There has been a simmering crisis brewing between the Bureau of Public Enterprises (BPE) and the Ministry of Finance Incorporated (MOFI) over who owns the mandate to optimize government assets.
Established under the Public Enterprises (Privatisation and Commercialisation) Act of 1999, through its secretariat, the Bureau of Public Enterprises (BPE) is charged with driving the federal government’s programme of privatising public enterprises, carrying out sector reforms and liberalization of key economic sectors, especially the infrastructure sector.
To date, it has completed over 70 transactions, with 30 ongoing.
The Ministry of Finance Incorporated (MOFI) was established in 1959 as a platform to take charge of all investments made by the Federal Government of Nigeria.
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MOFI manages a significant portfolio of federal government’s investments, spanning a wide variety of asset classes, including corporate assets, financial assets, fixed assets, mineral and intangible assets, and cash-flow-generating transactions.
As at today, MOFI has a total of 18 trillion estimated value of total holdings, and 52 entities with confirmed its shareholding.
When the problem started
Since 2016, the federal government has mulled the idea of selling some national assets to boost its revenue.
In 2022, sources at the Ministry of Finance, Budget and National Planning disclosed to daily trust that the government was considering selling or concessioning about 27 national assets.
The assets included Tafawa Balewa Square in Lagos, the National Integrated Power Projects in Olorunsogo, Calabar II, Benin (located at Ihorbor), Omotosho II, Geregu II plants, all the hydropower plants across the country, including Oyan, Lower Usuma, Katsina-Ala, and Giri plants.
The sources noted that more than 25 of such projects would be turned into active assets that will generate money in some ways to the federal government.
However problem started when the immediate past Minister of Finance, Budget and National Planning, Mrs Zainab Shamsuna Ahmed, said in 2022 that: “As part of the Reform, Restructure and Reposition (R3) components of the #SRGI, a number of government institutions were selected for reform with #MOFI approved by President Muhammadu Buhari as one of them.”
The proposed restructure and repositioning will allow for MOFI to transform into a world-class company, create and collate a national asset register, ensure assets and investments are better managed, with a mission to maximize value for all stakeholders and the people of Nigeria.
Following that move, MOFI has gone to town to discuss assets optimization, a move that has brought them on a collision course with BPE.
MOFI only recently disclosed that the federal government may sell stakes in about 20 state-run companies to raise funds and improve governance in the entities.
According to a Bloomberg report, the Nigerian National Petroleum Corporation (NNPCL) is among the firms the government may sell a stake in, according to the chief executive officer at the Ministry of Finance Incorporated, Armstrong Takang.
He stated that the agency is considering options including strategic sales and initial public offerings and aims to implement the plan within 18 months.
He noted that some of the entities need the private sector to take controlling shares and that the major consideration for the government is to create value rather than retain control.
He said, “It is better for us to own 49 per cent of a high-performing entity than 90% of an entity that is underperforming.”
Takang stated that the agency is in the process of appointing consultants, including valuers, financial advisers, lawyers, bankers and others to handle different aspects of the transactions.
Similarly, the immediate past minister of transportation, Mu’azu Sambo, in February called for the unbundling of the Nigerian Railway Corporation (NRC) for optimal operation.
Addressing the management team of MOFI in Abuja, Sambo urged them to make the corporation’s unbundling economically viable while offering world-class services to Nigerians.
He said: “One of the things I would like to see as the minister of transportation, through MOFI, is the unbundling of the NRC.
“There is a committee set up to unbundle NRC and I will urge you to work with the existing committee.”
BPE pushes to safeguard territory
A senior management source who confided in Daily Trust said: “BPE which is the reform agency of the federal government was specifically endowed with the mandate to carry out reforms in form of privatization and commercialization.
“When we talk about sector reform, we’re talking about the economy in general like pension, telecoms, ports, etcetera; beyond the sector reform, we’re also responsible for enterprise reform.”
The source also said, “We are now been confronted with recent development where MOFI is increasingly becoming assertive and going in our view, beyond the remit of what asset ownership does.
“There is a clear distinction between an asset owner and an asset optimizer. MOFI is recognised as the owner of federal government assets; BPE has been specifically mandated to optimize the assets. But what we are seeing, what is slowly emerging is an attempt by MoFI to also become the agency optimizing the assets, and this is where there are issues.”
Responding to BPE’s claim, a source at MOFI said the move became imperative to get more value from these enterprises in a bid to raise more money for the government.
The source claimed that the government is not getting value for its investment in the assets.
BPE cites recent Airport concession as another disregard for agency’s role.
“Some of the issues have emerged over the last few years. I mean you will recall that there was an attempt to concession the airports, which was actually specifically listed in our Act but the Federal Ministry of Aviation decided to do it on their own.
“Unfortunately, we are currently confronted by threat from the aviation workers for a showdown if the federal government should go ahead to impose the concession policy.
“They also warned the firms involved in the concession deal of the two airports to stay clear, alleging that the exercise is fraught with illegalities and lacked transparency.
“They alleged that the purported concession was handled in a most secretive manner.”
According to a Daily Trust report, the union said: “From the selection of the transaction adviser, through the pre-qualification and selection of bidders/winners, to the development of the Full Business Case and conclusion of the concession, only the minister, his henchmen in the ministry and the ICRC and the favoured bidder, apart from the wind and walls, have any inkling of the concession process, whereas the whole exercise, by regulation, ought to be carried out transparently within the public view.”
Briefing journalists in Abuja, the workers fiercely protested the action, claiming it fell short of legal and acceptable limits and standards of airport concession by global best practices.
The source said: “We have been doing this for over 20 years. We have that world of expertise, experience, institutional knowledge, memory and it’s what we do for a living.
“If the government decides that they want to change the role of BPE, then they need to change the act. We’re also under the office of the National Council on Privatisation, which is headed by the vice president.
“We are all government. So if these issues occur, I think it’s something that government needs to sit down and decide on its own how best to proceed.
“We recognize that they are federal government assets, but we have a responsibility to optimize the assets which we have been doing for a very long time.”
Efforts at resolving the impasse
THE BPE source added that, “No law or act gives MOFI the mandate to do what they are currently planning to undertake and they neither have the experience nor capacity to undertake these tasks.
“MOFI seats under the Ministry of Finance. The minister of Finance is the vice chairman of the National Council on Privatization, chaired by the vice president. There is a reason why the structure is like that; for synergy in the room.”
The source said BPE has had several meetings with MOFi and is on the verge of signing a memorandum of understanding on defining each other’s roles but from nowhere, MOFI surprised them with a premature announcement.
As President Bola Tinubu sets to constitute a new council, analysts have argued that if the government needs to find the much-needed foreign direct investment it urgently needs to drive infrastructure development, there must be an urgent intervention by the vice president to resolve this impasse.
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