Transcript BPE Privatisation

Investing Under The Nigerian
Privatisation Programme
US-NIGERIA TRADE AND INVESTMENT FORUM:
CHICAGO USA
July 2008
Mrs Irene N. Chigbue,
Director General,
Bureau of Public Enterprises (BPE)
Agenda
Background
Investing In Nigeria
Investing Through Privatisation
Privatisation Process
Results
Concluding Remarks
2
Background
Nigeria
- Largest population in Africa
(over 140 million)
- Second largest economy in
Africa – GDP (2007) of about
$294.8billion)
- Most entrepreneurial economy
in Africa.
- One-fifth of African and global
Black population
- Committed to democracy
and development
- Pillar of stability in Sub-Saharan
Africa
- Reforming to act as the engine
of growth in Africa
- Veritable Destination for venture
capital in Africa
3
Nigeria …Real Achievements
Significant Improvement of Economic Prospects:
 Increase in GDP growth (6.2% 2004, 6.8% 2005, 6.6% 2006, 6.1%
2007)
 Flitch, Standard & Poor’s credit rating of bb Significant increases in foreign exchange reserves (over
$50billion 2007)
 Reduction in government consumption
 Stable exchange and interest rates
 Very active capital market (Market Capitalization about $5bn –
most profitable Stock Market in the world with annual ROI of
105%)
 Consolidation in the banking system – very successful
4
Investing in Nigeria
Broadly there are 2 modes for Investing in Nigeria:
 Greenfield's
 Privatisation
Greenfield Investments require:
 Licenses & approvals
 Land Acquisition
 Rolling out of Outfit
 Recruitments
 Etc
Privatisation:
 All requirements provided in the deal
 Locked in Value in the Enterprise
5
Privatisation Process
Use World Class experienced advisers competitively selected
Application of a well developed and documented procedure for
transactions and for sale
Adhere to legal and due process as in Nigerian laws and the
Privatisation Act.
Advertise the opportunity in local and foreign papers and magazines
Competitive bidding process
Evaluation on basis of technical /managerial capabilities and finally on
basis of highest financial offers
Sale process conducted in the public place under coverage of live
television and radio
Process observed by internal Compliance Unit and Anti-Corruption Unit
Transparency International now invited to observe the bid process
6
Core Investor Sale (Bidding Process)
Solicitation, receipt and
evaluation of Expressions
of Interest
Qualified ?
Inform applicant of nonqualification
Issue Bidding Documents, Bidding
Process Guidelines & Information
Memorandum to qualified Bidders
Allow at least 4 weeks due
diligence period for all
bidders
Verification of
Bidders’ Credentials
7
Bidding Process – 2
Bidders submit Technical and Financial Proposals (& bid bond)
Evaluation of technical proposals and short listing
Qualified bidders invited to public financial bid opening
Financial bid opening (optional multiple rounds)
Preferred bidder payment within specified period
Reserve bidder
Financial Close
Commence Transitional Procedures and Transfer of Management Control
8
RESULTS 1999-2007
After the suspension 1994-1999, programme accelerated
40 PEs privatised 1999 to 2004
Accelerated privatisation initiative was launched in April 2005 to
privatise 23 PEs
46 PEs privatised in 2005
About US$2.5billion realised
Ports and Power sector reforms pursued aggressively
38 PEs privatised in 2006 in telecoms, solid minerals, manufacturing
& services
About US$1.16billion realised (2006)
37 PEs privatised in 2007
About US$1.5billion realised (2007)
9
Results: Transactions
159 transactions concluded – 1999 – 2007
Whereas the years 2000 to 2004 were used to reposition the program after the
lull years of 1994 to 1999, 2005 and 2007 can be dubbed the watershed years
in terms of transactions and reforms.
No. of transactions
Summary of No. of transactions
50
40
30
No. of transactions
20
10
0
2000
2001
2002
2003
2004
2005
2006
2007
Years
10
Transactions History
Number of Transactions
Summary of of transactions
50
40
30
No. of transactions
20
10
0
2000 2001 2002 2003 2004 2005 2006 May
2007
Year
11
Reforms Score Card 2006
“… monumental legislative and institutional reforms were successfully executed to pave the
way for effective regulation and privatisation in 2006…” UK Department for
International Development, April 2006
“…ongoing privatisation should improve the efficient provision of commercial services,
support private sector growth, and help focus the government on its core mandate…”
International Monetary Fund, August 2006
Results: Reforms
BPE produced sector-specific policies and reform Bills, and one generic
reform bill, including:
 Power Sector Reform Act
 Telecommunications Act
 Solid Minerals Act
 Petroleum Industry Bill
 Ports and Harbour Authorities Bill
 National Transport Commission Bill
 Federal Roads authority Bill
 Roads Fund Bill
 Nigeria Railway Commission Bill
 National Inland Water Way Bill
 Gas Bill
 Federal Competition Commission Bill
 Postal Sector Reform Bill
 Industrial Policy
13
International Investors?
…We have results to show
Success Story (2000-2007): International Participation
In addition to local Nigerian consultants, international participation in
privatisation consultancy services indicates:
Adoption of International best practice
Process credibility
Upgrade of domestic capacity
A partial List of Internationally renowned advisers to the programme
include:
 Booz Allen & H (USA) – Telecom Regulation
 Pricewatehousecoopers – NEPA corporate restructuring blueprint
 Adam smith International (UK)– Attitudinal Research
 CPCS (Canada) – Ports Concessions
 BNP Paribas (France)– Nitel (Telecom) & Refineries
 Arthur Andersen overseas – Power reforms
 CSFB (UK)/USA - Refineries
 Standard Bank of South Africa – Petrochemical plant privatisation
 Mecados Energiticos of Spain – Electricity Regulatory
Commission
 Netpost of Netherlands - NIPOST
 Chano Oil of China
 KPMG
15
Success Story: Snap Shot of International Participation
• In addition to Nigerian Investors, international participation by
Investors shows:
- Programme endorsement
- Platform for FDI
- Technology transfer and entrepreneurial development
- Platform for economic diplomacy
• A partial list of renowned international investors include:
• Scancem (Norway) – Cement
• Holcim (Spain) – Cement
• Lafarge (France) - Cement
• AP Moller - Ports
• ENL Consortium – Ports
• Flour Mills (Greece) - Ports
• Global Energy Company/MC Dermott - Ports
• Indorama of Indonesia – Petrochemicals
• Rusal (Russia) – Aluminum Smelting
• MTN of South Africa
• Celtel of Netherlands
16
Privatisation Transactions
Typically each transaction involves:• Transfer of major equity stake to core/strategic investor
• Public offer of remainder
• Concession of major infrastructure
17
How can you participate?
• Opportunities exist in the privatisation programme for:-
• Investors
• Advisers
• Consensus builders
• Process is competitive and transparent
18
What Next 2008 & Beyond (see attached
details)
Highlights 2008 Programme
 Ensure reform bills (including Anti-trust bill) are enacted;
Ensure the institutionalisation of reforms by establishing the sector
regulatory institutions comprising: Federal Competition Commission, National Transport Commission, Oil and Gas
Regulatory Commission, Infrastructure concession Commission
Conclude Transport Sector reform i.e Rail, Ports, Roads, inland Water
Ways, etc
Privatise balance of shares after core investor sale in NICON, Transcorp
Hilton, etc
Implement the Reform and Commercialisation of the River Basin
Development Authorities; and
 Implement outstanding Initial Public Offers such as SAHCOL, Nitel, Nig.
20
Re,
…Concluding Remarks
Nigeria Beckons for investment:
 Foreigners can own 100% of investment
 Guarantee against expropriation of investments
 Repatriation of profits guaranteed by law
 Generous tax incentives
 One of the highest ROI in the world
 Huge local market (population of N140million)
 Access to the West African sub-regional market
 Cheap but skilled labour
21
… Concluding Remarks
Nigeria is largely un-ploughed ...
 Seek-out credible Nigerians (and there are many of us)
 Use Embassies/High Commissions, National Investment Agencies
& Banks as entry contacts
 Avoid get rich quick schemes
22
Thank you for listening
Check our website:
www.bpeng.org
for other details and updates
Mrs Irene N. Chigbue,
Director General, Bureau of Public Enterprises, Nigeria
River Basin Authorities of Nigeria (RBDAs)
S/N
Enterprise
Strategy
1
Anambra-Imo RBDA
Commercialization
2
Ogun-Osun RBDA
“
3
Hadejia-Jama’are RBDA
4
Sokoto-Rima RBDA
“
“
5
Upper Niger RBDA
6
Lower Niger RBDA
“
“
24
River Basin Authorities of Nigeria (RBDAs)
SN
Enterprise/Strategy
Strategy
7
Cross River BDA
Commercialization
8
Chad RBDA
“
9
Benin-Owena RBDA
“
10
Upper Benue RBDA
11
Lower Benue RBDA
12
Niger Delta RBDA
“
“
“
25
Capital Market & Financial Institutions
S/N
Enterprise
Strategy
13
Nicon Insurance
IPO
14
Nig-Reinsurance
IPO
15
Capital hotel
IPO
16
Transcorp Hilton
IPO
17
NSPMC
IPO
26
National Facilities & Services
S/N
Enterprise/Strategy
Strategy
18
NIROWI
Liquidation
19
Save Sugar Company
Core Investor
20
Iwopin Paper Pulp Company
Core Investor
21
National Hospital
Commercialization
22
Chemical Company of Senegal
Commercialization
27
National Parks
S/N
Enterprise
23
Gashaka Gumi National Park
24
Chad Basin National
Strategy
Partial Commercialization
Park
25
Kainji lake National park
“
26
Cross River National Park
“
27
Old Oyo National Park
“
“
28
National Parks
S/N
Enterprise
28
Kamuku National Park
29
Okomu
National Park
30
Strategy
Partial Commercialization
“
National Park Services
29
National Stadia
S/N
Enterprise
31
National stadium Abuja
32
Surulere
Strategy
Commercialization
National
Stadium Lagos
33
Liberty Stadium Ibadan
34
Nnamdi Azikwe Stadium Enuge
35
Ahmadu Bello Stadium Kaduna
36
Abubakar Tafawa Balewa Stadium
Bauch
30
Transport Department
SN
Enterprise/Strategy
Strategy
37
SAHCOL
Core Investor
38
National Inland Waterways (Non Core Assets)
Asset Sale
31
Steel and Solid Minerals Cont
S/N
Enterprise/Strategy
Strategy
39
Associated Companies of NMC (12)
Divestment
40
Nimco Terrazzo Company
Divestment
41
NMC Bricks (3) and Quarry Companies (3)
Divestment
42
Non-Core aseet of NMC (Scraps, Motor Vehicles)
Divestment
43
Non Core assets of NCC and NMC Houses
Asset sale
32
Information and Communication Dept.
S/N
Enterprise
Strategy
44
NITEL
Core Investor sale
45
Federal Radio Corporation of Nigeria
Commercialization
46
Nigeria Television Authority
Commercialization
33
Information and Communication Dept.
S/N
Enterprise
Strategy
47
Nigeria Film Corporation
Commercialization
48
News Agency of Nigeria
Commercialization
34
Oil & Gas Transactions
S/N
Enterprise
Strategy
50
PPMC
Core Investor sale
51
Nigeria Gas Company
Core Investor sale
52
LPGs (7)
Asset sale
35