The Case against Privatization

The Case against Privatization

Wednesday, April 28, 2021 6:04 pm

Femi Falana

By Femi Falana


  • imperativeness of revisiting the Senator Lawan-led Investigation Committee Report (1999-2011)


The Federal Government has recently announced the policy that no less than 36 listed Public Enterprises (PEs) would be privatized in order to fund the 2021 Budget. The policy of continued privatization is being pursued with a frenzy in spite of the abysmal failure of privatization. The Bureau of Public Enterprises (BPE), a few days ago, publicly disclosed that out of 400 PEs, which the agency has privatised since 1999 so far, only 10 are on relative sound footing while the others have virtually been run aground by the same private sector.

These developments inform the decision of Alliance for Surviving Covid-19 and Beyond (ASCAB) to draw public attention to the “Report of the Ad-Hoc Committee on Investigation of the Privatization and Commercialization Activities of the Bureau of Public Enterprises (BPE) from 1999 to 2011” prepared by the Senate Committee. The Senate Committee that carried out the investigation was chaired by Senator Ahmad I. Lawan, now the current Senate President.

The verdict of the Senate Report is indeed “The case against Privatisation”. The Senate Committee Report disclosed how privatization in the period investigated was nothing but looting of public resources for the benefit of private individuals.

It is thus a good coincidence that the Chairman of the Committee that investigated privatization and commercialization programme between 1999 and 2011 is the current Senate President. It is a good opportunity for the Senate to insist on the implementation of the Recommendations of the Committee, which include reversal of the privatization of some of the privatizations and the prosecution of those who oversaw the exercise.

In this publication, ASCAB presents extracts of some of the key findings and Recommendations from the Senate Report in order for members of the public to be motivated in calling for total reversal of all past privatisations and to resist further privatisations as being pursued by the Federal Government.

The extracts from the Senate Report are as reproduced and/or summarized in certain cases below.

Femi Falana, SAN,Interim National Chair, ASCAB

12th March 2021

“The selection of core investors is supposed to be done in an Open International Competitive Bidding Process in order to ensure that only the most qualified bidder is chosen”. (Page 125, Paragraph 3).

However, the Committee discovered that in breach of this process and violation of section 11 of the Act and the Bureau Procedure Manual, direct approval of President Olusegun Obasanjo was sought in at least 43 listed privatization transactions.(page 125, paragraph 5).


“The Committee found that Aluminum Smelter Company of Nigeria was grossly undervalued having being built for $3.2bn USD and was privatized by BPE for $130m USD” (page 133, paragraph 9)

The Committee also found out that import duty waiver was being granted. (page 133, paragraph 9).

Ground rule 7 provides that “no single bidder/concessionaire would be allowed to have more than one concession in Apapa Port Complex”. However, the committee found out that the BPE breached this rule by giving the Apapa Port Complex Terminal ‘C’ to ENL Consortium Ltd which already had one, as opposed to Michelle Nigeria Ltd who emerged as the preferred bidder. (Page 133, paragraph 10).

“In Ajaokuta Steel Company, the Committee found that the process of privatization of public enterprises was totally set aside in the concession to Global Infrastructure Holdings Ltd and Global Infrastructure Nig Ltd by the then Federal Ministry of Power and Steel Development in breach of section 11(c) of the Public Enterprises (Privatization and Commercialization) 1999 Act”. (Page 134, paragraph 11).

“The Committee found that Bid bonds are usually refunded to bidders after closure of bidding”. (Page 135, paragraph 15).

“The Committee found that the processes of determination of workers terminal benefits/ pension payments are often abused by BPE. In NITEL, workers were forced to accept less than 5 years pension buy-out where it was agreed earlier for 5 years” (Page 135, paragraph 17).

“The committee found that in Federal Superphosphate Fertilizer Company, the Actuarist computed and recommended full payment of N457m but BPE paid only N383m leaving a difference of N73m. (Page 135, paragraph 19).

“The Committee found that workers of National Steel Raw Materials Exploration Agency, Kaduna are owed gratuities of one hundred and fifty million (N150m) by NICON Insurance Plc. (Page 135, paragraph 20).

“The committee found that out of 122 privatized public enterprises only 14 enterprises had shares reserved for workers”. (Page 136, paragraph 21).

““The Committee found that the scheme which was created to provide privatization share purchase loan scheme (PSPLS) to workers to acquire the reserved shares was aborted after NCP has expended N272,295,770.00. (Page 136, paragraph 22).

“The Committee found that some of the Share Purchase Agreements were skewed in favour of private investors against public interests (page 137, paragraph 23).

“The Committee found that the Share Purchase Agreement created an Escrow Account into which all the monies shall be paid into. However, the Committee found that the Escrow Account was not opened”. (Page 138, paragraph 26).

“The Committee found that the purchaser’s inability to pay $50m USD (first installment) within 5 business days resulted in an addendum which was executed on 14th November, 2006 in violation of the provisions of the SPA dated 3rd February, 2006”. (Page 138, paragraph 27).

“The Committee found that the enterprise was handed over to the purchaser without payment of the purchase consideration” (Page 138, paragraph 28).

“The Committee found that the approval for the addendum was given by former President Olusegun Obasanjo in violation of the Privatization Act and the Share Purchase Agreement. The Presidential Approval was ratified on 24th and 27th April, 2007. (Page138, paragraph 29).

“The Committee found that Nigerian Ports Authority, the statutory authority and agency of Federal Government responsible for dredging was not involved in the negotiation of the terms for the dredging exercise (Page 139, paragraph 30).

“The Committee found that the post privatization monitoring department of BPE carried out its routine monitoring of privatized enterprises in batches over a period of seven months. The exercise revealed that 43 enterprises out of 122 privatized companies are not performing” (Page 139, Paragraph 33).

“The Committee also found that that the Agreements were poorly monitored post privatization by BPE officials even though all the Agreements with the exception of IPO have this clause ‘that for a period of not less than five (5) years after completion the Purchaser shall adhere to and implement in full the


Post Acquisition Plan which it has submitted to and agreed with BPE (a copy of which is attached to the Agreement as Schedule A and which forms an integral part of this Agreement}. Such Post Acquisition Plan may be modified from time to time during the said period of five (5) years, only with the prior written consent of the BPE, such consent not to be unreasonably withheld. The Purchaser acknowledges and agrees that BPE or its agents shall be entitled to undertake biennial monitoring of the Purchaser’s compliance with the Post Acquisition Plan throughout the said period of five (5) years.

The clause created a legal obligation on BPE and/or its agents to monitor performance of core investors in line with PAP, while at the same time created similar obligations on the investors to perform. (Page 141, paragraph 34).

Remedy for non- performance

“The Committee found that, the Agreement further provided a remedy for non-performance. The clause is also reproduced for ease of reference herein “in the event of non-performance by the Purchaser of any of its obligations under clause 8 of this Agreement, BPE may

  • Rescind the Sale, the purchaser shall be obliged to deliver the shares back to BPE, and BPE shall refund the purchase consideration to the purchaser after deduction of
  • All cost and expenses incurred by BPE in both completing and rescinding the sale of the shares and
  • Any payments due to BPE by way of liquidated damages pursuant to Clause 9.1(b) hereof.


  • Recover liquidated damages in the sum of up to 0.5% of the purchase sum (which sum the purchaser hereby acknowledges as a fair and reasonable reflection of damages incurred by BPE in the event f default by the Purchaser) from the Purchaser for breach of obligation under this Agreement. For the avoidance of doubt, BPE may at any time seek


recovery of liquidated damages incurred by BPE in the event of default by the Purchaser, notwithstanding that BPE may not have rescinded the Agreement in consequence of such breach” (page 142, paragraph 35).


“The Committee found that BPE from inception of the programme in 1999 to date rescinded only Transcorp-NITEL transaction for non-performance” (Page 142, paragraph 36). (note that the Committee reported that 43 out of 122 privatized companies were not performing.

“The Committee found that on 28th October, 2004 after successful privatization of Daily Times Nigeria to Folio Communication Ltd in September, 2004, the new Board held a meeting and resolved among others to obtain written consent of the BPE to sell the underlisted properties”  (page 143, paragraph 37). (The Report listed 8 properties of Daily Times sold by Folio Communications Ltd).

After the privatization of Daily Times Nig. Plc to Folio Communication Ltd in 2004, the Committee found that “the Secretariat informed the Council that a Federal High Court in Lagos had passed a Judgment stating that that Folio Communications Ltd does not own Daily Times Nigeria Plc” (Page 143, paragraph 39).

“The Committee also found from the NCP minutes of meeting dated June 11 2010 that:

Folio Communications Ltd pledged the assets of Daily Times Nigeria PLC to obtain loan from bank(s) and utilized the loan to pay for the shares of the Company.

Folio Communications Ltd leased an asset that does not belong to it and refused to remit the rent to the rightful owner in spite of several requests to do so.

NCP considered the conduct of Folio Communications ltd both at the point of acquiring FGN share in Daily Times Nigeria PLC and subsequently thereafter as improper which do not warrant being given another opportunity to acquire FGN assets. Consequently, Council took the following decisions:

  1. directed the Secretariat to request Folio Communications Ltd to remit to the BPE all rents collected in respect of the DTN property at No. 32/40 Imam Dauda Street, off Eric Moore, Surulere, Lagos; and
  2. directed the Secretariat to exclude Folio Communications Ltd from participating in the sale of property. (Page 144, paragraph 40).

“The Committee found that Folio Communications Ltd challenged the decision of the Court and prayed for Stay of Execution but the Court of Appeal declined” (Page 144, paragraph 41).

“In Volkswagen Nigeria Ltd, the Committee found that the core investor, is in breach of Clause 8.5, which states as follows: “The Purchaser shall as far as possible adhere to and implement in full the strategic Business Plan post acquisition” instead the Core investor has turned the enterprise into an illegal “dry port” for containers and break bulk cargo”. (Page 144- paragraph 42).

“The Committee found that the core investor of Transcorp Hilton Hotel Covenanted to amongst other things within 3 years:

‘construction of a shopping mall within the hotel grounds,

construction of short /long stay service apartments on the available land within the hotel premises to cater for corporate and similar clients whose needs may not be met by the typical hotel service structure,

construction of state of the art office complex for short stay guests who may have need for office infrastructure outside their immediate offices; and d

development of an amusement emporium to add to the hospitality profile of the hotel’.


However, after 6 years (from December 9, 2008 to date) the core investor has failed to deliver in breach of clause 8.4 of the Share Purchase Agreement and BPE also failed to apply sanctions as provided in clause 10. (Page 144, paragraph 43).

“The Committee found that the core investor of Abuja International Hotels Ltd (NICON Luxury Hotel) covenanted to “invest at-least additional N2billion to complete the furnishing of the hotel and provision of ancillary services to a five-star deluxe status within 9 months”.

However, after 5 years (from November 17, 2006 to date), the core investor has failed to comply in violation of clause 7.3 of the Share Purchase Agreement and BPE has failed to apply sanctions as provided in clause 9.

On the Committee’s visit to the Hotel, it was discovered that the number of floors handed over to the core investor is still the number functional. (Page 145, paragraph 44).

“The Committee found that the core investor of Sheraton Hotel & Towers, Abuja covenanted to undertake the following within the five years lock-in period.

However, after 9 years (from September 3, 2002 to date) the core investor has failed to comply in violation of clause 8.6 and BPE has failed to apply sanctions as provided in clause 9.

That on the committee’s visit to Sheraton, the panel was shocked on the present state of the hotel. The facility is run down. (Page 145, paragraph 45).

“The Committee found that the core investor in Nigerian Cement Company Plc has woefully failed to fulfill its technical and financial obligations 9 years after privatization”. (Page 146- paragraph 46)

“The Committee found that the Federal High Court presided over by Honourable Justice E. C. Achibong ruled on 2nd August, 2010 that the process and sale of Stallion House at No. 2 Ajose Adeogun Street, Victoria Island, Lagos by the Bureau of Public Enterprises is illegal”. (Page 146, paragraph 47).

“The Committee found that the N1.9bn privatization proceeds loaned for recapitalization of Nigeria Re-insurance Plc and Nicon Insurance Plc was not used for that purpose and BPE is yet to recover the money”. (Page 146, paragraph 50).

“The Committee found that the core investor in Delta Steel Company covenanted to invest $100.65 million USD or approximately (local equivalent of N15.1bn) within 15 months but no evidence of such investment”. (Page 146, paragraph 51).

“The Committee found that in Delta Steel Company, BPE appointed Estate Surveyors, Messrs Dan Odiete & Co to carry out NCP approval for sale of the company’s Township 1 Housing Estate to settle pensions”. (Page 147- paragraph 52).

“The Committee found that the Delta Steel Township 1 Housing Estate is comprised of 4,500 housing units” (page 147, paragraph 53) and that “1,109 unauthorized plots were illegally sold/allocated by the BPE. (Page 147, paragraph 54).

“The Committee further found 370 plots were allocated to the staff of Delta Steel Company; while 469 plots were sold to third parties/private individuals (or companies) at market rates and they raised the sum of N177,504,000, while 270 plots were allegedly allocated as public relation/palliative measures to the communities/leaders in the interest of peace according to the Estate Surveyors. (Page 147, paragraph 55).

“The Committee found in Zuma Steel West Africa Limited formerly Jos Steel Rolling Mills that ownership crisis post privatization between Jaden Holdings B.V and FCO Nigeria Limited has marred the implementation of the Share Purchase Agreement/Post Acquisition Plans (page 147, paragraph 56).


“The Committee found that the National Sugar Development Council, the statutory agency of the Federal Government responsible for local sugar development was not carried along in the privatization of sugar companies, neither was the council provided with copies of the Share Purchase Agreements to enable them monitor their performances” (Page 147, paragraph 58).

“The Committee found in Savannah Sugar Company Ltd, the agreement upon which the transaction was consummated provided that in clauses 8.8 and 8.9 that the company will be converted into a public liability company not later than 6 years and 25% of the shares offered to the Nigerian public through Initial Public Offer (IPO). However, 8 years after the transaction closed, the company remained a limited liability company and the 25% shares still in the custody of the core investor” (Page 147, paragraph 59).

“The Committee found that Lafiagi Sugar Company Limited was liquidated in 2009 to BUA International Nigeria Ltd by Otunba Abdulateef Owoyemi in a guided liquidation transaction but was not handed over until 10th August, 2010” (Page 148, paragraph 61).

The Committee found that there were five attempts to privatize NITEL and Transcorp emerged as the preferred bidder but after two years of taking over, Transcorp failed to turn around the fortunes of the enterprise. Consequent to this, NCP approved the revocation of the sale of NITEL to Transcorp. Staff were owed fourteen months salaries at the time of revocation of the sale. (Page 149, paragraph 64).

“The Committee found that the syndicated loan was not paid by Transcorp Plc rather the Debt Management Office took over the debt on behalf of the Federal Government of Nigeria and issued FGN Bonds to the consortium of banks to be repaid from proceeds of privatization of NITEL” (Page 151, paragraph 68).

“The Committee found that after the take-over of African Petroleum Plc by Sadiq Petroleum in 2001, an undisclosed debt of N26bn was uncovered …”. (Page 151, paragraph 69).

“The Committee found that the former Treasurer, Mr. Pius C. Idigo and Head of finance and accounts department, Mr. M. O. Ajayi of African Petroleum Plc absconded and fled to the United Kingdom”. (Page 151, paragraph 70).

The Committee noted that Section 19(1) of the Public Enterprises (Privatization and Commercialization) Act 1999 provides for the establishment of the Privatisation Proceeds Account, into which shall be paid all proceeds received from the privatization pf public enterprises, before and after the commencement of the Act just as section 80(1) of the Constitution of the Federal Republic of Nigeria, 1999, as amended, provides that all revenues or other monies raised or received by the Federation (except revenues or other monies payable under the Constitution or any Act of the National assembly into any other public fund of the Federation established for a specific purpose) shall be paid into one consolidated revenue fund of the Federation).

In violation of both Section 19(1) of Act and Section 80(1) of the Constitution, the BPE established several accounts with various commercial banks: Two in Citibank Ltd, one in United Bank for Africa, three in Standard Chartered Bank, one in Keystone Bank, three in the Central Bank of Nigeria and one in Zenith Bank Plc. (Page 152, paragraph 73).

The Committee also found that former Directors-General used privatization proceeds to pay transaction expenses, consultancy fees and staff terminal benefits without appropriation by the National Assembly. (Page 153, paragraph 75)

“The Committee found that the former Director-General of BPE, Mrs Irene N. Chigbue used privatization proceeds to execute capital projects (office extension) in 2007”. (Page 153, paragraph 76).

“The Committee found that a total sum of N301,717,426,290.19 (N301bn) was realized as proceeds was realized as proceeds from 1999 to date [i.e.2011], (Page 153, paragraph 77) while “the Committee found that a total sum of N204,572,301.44 [N204bn] was trapped in distressed banks. (Page 153, paragraph 78).

“The Committee found that N900m from the privatization proceeds was used as loan for the recapitalization of Nicon Insurance Plc” (page 154, paragraph 79) while N1bn from privatization proceeds was used as loan to Nigeria Re-insurance Plc.” (Page 154, paragraph 80).

“BPE failed to provide the committee with up-to-date pre and post privatization data on employment for the privatized enterprises. However, the Committee found that jobs were created in performing and lost in non-performing privatized public enterprises”. (Page 154, paragraph 81).

“The Committee found that the abuse of due process in the selection of core investor, valuation of public enterprises, appointment of consultants, pricing of shares/assets, determination of workers terminal benefits, handing over of public enterprises and payments by core investors adversely affected the performance of privatized public enterprises” (Page 155, paragraph 82).

“The Committee found many cases of Presidential directives/ interference during the period under review (1999 to date) which affected the process of core investor selection. (Page 155, paragraph 84).

“The Committee found that BPE was negligent and ineffective in monitoring of privatized enterprises. In some cases, BPE never monitored the enterprises for the entire lock-in period and in other cases their reports was (sic!) complete opposite of what was on ground” (Page 156, paragraph 85).

“The Committee also found that the core investor converted the premises of Volkswagen Nigeria Limited into bonded warehouses for storage of contrabands mainly rice, vegetable oils, fertilizer, but was not reported by the BPE (Page 156, paragraph 87).

“The Committee found in the Share Purchase Agreement/Post Acquisition Plan that the core investor covenanted to start assembly plant with effect from the 7th month of effective possession (31 July 2006) as Resuscitation of the Plant, installation and commissioning of the capital equipments (sic!) shipment and receipt of CKD, etc, will be done in the first 6 months. However, after five years and expiration of the lock-in period, the core investor has failed to comply” (Page 156, paragraph 88).


“That the National Council on Privatization (NCP) should rescind the sale of Jos Steel Rolling Mills for non-performance and re-advertise the enterprise for sale”. (Page 159, Recommendation No. 23)

“That the National Council on Privatization (NCP) should rescind the Concession Agreements of Tin Can Island Port Terminal “A” to Joseph Dam Port Services Ltd, Koko Port to Greenleigh Nigeria Ltd and Port Harcourt Terminal “B” to BUA international Ltd for non-performance and re-advertise the enterprises for sale” (Page 160, Recommendation No. 30)

“That the National Council on Privatization (NCP) should rescind the sale of Transcorp Hilton Hotel for failure of the core investor to deliver on the following fundamental provisions of the Share Purchase Agreement/Post Acquisition Plans”. (Page 160, Recommendation No. 31) [a list of the provisions is provided in the Report].

“That the National Council on Privatization (NCP) should rescind the sale of Sheraton Hotel & Towers, Abuja for failure of the core investor to deliver on listed fundamental provisions of the Share Purchase Agreement/Post acquisition Plan” (Page 161- Recommendation No. 32)

“That the National Council on Privatization should rescind the sale of Abuja International Hotels Ltd (Nicon Luxury Hotel) for failure of the core investor to deliver on listed fundamental provision of the Share Purchase Agreement/Post Acquisition Plan” (Page 161, Recommendation No. 33)

“That the National Council on Privatization (NCP) should rescind the sale of Daily Times Nigeria Plc to Folio Communication Limited in keeping with Court Judgements” (Page 161, Recommendation No. 34)

“That the sales (sic!) of assets of Daily Times Nigeria PLC by Folio Communications Ltd and its Directors should be investigated by anti-graft agencies and the sold assets recovered” (Page 162, Recommendation No. 35).

“That the National Council on Privatization (NCP) should rescind the sale of Sunti Sugar Company for non-performance and re-advertise the enterprise for sale” (Page 162, Recommendation No. 36)

“That the National Council on Privatization (NCP) should rescind the sale of Bacita Sugar Company for non-performance and re-advertise the enterprise for sale” (Page 162, Recommendation No. 37).

“That the anti-graft agencies should work with BPE to recover the sum of seventy million pounds sterling of African Petroleum Plc looted by the former Head of Finance & Accounts, Mr. M. O. Ajayi and former Treasurer, Mr. Pius C. Idigo both formerly of the Company, prior to Privatization in 2001 (page 163, Recommendation No. 39).

“That the core investor of Federal Superphosphate Fertilizer Company should build the $10m USD Captive Sulphuric Acid Plant as covenanted in the Share Purchase Agreement/Post Acquisition Plans within the next 3 years and the Post Acquisition Plans be amended” (Page 163, Recommendation No. 41).

“That BPE should implement National Council on Privatization decision on Privatization Share Purchase Loan Scheme (PSPLS) to enable workers and host communities pay for shares reserved for them in privatized enterprises. (Page 163, Recommendation No. 42)

“That the former Directors-General, Mallam Nasir El-Rufai, Dr. Julius Bala and Mrs Irene Nkechi Chigbue should be reprimanded by the National  Council on Privatization for seeking approval directly from the President instead of the NCP as stipulated in the Public Enterprises Act 1999. (Page 163, Recommendation No. 43).

“That Dr. Julius Bala should be investigated by anti-graft agencies for giving approval to Folio Communication Ltd for the illegal sale of assets of Daily Times Nigeria Plc” (Page 163, Recommendation No. 44)

“That the Director-General, BPE, Ms Bolanle Onagoruwa be relieved of her appointment for gross incompetence in the management of the Bureau of Public Enterprises and for illegal and fraudulent sale of the 5% FGN residual shares in Eleme Petrochemicals Company Ltd (EPCL)” (Page 163, Recommendation No. 45).




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