The rise and demise of Nigerian agencies

By Matthew Ma

A country’s population can only reach its full potential when its national agencies are functioning optimally. These agencies are responsible for providing essential services such as communication, transportation, electricity, postal service delivery, and public infrastructure. By ensuring that these agencies are working at their best, we can create an environment that is conducive to growth and development.”
It is a common belief that Nigerians have a tendency to destroy their own governmental agencies, whether intentionally or unintentionally. There could be several reasons for this, including insufficient training, inadequate funding, corruption, or political instability. However, it is essential to acknowledge that this is not a universal characteristic of Nigerians. Numerous individuals and organizations within the nation are working tirelessly to enhance the situation and create a better future for all Nigerians. While these individuals are striving to improve Nigeria’s reputation, the government recently released a statement that has raised concerns about the status of the country’s agencies and the role of its citizens in their deterioration. According to the report, the burden of the systemic collapse of the Nigerian Telecommunications Plc (NITEL), the National Electric Power Authority (NEPA), the Nigerian Postal Service (NIPOST), and the Nigeria Airways (NA) should not be entirely placed on the leadership but also on every Nigerian citizen. This statement has sparked a public discussion regarding the government’s honesty and whether the citizens of Nigeria have genuinely contributed to the current state of the nation’s agencies.
In the past, NITEL, NEPA, NIPOST, and NA were highly desirable entities in the country. Later, the Power Industry underwent significant changes when the Federal Government established NEPA by Decree No. 24 of 1972. NEPA resulted from the merger of the Electricity Corporation of Nigeria and Niger Dams Authority (NDA). In 1990, NEPA underwent partial commercialization with the appointment of a Managing Director/Chief Executive to oversee the Corporation. Moreover, NEPA was divided into four independent divisions: Generation and Transmission, Distribution and Sales, Engineering, Finance, and Administration, each headed by an Executive Director. By 2000, NEPA had a monopoly over the generation, transmission, and distribution of electric power, operating as a vertically integrated utility company with a total generation capacity of about 6,200 MW from 2 hydro and four thermal power plants. However, this resulted in an unstable and unreliable electric power supply situation in the country, with frequent power cuts and extended periods of power outages for consumers. A lack of maintenance of power infrastructure, outdated power plants, low revenues, high losses, power theft, and non-cost-reflective tariffs plagued the industry. In 2001, Nigeria began reforming its electricity sector with the National Electric Power Policy. The main goal was to establish an efficient and sustainable electricity market by transferring ownership and management of electricity infrastructure to the private sector. The Federal Government of Nigeria (FGN) took further steps to restructure the Nigerian power sector, aiming to establish a reliable and cost-effective electricity supply throughout the country to attract private investment. In 2005, the Power Sector Reform Act transformed NEPA into the Power Holding Company of Nigeria (PHCN) with 18 Business Units, 11 distribution companies, six generation companies, and one transmission company.
NITEL was a valuable asset in the telecommunications industry, attracting numerous interested parties, some of whom were driven by greed. Despite its profitability, NITEL could have been managed with greater efficiency, given its crucial role in Nigeria’s telecommunications system. The decision to abandon NITEL in favor of registering GSM companies seemed surprising. To tackle the issue, the Obasanjo administration turned to privatization and auctioned off the company at a low price to select individuals. In 2002, NITEL generated a revenue of N53.41 billion and collected N49.18 billion. Despite this success, the Obasanjo-Rufai group auctioned off NITEL to International London Limited (ILL) for $1.2 billion. It was later revealed that a group of politicians hastily assembled ILL to purchase the company. During the Obasanjo administration, the privatization program was advertised to attract foreign investors. ILL expressed interest in purchasing it but required additional foreign exchange. The majority of the funds were sourced locally, with First Bank providing the most capital. However, ILL and its local partners were only able to raise 10% of the required funds, putting them in a difficult position. The failure of the deal led to First Bank’s management crumbling, and the government was compelled to cancel the messy transaction. Following the ILL debacle, the El-Rufai BPE devised a new plan to entrust NITEL to an organization called PENTASCOPE to improve its profitability. Regrettably, PENTASCOPE was a fraudulent enterprise. Due to compelling evidence of the proposed management’s ineptitude, NITEL employees approached the Obasanjo-Rufai group and demanded that the management halt its dealings with PENTASCOPE. NITEL protesters marched to the NICON HILTON Hotel, where a contract was set to take place, in an effort to make their voices heard. As a result, the government announced a delay in signing the agreement. However, this delay was merely a ploy, as the group proceeded to sign the questionable deal anyway. Entrusting NITEL to PENTASCOPE was like leaving a group of hungry cats to guard a plate of fried fish. Instead of rushing into an agreement, PENTASCOPE should have taken the time to examine NITEL’s finances and clean up its treasury thoroughly. PENTASCOPE managed NITEL from March 2003 to February 2005, during which time the number of working NITEL lines decreased from 553,471 to 291,000. In the period prior to PENTASCOPE’s involvement (2002), NITEL generated N53.41 billion and collected N49.18 billion. Under PENTASCOPE’s management, these figures fell to N29 billion and N21 billion, respectively. In addition to the significant revenue loss, NITEL under PENTASCOPE failed to make any new installations or system upgrades in the digital age.
PENTASCOPE failed to address the root cause of the issue, leaving NITEL with a significant burden of N19 billion. This occurred after PENTASCOPE liquidated its credits with the ITU and INTELSAT, as well as wiping out the company’s investments in treasury bills with the CBN. The BPE was granted a license to operate NITEL while searching for a new investor. However, from February 2005 to November 2006, the BPE continued PENTASCOPE’s legacy of mismanagement and incompetence. To make matters worse, even the staff’s private pension funds, which PENTASCOPE had previously avoided, were now being accessed by the BPE. As employees protested, the local union, SSACTAC, and the BPE management worked together to punish the protest leaders. This involved punitive transfers and detention in police cells. TRANSNCORP, a company with questionable origins in which the President held substantial shares, took over NITEL from PENTASCOPE and BPE. They subsequently sold NITEL’s valuable assets across Nigeria at meager prices, including the NITEL Training School and various offices. This left the staff without salaries for an extended period of 11 months. The NITEL official market share plummeted from 15 percent to a meager 0.03 percent, while MTEL, NITEL’s GSM arm, had over 1.3 million subscribers. Unfortunately, the number has since dropped to a few thousand despite MTEL’s extensive reach.
Rev. Ma, S.J, is a Jesuit Catholic priest and PhD candidate in public and social policy at St. Louis University in the state of Missouri, USA.