Sad story of NNMC’s privatisation

Seven years after the Nigeria Newsprint Manufacturing Company (NNMC) was privatised, the company has failed to resume operations. NNMC located in Oku Iboku in Akwa Ibom State was set up to produce 100,000 metric tonnes of finished newsprint per annum. Until it was shut down in 1994 it was producing international standard newsprint which was […]

Seven years after the Nigeria Newsprint Manufacturing Company (NNMC) was privatised, the company has failed to resume operations. NNMC located in Oku Iboku in Akwa Ibom State was set up to produce 100,000 metric tonnes of finished newsprint per annum. Until it was shut down in 1994 it was producing international standard newsprint which was being exported to neighbouring countries. The House of Representatives has now resolved to probe the flawed sale process and subsequent failure to operate. 
As with so many other public assets sold off under the privatisation program, the House Committee on Privatisation and Commercialisation says that the process of valuation, liquidation and sale of the company failed to comply with the provisions of the Bureau of Public Enterprises [BPE] Act.  In 2008 under the principle of guided liquidation and with an expiration period of five years, BPE sold the newsprint company for slightly over 4 billion Naira to the indigenous firm Negris Holding Ltd, which renamed the company Oku-Iboku Pulp and Paper Ltd. However the firm’s glaring lack of financial capacity to resuscitate the newsprint firm became obvious after the sale. Despite promises to commence operations Negris Holdings resorted to asset stripping and removed many valuable items such as cranes, heavy duty trucks, pipes, electric motors and welding machines which were sold off.
One of the most important conditions of privatisation is the capacity of the new owners to resuscitate the company, to the advantage of workers, production and the national economy as a whole. Failure to resuscitate this plant has led to colossal losses for the newspaper industry in particular and the country as a whole. Thousands of tonnes of newsprint have to be imported into the country on a weekly basis for the use of newspapers and magazines alone. The Oku Iboku plant was never able to supply all the country’s needs but while it lasted it helped to reduce this huge import bill.
BPE serves as the secretariat of the National Council on Privatization and it is charged with the responsibility of implementing the Council’s policies on privatization and commercialization. Amongst its key functions are account management for all commercialized enterprises for financial discipline and monitoring of post transactional performance, monitoring and evaluation. It is not performing this duty very well. Otherwise, how is it that we have heard nothing from BPE and NCP on the newsprint manufacturing company more than two years after the deadline given to the new owner to resuscitate it has elapsed?
The most important benefit the nation can derive from privatisation is not the money that is paid into government coffers. It is the ability to resuscitate an ailing firm under the belief that the private new owners won their bids after a careful evaluation of their technical and financial capacity to do so. Right now, most of the state owned that were privatised have remained comatose. In many cases the new owners resorted to asset stripping of the business.
Director-General of the Raw Materials Research and Development Council (RMRDC) recently  disclosed that the non-performance of Nigeria’s three paper mills will cost the nation N180 billion by the end of 2015. Apart from this loss the nation spends a further N50 billion every year on paper imports.  The Nigerian paper mills were established by the federal government in the 1960s and 70s, yet one of the major hindrances to their functional operations is inability to source long fibre trees. This lack of raw materials means that attempts at privatization cannot be successful. The lack of a national strategy for paper production is responsible for the delay in getting serious investors into the industry.
The host community of NNMC have expressed worry that the multi-million naira company has been inactive since 1992 with the land and structures lying waste all these years. It is quite evident that the new investors lack the capacity to re-activate the company. BPE and NCP should urgently look into the legal details of the sale with a view to invoking the relevant clauses to reverse it. Other avenues should be pursued to get this all-important plant up and running as soon as possible, under new ownership.