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Monday, June 6, 2011

THISDAY,>'oI, )6,..Noi 5887, Page 19

TH:'I S8 DAY, Simon KO~~~~ IWnfc:I';!tTI~lrector , Deputy Editor Deputy Mamiging Directors , Collins Edomaruse Kayode Komolafe, Okey IIionu Editor, Nation's Capital Editorial Boan! Chpan Nduka Nwosu Yusuph Olaniyonu

Poor Perfonnance of Privatised Cotnpanies

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ne of the principal reasons for the privatiSation of Public Enterprises was to improve corporate governance and profitability. However, the petfonn'a nce of the privatised companies in the last 23 years leaves much to be desired. The exercise has been ' riddled with unwholesome practices. In most cases, the political office holders have used their cronies to salt away our coUective patrimony, wblch has.1ed to loss of jobs, assets stripping and in some instances, the closure of such enterprises. It is therefore remarkable that President , Goodluck Jonathan has expressed worry over the petfonnance of the Bureau of Public Enterprises (BPE) and has directed that the bureau ensnres that aU privatisation decisions are based on competence, capability and capacity to deliver. The economic boom of the 1970s occasioned by increased revenue from crude oil sales encouraged government to invest in Public enterprises to create job opportunities. Unfortunately, government overstretched its capacity by investing in virtuaUy aU sectors of the economy, which included farming, energy, insurance, banking, iron and steel, petrochemicals, hotels, manufacturing, transport, housing and so on. Not long, the investment had grown too large with poor management style of public office holders, most public enterprises were bedeviled by large scale corruption, waste and loss of revenue. By the 1980s the global recession had impacted negatively on the economy. Based on the advise of IMF and World Bank, several governments introduced various ec0nomic measUres to reduce the huge external. debt. Unfortunately, this led to mass unemployment and hyperinflation. As a result of the economic downturn, the Structural Adjustment Programme was introduced in 1986 to pursue deregulation and privatisation. The privatisation exercise was envisaged as a measure to reduce corruption associated with running . pul1lic enterprises. It was also to cut down waste in public spending and free resources for the development of infrastruct(Jre that will be catalyst for economic development 1To achieve this, the Federal government on July 1988 introduced the privatisation and commercialisa~on Act and set up a 17-member Technical Committee .on ,Privatisation and Commercialisation (fCpc) headed by Dr. Hamza Zayyad to privatise 111 enterprises and commercialise 34 others. The committee concluded its assigmnent in 1992 by privatising 88 of the 111

enterprises. The Bureau of Public.Enerprises (BPE) was thus creat- . ed through the Bureau of Public Act ofl993. The National Council on Privatisation (NCP) which was headed by the Vice President was created through the establishment of the 路 Public Enterprises ( Privatisation and Commercialisation) Act of 1999. The Act created the Bureau of Public Enterprises (BPE) to be the secretariat of the National Council on Privatisation. The function ofBPE included the foUowing: . Implement NCP policy on privatisation and commercialization; and prepare Public Enterprises approved by council for privatisation and commercialization. It was also to advise council on capital restructuring needs of public enterprises to be privatised. The general principle of the Act was good but as with everything in our National life, corruption set in and it became a way of life. Although the BPE has made measured strides in some of the transaction, the disturbing high rate of post-transaction failure is an indication that

LEADERS

ill COMPANY LIMITED

Editor-in-Chief/C~ :

. Nduka Obaighena

Group路Executive Directors: Eniola Bello. Kayode Komolafe, Israel Iwegbu Divisional DIrectors: Simon Kolawble. Emmanuel Bfeni,

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'Obayode Somuyiwa, Nactya-Ruth Froesch ,

AssOciate Directors: . Peter Iwegbu, Labake Yembrn General Managers: Patrick Eimiuhi

Fide~ s Eieina,

Deputy General Man.ger~ Angel,Okhakume . ' Group Heads: Ferni Tolufashe, Sol, Obisesan, Morooph Alii. Peter Bakare, Ugochukwu Nn~e , Art Director: ~hi Ogbuakb n

Head i,f~ting ~uctiOD:

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ObiAz~~

GeneraI ,CoUnsel: Ibilbia Ad.fope, ~wel";gbu (N'lIian's Capital)

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~'of Photogra(IhY: Sunnji S~-Cole, conin'buting Editor: Flink. Ahoyade ..

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the bureau has failed in two critical areas: The Bureau failed in investigating properly the background of the corelstrategic investors before transferring equity. This has led enterprises such as African Petroleum, NITEL, Daily Times, Kaduna Refinery to be immersed in controversies. It caDs to question the criteria used in selecting core/strategic investors. From past exercises there are instances where companies got hurriedly registered with the sole purpose of buying specific public enterprises to strip off the assets. Government must view seriously the action of this so caUed investors and tmIt the act of asset stripping as economic crime. The failure of the Bureau to effectively carry out its post-transaction functions has led to the demise of some of the public enterprises, where core investor have practicaUy stripped off the asset. This poor handling of the post transaction functions has led to the demise of Daily Tunes, Niger Dock, NALBank, Electric Meter Company and soon. The philosophy behind privatisation was that government had no business in business concerns. That business be left in the hands of the private sector. IncidentaUy, the insincerity of the political leadership and undue interference in the activities of the bureau led to the failure of the 路 privatisation program. It is disturbiJig that public funds were spent to restructure these enterprises only to transfer same at less than market value to cronies. The intention of government in the privatisation exercise is to inject private funds for the revival of such enterprises and to transfer technology. Not much has been achieved in this diiection as some of the investors do , not have resources to keep the enterprises going. H the mission of the BPE to be Ute key driver of government economic refonn is to be achieved, then the privatisation exercise must be seen to be transparent, open and in the national interest. It has become imperative that government should review the Laws and procedures guiding the activities of the bureau for it to achieve the desired result. NeedJess to stress that the BPE should ensure that President Jonathan's directive that transfer of equity be based on competence, capability and capacity to deliver is carried out through a transparent, open and competitive process in ' the nation's interest.

LETTERS Letters for publication should be emailed to: op1n10n @thisdayoline . com or addressed to The Editor: THISDAY , 35, Creek Roac Box 54749, Falomo, Ikoyi, Lasos or fax to: 234-1-4600267, 3203038 & 08022924721. Letters must be short and not more than 25

eforestation is a process where . vegetation is cut down without any simultaneous replanting for economic or social reasons. Deforestation has negative implications on the environment in tenns of wildlife and increased desertification among many other reasons. Accon:ling to data gathered between 2000 and 2005 in Nigeria, hos the largest desertification rates in the world having lost 55.7% of her primary forest. The annual rate of deforestation in Nigeria is 3.5% approximately 350,000 - 400,000 hectares per year. In Nigeria, forests have been cleared fe~logging. timber export , subsistence agriculture and notably the collection of wood for fuel which remains problematic in West Africa. A lot of d:unage hos been done to Nigeria's land through the process of deforestation , notably contributing to the overwhelming trend of desertiJication. Desertific:nion is the encroachment of the desert on land that wos

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Dangers of Deforestation in Nigeria once fertile. A study conducted from 1901 to 2005 revealed that there was a temperature increase in Nigeria of 1.I0c, while !he global mean temperature increase was only 0.74Oc. The same study also found in the same period of time that the amount of rainfall has decreased by 8 I mm . It wos noticed that ' both trends simultaneously had shmp changes in the I 970s . From 1990 to 2010, Nigeria nearly halved their amount of forest cover moving from 17234 to 9,041 hectares. The combination of extremely high deforestation rates, increased temperature and decreasing rainfall are all contributing to desertific:nion in the country. Through the years, Nigeria's wide biodiversi ty of higher plants and animals are also strongly affect~ by the negative impacts of deforestation OS

numbers of the rare Cross Rive gorilla have decreased to around 300 individuals because of poaching by locals and mass habitat destruction . Pollution is rapidly growing along with population. Forest is greatly helping to reduce the amount of pollutants in the air. So, the depletion of these trees is greatly increasing the risk thai carbon monoxide would reach the atmosp~ere and result in depletion of the Ozone layer which in tum results to global warming (the Ozone layer is a mass of oxygen or 03 atoms that serve as shield in the atmosphere against harmful ultrnviolet mys from the sun). 'Deforestation also is said to account for 87'70 of the total crubon

undemeath the ground that is the common SOUIte of naturnl drinking water by people living around forest. Water table is rep,lenishing, that means the supply of water underground could also dry up if not replenish regularly. \Vben there is min, forest holds much of the rainfaI) to the soi) through their roots. Thus, water sinks in deeper to the ground and eventually replenishing the supply of water in the water table. Now, imagine what happens when there is no enough forest anymore, water from rain would simply flow through the soil surface and not be retained by the soil setting up evaporation process from the surface of the soil. Thus, the water table is not replenished leademission in Ihe country. Effect of deforestation to the envi- ing to drying up of wells. The food and agriculturnl organironment would be on' the water table

sation 'of the United Nations list the requirement of sustainable forest management as: Extent of forest resourtes, biological diversity. forest health and vitality. productive functions of forest resourtes , protective function of forest re5OtlIt.'eS .

socio -economic

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tions, legal policy and institutional fuunework . However. deforestation is "one of the major pressing environmental issues we face and one we must address the solutions to. and work together with our full support, if we are to restOlt' the dam3!!e we have done thereby. achieving being environmentally fn '"dly. . -Ladidj YaJ",bu' "', ' .,,,, Ba}l?ro

Kallo

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THISDAY, 06 JUNE 2011