Under the privatisation programme as announced on July 20, 1998 by H.E Gen Abdulsalami Abubakar, Government will retain 40% of the telecom, electricity, petroleum refineries, coal and bitumen production, tourism, and spill-overs from the first phase of privatisation equities of the affected enterprises whilst 40% will be alienated to strategic investors with the right technical, financial and management capabilities. The remaining 20% will be sold to the Nigerian public through the Stock Exchange.

1.(b) President Olusegun Obasanjo in his Presidential order to the Vice President of the Federal Republic of Nigeria dated 6th July 1999, directed that as the first step in the phased implementation of the administration's privatisation programme, action was to be initiated to enable the sale of shares listed on the Lagos Stock Exchange and owned by the Federal Government and its agencies in:

-Commercial and Merchant Banks

-Cement Plants

-Petroleum Marketing Companies

The sales are to be completed by December, 1999 and Core Investors are to be encouraged to buy into any of the privatised enterprises which will be paid in foreign currencies.

1.(c) The second phase will consist of hotels and vehicles assembly plants, amongst others.

1.(d) The third phase will involve work on the companies currently being prepared for privatisation or currently being audited, including NEPA, NITEL, NAFCON, Nigeria Airways, Refineries, etc.

Obectives of the Privatisation & Commercialisation Programm

 The objectives of the Privatisation and Commercialisation programme are:

-to restructure and rationalise the public sector in order to lessen the dominance of unproductive investments in the sector;

-to re-orientate the enterprises for privatisation and commercialisation towards a new horizon of performance improvement, viability and over all efficiency;

-to raise funds for financing socio-economic developments in such areas as health, education and infrastructure;

-to ensure positive returns on public sector investments in commercialised enterprises, through more efficient management;

-to check the present absolute dependence on the Treasury for funding by otherwise commercially oriented parastatals and so, encourage their approach to the Nigerian Capital Market to meet their funding requirements;

-to create more jobs, acquire new knowledge and Technology and expose the country to international competition.


Legal Framework

The legal framework, for the programme is the Public Enterprises (Privatisation and Commercialistion) Act of 1999. It was promulgated by the previous administration.


The legal framework, for the programme is the Public Enterprises (Privatisation and Commercialistion) Act of 1999. It was promulgated by the previous administration.

For the purpose of this programme the following definitions will be used:

1.     Full Privatisation
Means divestment by the Federal Government of all its ordinary shareholding in the designated enterprise.

2.     Partial Privatisation
Means divestment by the Federal Government of part of its ordinary shareholding in the designated enterprise.

3.     Full Commercialisation
Means that enterprises so designated will be expected to operate profitably on a commercial basis and be able to raise funds from the capital market without government guarantee. Such enterprises are expected to use private sector procedures in the running of their businesses.

4.     Partial Commercialisation
Means that such enterprises so designated will be expected to generate enough revenue to cover their operating expenditures. The government may consider giving them capital grants to finance their capital projects.

In both full and partial commercialisation, no divestment of the Federal Government's shareholding will be involved, and subject to the general regulatory powers of the Federal Government the enterprises shall:

Fix rate, prices and charges for goods produced and services rendered;
Capitalise assets; and
Sue and be sued in their corporate names.

Implementation Arrangements

Technical/Financial Advisers

Local manufacture of switching and transmission equipment is requird since no single company exists in Nigeria or even neighbouring countries for this purpose. Hence any company that goes into the venture will have its market beyond the frontiers of Nigeria.

Commitees and Sub Commitees

In Nigeria, there are three companies engaged in the production of telecommunication cables using imported copper and other local resources like poly vinyl chloride materials for insulation. There is no company that is cuurently producing fibre optic cables in the country.

The copper cable producing companies are producing only low pair capacity of 50, 100, 200 pairs. There is need for a plant that will produce high pair capacity cables that will enhance massive provision of lines to the teaming population.

Floatation Advisers

Public offer of shares through the Stock Exchange will be the dominant method of privatisation to be used in the sale of the 20% equity reserved for Nigerian investors under the programme. In order to handle the floatation of the shares of affected enterprises on the Stock Exchange, the National Council on Privatisation (NCP) shall appoint professional advisers, in accordance with powers conferred on it to do so by Section 13 (c) of the Public Enterprises (Privatisation and Commericialisation) Act of 1999. The most important professional advisers in each case are:

The Issuing House
The Solicitor to the Issue
The Reporting Accountant
The Stockbroker to the Issue
Asset Valuers :

These professional advisers are responsible for gathering, analysing and reporting on the operations of the affected enterprise, in such a way as to enlighten the prospective investor on the activities of the enterprise to be privatised and whose shares are being sold. The responsibilities of these advisers are described briefly hereunder

Issuing House

  Preparation of information memorandum, prospectus, application to the Securities and Exchange Commission (SEC) for the offer price and the Stock Exchange for listing;

  Sale of shares and receiving subscription funds;

  Preparation of the basis of allotment;

  Representing the BPE and the company before SEC and the Stock Exchange;

  Co-ordination of all-parties meetings culminating in the Completion Board Meeting.

Reporting Acctountant

The Accountants are responsible for providing accounting data and calculations for forecasts of the Company's future profits. In expressing his opinion on forecasts, the Reporting Accountant must consider the following:

·  The general character and recent history of the company's business with particular reference to its main products, markets, customers, suppliers, labour force and trend of results.

·  The accounting policies normally adopted in preparing the Company's Annual Accounts and the fact that those have been consistently applied in the preparation of profit forecasts.

·  Whether or not the preparation of the forecast was consistent with the economic, commercial, marketing and financial assumptions which the Directors have stated to be the underlying bases.

·  The Company's general procedures in the preparation of forecast. In particular, the accountant would ascertain whether forecasts are regularly prepared for management purposes and if so, the degree of accuracy and reliability normally achieved. He would also wish to discover the extent to which the forecast results of the expired period are supported by reliable interim accounts; and how the forecasts take account of any material exceptional items;

·  Matters of general interest including the adequacy of provisions made for foreseable losses and contingencies, and the adequacy of working capital as indicated by properly prepared cash-flow forecasts. All these are done to ensure that ultimately, the new shareholders would be buying a good product.

Solicitors to the issue

The Solicitor is expected to primarily advise on compliance with the law at every stage of the exercise. He is expected to:

Examine the Company's Memorandum and Articles of Association to ensure that those provisions which are considered unnecessary in a public limited liability company are deleted.
Cause all the necessary resolutions for the different stages of the floatation e.g. restructuring of capital, creation of new shares etc., to be passed.
Registration of all documents and resolutions with the Corporate Affairs Commission and other Regulatory agencies.
Following up verifications with the Land Registry etc., on the title deeds held by the company.
Preparation of Management Agreements, Sale and Purchase Agreements, Shareholders' Agreement etc., where necessary or reviewing same to ensure that the interest of the company and country are safeguarded.
Take such actions as are considered necessary in a public floatation in accordance with the law.

The Stockbrokers to the Issue

The principal role of the Stockbroker is to introduce the Securities on the trading floor of the Stock Exchange. Technically, shares of a publicly quoted Company can only be traded on the floor of the Stock Exchange.

Asset Valuers
Asset Valuers undertake the professional valuation of the assets of the affected enterprises to provide a guide on the current replacement value of the Company.

Marketing of Shares of Enterprises Designated for Privatisation

6.1 In order to ensure effective coverage of the country, the following arrangements will apply:

(a)Availability of Application Forms:

The maximum possible number of people would be given the opportunity to apply for the shares of privatised public enterprises. Therefore, application forms will be printed in sufficient quantities and distributed to all local government areas in the country. Abridged prospectus outlining the main features of the offer will be published in national newspapers.

(b)Minimum Application

In order to ensure widespread ownership of shares amongst the different classes in the society, the minimum application for general allotment of shares shall be 100 shares of 50k each. In this way low income earners and even students will be able to participate in the privatisation exercise.

(c)Distribution of Application Forms

Application forms will be distributed through the branch network of the banking system, stockbrokers, local government offices, State Investment companies, Post Offices, Offices of Chambers of Commerce & Industy across the country, State Ministries of Commerce and Industries, Nigerian Missions abroad. Distribution of application forms to receiving agents will be programmed to commence about one week before the opening of application list to prevent late arrival of forms.

 6.2 Application Prices
The application prices of shares will be as determined by the National Council on Privatisation on the recommendations of the Bureau of Public Enterprises.

6.3 In line with the Privatisation Act, shares will be made available for participation by all interested investors subject to strict conformity with the following guidelines

:Multiple applications will not be allowed.
Share of privatised enterprises are to be allotted equally between Federal Constituencies. Only residents of the Constituencies are expected to buy such shares.
Fictitious names used in applications will be rejected.
Only Nigerian citizens aged 18 and above are eligible

Funding of Share Purchase

Government will provide the enabling environment to facilitate access to capital credit for purchase of shares by the general public. Employers of Labour in both the public and private sectors are urged to extend financial assistance to their employees to enable them purchase shares in privatised enterprises. Commercial Banks in the country are enjoined to extend credit to their adjudged customers against the security of share certificates to be issued. In this way, even those who do not have savings will be able to participate in the programme.

Debt Conversion Programme & Privatisation

Participation is open to owners of converted debts subject to allotment principles guiding the privatisation programme. This programme of debt conversion has now been suspended.


A co-ordinated and integrated communications programme has been developed to ensure that the concept of privatisation, the processes adopted and the affected enterprises are marketed in such a way that all stakeholders participate effectively in the programme. This is with a view to building a better Nigerian society for the optimisation of the economic resources. Extra effort will be made to mobilise and sensitise the grassroots.

Allotment of Shares

10.1 Allotment of shares in privatised enterprises will generally be guided by government policy of "wide geographical spread of ownership". All share allotments will be published in national newspapers. The shares on offer to Nigerians would be sold on the basis of equality of Federal Constituencies.
10.2 Staff Participation
A minimum of not less than 1% of total shares on offer shall be reserved for the staff of any privatised enterprise.

10.3 Limitation on Individual Shareholding
No individual shall be allowed to acquire more than 1% equity in any enterprise whose shares are offered for sale under this programme and where applicants resort to multiple applications, these will be rejected outright or cancelled if subsequently discovered. In the event, they will be refunded their application money only.

10.4 General Allotment
The shares on offer to Nigerians shall be sold on the basis of the equality of Federal Constituencies and of the residents of the Federal Capital Territory, Abuja.