Senate Wades into Etisalat $1.2 bn Debt Crisis
To review privatisation of public enterprises
The Senate has waded into the $1.2 billion Etisalat debt crisis, with a mandate to its Committees on Banking, Communications, Capital Market and National Security to investigate the management and utilisation of the loan facility procured from 13 Nigerian banks.
This followed a motion brought before it yesterday by Senator Adeola Olamilekan (Lagos APC) who noted that about 4,000 jobs were at stake as a result of what he termed “suspicious dealings.”
He alleged that the loans might have been diverted to other uses.
Olamilekan noted that only 42 per cent of the loan amount has been repaid, leaving an outstanding of $696 million, which Etisalat has failed to service since 2016.
“Note that Etisalat ownership comprises of three shareholders - the United Arab Emirates Sovereign Wealth Fund through Mubadala Development Comp Abu Dhabi (45 per cent), Emirates Telecommunications Group Company (40 per cent) and Myacinth (15 per cent) through Emerging Markets Telecommunications Services.
“Note that as of 2016, the company had started defaulting on its $1.2 billion loan obligations leading to a few bailouts from its parent company in Abu Dhabi. Understand that since this year, the banks had move to take over the telecommunications company in order to recover their funds.
“Note also that the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) have intervened and raised issues of regulatory compliance in trying to prevent a takeover by the banks, but the intervention has failed to produce an agreement on the debt restructuring,” Olamilekan added.
The lawmaker observed that while it is not necessarily the duty of the Senate to wade into the debt crises, it is necessary that the Senate intervenes to avert any negative implications of the development on Nigerian business climate and foreign investments.
This, he particularly noted, was necessary, as the magnitude of the loan can trigger another banking crises and a need for bailout funds again.
“Note that the decision of the core investors to pull out of Nigeria raises issues of suspicion, on the intent of a company in obtaining a loan facility, defaulting and then pulling out of the country, hoping that their shares would be used to write off the debts;
“Aware of allegations that the loans have been diverted to other uses not related to the business for which the huge loan was obtained, as there was no evidence of what the company did with the loans,” he said.
Presiding, Senate President, Bukola Saraki, urged the committees to do a thorough job on the assignment.
“We must first and foremost always do all that we can to protect the jobs of our people. On the issue of investment planning and corporate governance, we must also look at preventing these kinds of issues. It is my hope that this committee would come up with a framework that will help us address issues like this in the future,” Saraki said.
In another development, the Senate also directed its Committee on Privatisation collaborate with the National Council on Privatisation (NCP) and the Bureau of Public Enterprises (BPE) to receive and examine a comprehensive report of current privatisation status of Nigerian public enterprises.
The committee is expected to determine the public enterprises that have been privatised and commercialised, their current status, extent of due process in the conduct of the exercise, enterprises whose privatisation where reversed by the federal government, extent of compliance with post privatisation conditions by core investors and the impact of privatisation/commercialisation of public enterprises on the Nigerian economy.
The mandate followed a motion sponsored by Senator Umaru Kurfi (Katsina APC) who noted that while the objective of privatisation is noble, the exercise is not backed by an articulated and properly phased public sector reform.
It is also usually beset with several challenges which make the exercise unable to facilitate efficient production of public goods, or make any significant impact to fiscal balance, Kurfi added.
“Aware that through initial public offer, sale by competitive bids, and sale through direct negotiation to core investors, the federal government had between 1989 and 1993 privatised 111 public enterprises and commercialised 35 others with 67 in the first category comprising hotels, breweries, insurance companies and other similar light industries.
“Further aware that the second category consist of 43 enterprises including oil marketing companies, the steel rolling mills, Nigeria Airways, fertilizer companies, the paper mills, sugar and cement companies; the third category consisted of 11 parastatals, including the Nigerian National Petroleum Corporation (NNPC), the Nigerian Telecommunications Plc. (NITEL), and National Electric Power Authority (NEPA), later transformed to Power Holding Company of Nigeria ( PHCN) while the last category consisted of 14 other parastatals including the Nigerian railways, the Delta and Ajaokuta Steel Rolling Mills,” Kurfi added.
The senator recalled that an ad hoc committee of the Senate in 2011 on the same issue, found that the exercise, since the return to civil rule in 1999, has been fraught with corruptioninspired undervaluation of privatised enterprises, sale of the undervalued enterprises to cronies and political associates, asset stripping, clear breaches of due process, and regulatory inefficiency.
The recommendations of the 2011 committee have not been implemented, Kurfi noted.