, you have to bring out your best, and the atmosphere has to be made conducive for you to bring out your best, I have a lot of good ideas bubbling inside, I always share with people and at the end of the day, if they are found workable, they prevail.

EC: Any last words?

ANS: My concern is that the steel sector is such an important sector, no mistake should be made, and that the idea of it being a white elephant project or a bottomless pit for Nigeria resources must stop. The project must work and it must work through the Nigeria people, work through the Nigerian investors, work through the Nigerian banks investing in it. But calling the Nigeria government to come and pay money to anybody who calls himself an investor is criminal. It is not proper, because, all investors were given the opportunity, through due diligence to look at the facts and circumstances on the ground, including the peculiar political environment of Nigeria to consider them before investing, and you have to capture that setting in the any agreement, so that if anything goes wrong you do not call on the country to make recompense to anybody, that is not possible, and the government has to really pay attention to the steel and power sector, because, if we are serious to provide the launch pad for technological take off, then we must be in control of the steel and power sector and make them work as it is working in other advanced countries, until we achieve that, we have not started.