Professor Abubakar Momoh, took a sudden exit two years ago. On Wednesday, the resourceful Lagos State University, LASU, under its Vice-Chancellor, Professor Olanrewaju Adigun Fagbohun, invited me to speak on Momoh. One of my main recollections was the sustained and principled campaign he waged against privatisation.
The process of privatisation was universally popular from the middle 1980s through the 1990s. It was promoted around the world as the best means of running modern-day economies as it allegedly ensures transparency, provides ready funds for investment in infrastructure and frees government to face governance rather than ‘business’. Privatisation was touted to ensure the democracy of the market place, foster competition, enhance good industrial relations and ensure efficiency. But all these were actually dressing armed robbery in elegant robes. Privatisation which began in Nigeria in 1988 negated the advertised advantages as it merely transferred public wealth to private pockets. Privatisation in Nigeria has not produced the promised foreign direct investment, nor ready funds for investment in infrastructure and other critical sectors. Also, the funds realised from the process have never been publicly accounted for. Rather than fostering better industrial relations, the privatised entities in most cases made it worse by not paying the accrued gratuities and pension to affected workers. In many cases, they engaged in mass worker lay-offs and asset-striping. Today, with the public always racing to the rescue of the private banks, airlines, electricity companies, etcetera, I am not sure we still have strong preachers of the false religion that the private sector is the engine room because it is a knocked engine. Three decades into this gambit with many public companies sold, the proceeds disappearing into private pockets and many of the companies going down, I do not think the hailers of privatisation still have a voice. Let me illustrate our privatisation experiences with two quick examples. The Nigerian Telecommunications Plc, NITEL, by 2002, was one of the most profitable public companies in the country. That year, it earned N49.18 billion. That same year, then President Olusegun Obasanjo with Vice President Atiku Abubakar as Chairman of the National Privatisation Council and Nasir El-Rufai as Director-General of the Bureau for Public Enterprises, BPE, decided to auction NITEL. They sold it to a company, International London Limited, ILL, for $1.2 billion. It turned out that the company was hastily put together by a gang. Although the Obasanjo government had claimed that its privatisation programme was part of ensuring direct foreign investment, it turned out that ILL had no such foreign exchange. Rather, it sourced the money locally, most of it from the First Bank. ILL and its local collaborators raised only 10 per cent of the money and were stuck. The transaction brought down the First Bank management and the government had no choice but to annul the messy deal. The triumvirate then handed over NITEL to a body called PENTASCOPE ostensibly to properly manage and make it more profitable. Handing over NITEL to PENTASCOPE was like inviting a gang of hungry cats to guard fried fish. The company wasted no time sinking its teeth deep into NITEL funds and cleaning out its treasury. PENTASCOPE managed NITEL from March 2003 to February 2005 during which the active NITEL lines fell from 553,471 to 291,000. While in the immediate pre-PENTASCOPE period NITEL earned N49.18 billion, under PENTASCOPE, it earned N21 billion. Also under PENTASCOPE, there were no new installations, no system upgrade and NITEL reaped lots of technical problems. PENTASCOPE wiped out the NITEL investments in treasury bills with the CBN and liquidated its credits with the International Telecommunications Union, ITU, and INTELSAT. The company abandoned and left NITEL a liability of N19 billion. Then the Obasanjo group decided that the BPE directly runs NITEL while a new investor is sourced. From February 2005 to November 2006 when the BPE ran NITEL, it was a mere continuation of the PENTASCOPE legacy of gross ineptitude and mismanagement. Even the private pension funds of the staff which PENTASCOPE avoided touching, the BPE group started nibbling.
The BPE owed salaries, and when the staff protested, it identified the protest leaders, and victimised them, including using punitive transfer and detention in police cells. Finally, the Obasanjo government announced it had found the perfect company to buy NITEL; it turned out to be the Transnational Corporation of Nigeria, TRANSCORP, a contraption hastily put together. Between TRANSCORP and BPE, NITEL choice properties across the country were auctioned at giveaway prices. The NITEL Training School which itself is a whole village and the only such school in the country was sold, as were NITEL offices and exchanges. Even its poles were sold and the staff left without salaries for 11 months. The GSM arm, MTEL which had 1.3 million subscribers, was wiped out. Yet at inception, MTEL had the widest reach of all the GSM companies in the country. Finally, NITEL was sold as scrap. The second example is the privatisation of electricity. Doubtlessly, the electricity agency, the Power Holding Company of Nigeria, PHCN, had a very bad record of under-performance. When the PHCN was known as the Nigeria Electricity Power Authority, NEPA, the public made a pun of its acronym to mean: ‘Never Enough Power Available’ or ‘Never Expect Power Always’. When it was changed to PHCN Plc, the public extended the jibe, that by the change of the name and acronym, the government was telling Nigerians: ‘Never Expect Power Always, Please Light Candle PLC’. The government claimed the only way out was to privatise electricity. First, it unbundled the single agency into 18 new companies: 11 Distribution Companies, DISCOs; six Generating Companies, GENCOs, which were all privatised, leaving only the Transmission Company of Nigeria, TCN, in public hands. Today, six years after privatisation, the 17 private companies unbundled from the PHCN, have worsened electricity supply in the country with no improvement in power generation. They have practically added no value to electricity generation or distribution and insist on estimated billing rather than provide pre-paid meters. Also, they have not provided the promised foreign direct investment and have become private monopolies in an essential industry. To worsen matters, the public continues to finance the 17 private electricity companies. They have not repaid any of the ‘loans’ given to them by the Central Bank under the Jonathan administration. Under the Buhari administration, we continue to give them financial bailout from the public treasury. First, the administration gave the GENCOs, N702 billion bailout funds. On Wednesday, August 21, 2019, the government approved N600 billion bailout funds for the privatised electricity companies. The national grid broke down six times in the first four months of 2019. These cases are part of the irrefutable evidence that privatisation is nothing but political robbery.