Nigeria Asset Sales Seen Uncertain After Official Fired

Nigeria’s privatization of state-owned companies faced uncertainty after the head of the Bureau of Public Enterprises was fired with key sales yet to be concluded, analysts from Financial Derivatives Co. and Standard Bank Group Ltd. said.

Bolanle Onagoruwa was asked to quit “with immediate effect” yesterday and hand over to her deputy, according to a statement released by Vice President Namadi Sambo’s office in Abuja, the capital. No reason was given for the decision. Chukwuma Nwoko, a spokesman for the agency, also known as BPE, said today it was a presidential directive that had to be obeyed and declined to comment further.

“It’s a curious development in terms of the timing and very disturbing from an investor perspective,” Bismarck Rewane, chief executive officer of Financial Derivatives, a Lagos-based business advisory group, said today by phone from the commercial capital. “It is a major setback and would make international investors more wary.”

Nigeria, Africa’s top oil producer, is selling majority stakes in power plants and letting private investors buy as much as 60 percent of 11 distribution companies spun out of the former state-owned utility as it seeks private investment to curb power shortages. Blackouts are a daily occurrence in Nigeria, Africa’s most populous country with more than 160 million people. Demand for electricity in Nigeria is almost double the supply of about 4,000 megawatts and the government plans to boost output to 14,019 megawatts by 2013.

Bids from companies including Siemens AG and Korea Electric Power Corp. for 10 state-owned power distribution companies were approved by the National Council on Privatization headed by the vice president on Oct. 29. Buyers are required to provide bank guarantees for 15 percent of the price within 15 days and complete payment within six months.

The privatization agency is also yet to resolve conflicting claims to the ownership of Aluminum Smelter Co. of Nigeria it sold to United Co Rusal, with the Abuja-based Supreme Court ruling in July that another company, Bancorp Financial Investment Group, had “a valid contract” for the smelter in 2004.

“What investors would like to see is a sustainable and entrenched privatization process that is not episodically reversed in specific cases and subject to political influences,” Samir Gadio, a London-based emerging markets strategist at Standard Bank, said today in an e-mailed response to questions.

Reuben Abati, a spokesman for President Goodluck Jonathan, declined to comment on Onagoruwa’s removal at a news conference today in Abuja.

Nigeria’s Senate last year asked the government to cancel the sale of 12 state-owned companies, including the smelter bought by Rusal and a steel company bought by Global Steel Holdings Ltd. of India, saying stipulated procedure wasn’t followed. The lawmakers also recommended that Onagoruwa be fired.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE