Folks,
Of the 10 listed companies (when we were CRS), I see ONLY ONE that should not have been defunct, #4.
Of the 10 listed companies (when we were CRS), I see ONLY ONE that should not have been defunct, #4.
4. State Seafoods Limited, Ibeno - 1975, Fish/Shrimp
The reason is that the raw material for this factory/company is locally available and will continue to be so till earth passes away. If anyone here knows the history of this enterprise, could they share it with us?
The first reason I see for its failure is in the FIRST part of its name - State! Folks we must get rid of the mentality that money will always come from somewhere to subsidize state enterprises and so we can chop the capital and profits. Ghana is making money hand over fist today exporting food stuff to the USA. I am willing to bet that they are exporting to Europe too. Why not us?
Here is a challenge to Akwa Ibom people, especially those in the coastal areas. If any of you would like to set up and run a manufacturing business that can export our smoked fish and crayfish for continual sale abroad, send me a private email and we can talk. Do not let this be like the palm oil situation of 5 years ago which no one wanted to undertake. There is good money to be made in this venture.
Ibanga in Austin
Chris:You wrote:Let us assume that this money is truely going to be used to build industries, which I doubt, It takes a minimum of 2 to 3 years to construct and commission an industry. It will take another 2 to 3 years for the industry to break even and be able to generate extra income. An average annual turnover for blue chip companies in Nigeria is N23b. What magic is going to be performed by the Akpabio companies to generate N225b cash to make loan repayment in one day. Do the economics yourself; given the trend that government industries hardly generate income.Me:Most of us are skeptical and very uncomfortable due to lack of disclosure or detail by the Governor on how he is planning to utilize the $1b loan so we may not be making the same mistake all over again. We were fortunate, Dr. Clement Isong did not take out any loan to finance the run down companies by his predecessors but on a fraction of Godswill Akpabio’s allocations from the fed or less than Godswill Akpabio’s over 25% security vote.Without getting into your assumption for the balloon payment of N225b, I am agreeing with you that `` government industries (companies) hardly generate income`` or profit capable of maintaining the N165b debt of paying the quarterly, semi or annually interest payment; talk about paying the principal at maturity when they are likely to go under; given past records as articulated by Ekerette Umoren and quoted below.Excerpt:`` Our recent history reveals to us several projects which we spent significant amounts of money on now constitute nothing more than an industrial graveyard. To our misleaders, these appeared to hold so much promise, but their promise fizzled over a few short years. To the average person, the
thinking is, we have the facility that was build by the government, it is ours. The fact the facilities are no longer used and unusable, and the fact they diverted crucial and scarce resources into an irrecoverable abyss does not seem to matter. A cursory appraisal of the proposed projects would have
given any student of industrial economies cause for concern, yet every administration comes up with the same unworkable scheme time after time and expects to be able to work miracles from a flawed premise. I could just say good luck and move along, but it is my money too so I have to speak up -
again, I know I have alluded to this in a previous write-up, but today I would name names so you can appreciate the history.When we were part of Cross River, we had the following companies in operation:
Company, Location - Year started, Product(s)
1. Pamil Industries, Abak - 1972, Palm Kernel Oil/Cake
2. Asbestonit Limited, Oron - 1972, Asbestos Sheets
3. Champion Breweries Ltd, Uyo - 1974, Beer/Malt
4. State Seafoods Limited, Ibeno - 1975, Fish/Shrimp
5. PlastoCrown Nigeria Ltd, Uyo - 1976, Plastic Products
6. Qua Steel Products Ltd, Eket - 1978, Steel Products
7. Peacock Paint Limited, Etinan - 1979, Paints
8. Sunshine Batteries Ltd, Ikot Ekpene - 1980, Automotive Battery
9. International Biscuits Ltd, Ikot Ekpene - 1980
10. Quality Ceremics Ltd, Itu - 1980 Ceramic Products
The federal government also had a significant hand in establishing companies
in the state. Here they are:
1. Nigeria Newsprint Manufacturing Co. Ltd (NNMC), Itu - 1982, Newsprint
2. Aluminium Smelter Company (ALSCON), Ikot Abasi - 1988, Aluminium
products.
Enterprises Jointly Owned
3. Exxon Mobil Production Unlimited (Joint venture), Ibeno - 1961, Oil and Gas
4. Exxon Mobil Oso Gas Condensate plant (Joint venture), Ibeno - 1993, Petroleum condensate
Enterprises set up by Akwa Ibom
1. Akwa Rubber Estates Limited, Itu - Processed Natural Rubber
2. Akwa Feeds Limited, Uyo - Livestock Feeds
3. Akwa Palm Industries Limited, Eket - Palm Oil/Kernel
4. Akwa Plant & Equipment Services Ltd., Uyo - Plant and Equipment Hire
5. Akwa Hatchery Company, Uyo - Plastic Products
Of these lists I would give you the privilege of coming up with the ones that are working - hint, hint, they have "xx" in their name somewhere. The other hint is they have a significant private sector participation.```Full Text – Source: Ekerette Umoren
All,A paragraph of this write-up read "He observed that if those projects were successfully completed, the objective of transforming the state into an industrial giant would have been met while employment opportunities would be abundant for the teeming population of the state."
I felt a bit (but just a tiny bit) of ambivalence responding to Kunle's write-up. This is because I am a committed advocate of continuity. That said, I draw the line in my advocacy if what needs to be continued is a cancer in which case I would call for radical surgery, radiation, chemotherapy - the works.
Statements like the quote above, in relation to the projects we have expensed money in our state, only serve to reveal the level of unrealistic and myopic grasp of the practical aspects of macro economics as it applies to the world in general and to our state in particular.
For us to construe a smattering of outsized, alien projects, geographically, and more importantly, synergistically, dispersed and having overwhelming government participation as being capable of "transforming the state into an industrial giant" with abundant employment opportunities is a clear
admittance we have a less than passing acquaintance with economics and an even less familiarity with recent history.
Our recent history reveals to us several projects which we spent significant amounts of money on now constitute nothing more than an industrial graveyard. To our misleaders, these appeared to hold so much promise, but their promise fizzled over a few short years. To the average person, the thinking is, we have the facility that was build by the government, it is ours. The fact the facilities are no longer used and unusable, and the fact they diverted crucial and scarce resources into an irrecoverable abyss does
not seem to matter. A cursory appraisal of the proposed projects would have given any student of industrial economies cause for concern, yet every administration comes up with the same unworkable scheme time after time and expects to be able to work miracles from a flawed premise. I could just say
good luck and move along, but it is my money too so I have to speak up - again.I know I have alluded to this in a previous write-up, but today I would name names so you can appreciate the history.
When we were part of Cross River, we had the following companies in operation:
Company, Location - Year started, Product(s)
1. Pamil Industries, Abak - 1972, Palm Kernel Oil/Cake
2. Asbestonit Limited, Oron - 1972, Asbestos Sheets
3. Champion Breweries Ltd, Uyo - 1974, Beer/Malt
4. State Seafoods Limited, Ibeno - 1975, Fish/Shrimp
5. PlastoCrown Nigeria Ltd, Uyo - 1976, Plastic Products
6. Qua Steel Products Ltd, Eket - 1978, Steel Products
7. Peacock Paint Limited, Etinan - 1979, Paints
8. Sunshine Batteries Ltd, Ikot Ekpene - 1980, Automotive Battery
9. International Biscuits Ltd, Ikot Ekpene - 1980
10. Quality Ceremics Ltd, Itu - 1980 Ceramic Products
The federal government also had a significant hand in establishing companies in the state. Here they are:
1. Nigeria Newsprint Manufacturing Co. Ltd (NNMC), Itu - 1982, Newsprint
2. Aluminium Smelter Company (ALSCON), Ikot Abasi - 1988, Aluminiumproducts.
Enterprises Jointly Owned
3. Exxon Mobil Production Unlimited (Joint venture), Ibeno - 1961, Oil and Gas
4. Exxon Mobil Oso Gas Condensate plant (Joint venture), Ibeno - 1993, Petroleum condensate
Enterprises set up by Akwa Ibom
1. Akwa Rubber Estates Limited, Itu - Processed Natural Rubber
2. Akwa Feeds Limited, Uyo - Livestock Feeds
3. Akwa Palm Industries Limited, Eket - Palm Oil/Kernel
4. Akwa Plant & Equipment Services Ltd., Uyo - Plant and Equipment Hire
5. Akwa Hatchery Company, Uyo - Plastic Products
Of these lists I would give you the privilege of coming up with the ones that are working - hint, hint, they have "xx" in their name somewhere. The other hint is they have a significant private sector participation.
With that backdrop, let's explore some of my general concerns with the projects initiated by the last administration. Please permit me to be frank, in language, as I see it (I promise I won't be gross), I believe the time for pussyfooting around these issues is long gone:
1. What has happened will happen. There is a saying in my company "what has happened will happen". The list of defunct companies shown above, and their common characteristic - government ownership and operation, indicates all the new projects would end up the same way. There is no shred of evidence to convince me otherwise so consider yourself warned long before it happens.
2. Did I hear "white elephant?". The statement in this report indicates the continuity moves are "to prevent the projects from turning into white elephant.". I got news - white elephants are designed, projects don't just turn into them. These projects have white elephants written all over them.
Worse, there is a very strong suspicion (so far only circumstantial) that these projects could have been used to line the pockets of their originators. Some of the ones listed above where not designed to line their originator's pockets yet they stood no chance - how much less the ones that may be.
3. Sustained economic benefit of the product. The product derived from the company in question has to have sustained economic benefit to justify its existence, unlike the government which does not have to justify its existence. How a company justifies its existence is continued production of goods or services people want, in a cost-effective manner. Both ingredients - demand for the product and delivery at a price people would pay for - are vital to the success of a company. If you look at the Exxon offerings above, they fulfill those aspects admirably and that is why they are the only ones that are not defunct.
4. The Geographically disparate location of the companies. In college, in the mid to late 70's, we had discussions about the future of our state as a coterie of friends sitting over some cold cordials. As far as
industrialization goes, we concluded the approach of spreading the few companies we had over the entire state (Cross River at the time), though politically palatable was economically unsound. The reason for this conclusion was you always need to get to a critical mass (you can almost hear the physical scientists in the forum spinning their intellectual wheels) for industrialization to really take off and clustering the companies in close proximity to each other gets us there at an accelerated
rate. As we can see, from the spatial distribution of the companies above, we were not even close to taking advantage of the synergistic interactions these facilities could have had if so situated.
5. Open-ended contracts - Others have complained about the seeming open-ended contracts for the airport. I concur with this assessment. I tried to nail down a figure for the contracts and all the statements I saw said something like "more than $200 million". These statements were not very comforting and leaves a bad taste in the mouth even if there was nothing going on.
Now to the specific critique of the projects in the pipeline.
1. Ibom Power Plant. Of all the projects, this is the one I have the greatest affinity for because of its potential downstream effects. In fact, I have no fundamental objection to this project. What I have are, however, concerns for its sustainability which is vital to our goals. As I have mentioned before I never hear of what happens after we generate power from this power plant and that concerns me. For this power generation to be sustainable (remember our requirement of demand and delivery at a cost-effective price?) the following considerations are vital:
a. On the part of the facility, it needs to be constructed const-effectively, run, maintained and adequately protected against catastrophic failures.
b. The power needs to be transmitted to the point of usage using a well-designed and maintained transmission infrastructure - a transmission architecture that can degrade gracefully, again, to avoid a catastrophic failure. This part I have not heard anything about.
c. The revenue stream (this is the effective demand part of the equation) needs to be assured. The antiquated revenue-collection process now used by NEPA has no place in the power supply architecture. As part of the deal going with the IPP, there should be a re-orientation as far as the
responsibilities and roles of the power supplier and end user are concerned.
Payment of the appropriate fees by users would need to be adequately enforced to ensure the continuity of the scheme. I do not care if government subsidizes power use and turns around and hands the subsidy amount to the power company - what is important is that it would be understood for what it is - a temporary subsidy that would be gradually phased out. There is no free lunch and our insistence on free lunches, in the past, has left us in a situation where we can no longer afford lunch.
d. I am not sure what the current ownership structure of IPP is, but significant government ownership is, almost always, a sign of trouble. While government involvement could be inevitable due to the monopolistic nature of the IPP at this point in our history, its influence should be toned down as much as possible to keep its ruinous, corrupting implications at bay while the facility provides the necessary power vital to the technological development of the state. E.g. Although Exxon Mobil Nigeria is
majority-owned by the Nigerian government, its day to day operations are completely run by Exxon Mobil Nigeria.
With these issues addressed, the Ibom Power Plant would be a project whose positive effects would reach into the deepest recesses of our state and should be retained.
2. Le Meridiene Hotel. The fact this project is somewhat complete does not detract from the fact it is an ill-conceived white elephant and, certainly, a project whose advent is premature. Other than the possibility of its having been used to line some pockets, (if you examine its cost structure) it builds on the premise people would flock to the hotel, in the guise of being tourists, just because it is there and has decent facilities.
A few weeks ago I was around Disney World in Orlando, Florida. This is a town whose claim to fame are its resorts. Other than Disney itself, which is a logistics masterpiece, the surrounding resorts are impeccable in their appearance and the available amenities both inside the resort facilities and in the town itself, and the relative safety of carrying on in the area just stand out. But America, we say, has it altogether. I was merely trying to illustrate the concept so go to the next state to us - yes that one with a
locale called Tinapa. As impressed as I am with Tinapa, it is not really what I am talking about. Just think of you sitting on the edge of your seat in a car traversing the high (or is it low) way from Uyo to Calabar and compare your changing visual sensations as you cross over into Cross River territory. You enter the town of Calabar and cast your mind back at the town of Uyo which you just left. Which one would you, honestly, think engenders a more resort-like feeling? The painted houses and manicured landscapes of Calabar or the trash-piled landscapes of Uyo. This is why I am saying it is not the resort.
Yes, there are quite a few hotels at Uyo and quite a few more are needed.
What is common to these hotels, which hopefully, the Meridien would have supplied, is the absolute lack of standards and spotty service you receive at these hotels. Moreover, the noise from their emergency generators, the accompanying hydrocarbon and particulate pollution (blame the government on this one) and the appalling security issues in the place leaves quite a bit of work that needs to be done for this location to turn into a tourists Mecca.
Instead of sinking all that resource into a government-construc ted and run facility, the government would have done much better for our people by saying they are going to put in money and improve the already existing hospitality industry. In exchange for government help (help, not taking over) the participating hospitality outfits will agree to move towards a standardized (minimum required) service delivery where quality of service would be established in the industry in the state. The state would also use this opportunity to work towards countering some of the more significant impediments to wealth growth in the state, namely - the evil twin of business being oblivious to the need for growth and business mortality due to terminal business entities. Ultimately, the state would have ended up
with a very robust hospitality industry which could form the basis for launching other industries, would have increased its tax base and also raised a cadre of management and rank that have actually begun to understand how business works and grows and that can constitute a formidable vanguard for the
advance of business in the area.
Oh, we were talking about the Meridiene! At any rate, I am afraid the resources expensed in the construction of the hotel, along with the environmental deficiency surrounding it, wins her the price of White Elephant Extraordinaire.
It is not only better to start building from the foundation, it won't work any other way.
3. Science and Technology Park. Such a park could, presumably, work towards bringing together the synergies we talked about earlier. To quote from Akwa Ibom State site "the science and technology park is to serve the main centre for information technology research and development, product
manufacturing, marketing, distribution and logistics." Fair and noble aspiration. This project is expected to be a tech incubation center, IT nursery, a springboard for the automation of data processing in the state and even to, ultimately, assemble computers in the state. Of course, in the speeches you see unrealistic goals and timelines, etc. and the end goal for the effort is dubious, at best as they address items that could be accomplished much quicker and cost-effectively using other means.
Here is where a few of the common sense rules of industrial naissance are also violated and why it is unlikely to succeed. The concept would have had a much more likely chance of growth and success where the economic activity is already significant. Uyo or Eket come to mind. Please bear with me, I
believe all the areas of the state should have development get to them in a timely manner. All I am advocating is we have the kind of development that would not only outlive us but grow into even more effective creators of wealth as time goes on. When the business viability itself is nonexistent from the get go, we all lose.
So then, a technology park, located near where its services and products could be readily employed and desired and where it can feed off business as business feeds off it, would be more desirable than one that would quickly die once the government takes off its props, perhaps by the advent of a new
administration. The focus of the government should be to help with necessary infrastructure that would provide an enabling environment for the survival and growth of the park. The power supply, fiber optic data lines and associated infrastructure quickly come to mind. Provision of communication links between the park and businesses and the rest of the world are also vital. Some of the initial businesses that could benefit from a well thought out technology park could be intuitions of learning like Uniyo, banks (which are currently loaded with money - if you pardon the pun). The oil industry, which has had to go it alone in providing the communications/ tech centers for its operations would, probably, have jumped on the opportunity to have a partner, reducing the cost to our state while the state helps the
largest tax generator.
What we would have achieved by going this route is the demand and cost-effective delivery equation which would speak to the sustainability and growth of the enterprise.
4. Akwa Ibom International Airport. The only thing I could say, as my initial feelings towards this project is, I sea an animal from the order Proboscidea and it is white and flying with its large ears. If I were given the task of thinking about the feasibility of this project, sans the political underpinnings, some of my considerations would have been the following: We have an airport at Calabar (remember, I am politics blind so far), a mere 34 miles from Uyo (as the crow flies), an airstrip at Eket, about 36 miles from Uyo and we are looking at a new airport, smack between the Calabar airport and Eket airstrips - what would be the viability of our airport. The new airport would be about 30 miles from Uyo and about 25 miles from Eket. Remember these are miles as the crow flies. Actual ground miles are larger due to road patterns and then, at home, the 30-mile ride, that should take 30 min would most likely take closer to 60 min.
Another consideration would be - who would form the prime clientele for my airport which, I admit, is just another way of asking about its feasibility?
Asked this way, though, it is obvious two sets of clientele would be served - the local traffic which would be, politicians, business folk and some folks on the street e.g. those traveling home and their relatives and the center of that travel would be Uyo. The second set would be the oil workers whose center of gravity is Eket. You have located the airport farthest away from those who would be using it. However, all is not lost. Up until recently, the nearby Calabar airport was heavily underutilized because of lack of traffic. The shut down of the Port Harcourt airport for an extended period of time now and the well-earned popularity of Calabar as a tourist heaven has now helped it to go from zero flights to 3 flights a day to the point where the state is embarking on a new airport. With the combination of Calabar airport and the resurrection of Port Harcourt airport (not to forget the lessons of the never-could- go-from-crawling -to-walking Owerri airport) what, really, is the feasibility of this airport? Are we, naively, operating on the "if you build it they would come principle"? I understand the initial focus is that of maintenance as opposed to passenger traffic, but passenger traffic is still a significant part of it.
The other claim for the airport is its touted, ultra-modern hanger facilities to which I have expressed my doubts about its ultimate utilization and our readiness, or willingness to prepare and be ready to have local, technical participation in its upkeep. But my biggest fear is with the supporting services that need to feed operations of this technical nature to ensure the facility garners the reputation that would lead to its further utilization. A hanger, by itself, is merely a mechanics shop for an aircraft. The difference between a hanger and a mechanics shop is that the parts and what is being serviced are far more expensive and the competence, and training, of the mechanic is of an order of a few orders of magnitude above that of the mechanic. Plus you can have a whole lot of fuel, in the aircraft, that can blow up in your face. This part could be done with proper planning and execution, but one still needs the demand for these services.
Presumably, the fleet of Nigeria's aircraft would be serviced at these hangers, but I don't know whether any contracts have been or are being negotiated yet or it will just come on an ad hoc basis.
Let me digress a bit here to make a statement: Most, if not all, the projects Attah's administration dreamed up are excellent for our state. As often is the case, timing can be a tricky thing when it comes to prioritizing projects. Our leaders should take the example of King David in the Bible. He dreamt up the temple of God, laid the ground work, but it was his son, Solomon, who built it. All these projects are good in their proper time, but the basic economic principle that has to be understood is that resources are limited and so everything has to be properly prioritized. The other aspect of the airport is it will serve as a cargo conduit for the needs of the burgeoning oil industry, Fair enough.
These said, there are some potentially significant positives about this project. It is said to be a 60%/30% Private Interest/Akwa Ibom partnership. If this is, indeed, true it is a significant positive, in my estimate. If
this is, indeed the case, this project may be suffering from one of those maladies that affect our joint ventures with the private sector. The malady, termed I-want-something- for-nothingtitie s, occurs when one partner (usually the government) refuses to hold on to its own part of the business bargain and expects the other partner to put up all the resources while they both reap the rewards. I am sure, eventually, we would know what is really transpiring with the project.
Original plans called for dual carriageway roads from the airport to the rest of the state and other states. This would be a good thing and vital to the airport if it is to have a chance at survival. It will also go to feed our long-standing need for roads that are sorely needed for commerce in the area. That said, it is not been clear whether these roads are part of the budget process so doubts arise.
Before I leave this subject, let me bring out the other side of the coin I believe would have been more elegant. Cross River is due to expand its airport and, due to capacity limitations at its current site, it is moving to virgin site. Akwa Ibom embarked on building its airport. I believe it would have been possible for the two states to come together and spend their resources to build an elegant, airport/hanger facility on a common boundary.
The two would also commit to building roads from the airport to their main cities. This step would have accomplished a few things. It would have initiated an era of effective cooperation between states. It would have boosted the airport's viability significantly in the eyes of those who matter and it would have provided a very powerful, regional airport that would have leapt ahead of the others in the area. But, alas, I can always dream.
Finally, despite my initial misgivings about this airport project, on the strength of its being a joint venture in the percentages indicated, I submit it should be continued but with due diligence to tie up the current loose ends. I would also note that it would not have been a priority project, in the order of the power plant, for me. I suggest the state work with the business partner and pony up its obligations, i,e, 30% and the roads (probably far more than 30%, but would be useable for our commerce).
5. Nigerian Stock Exchange - I am still scratching my head on why we need this one and, maybe, someone in the forum could enlighten me.
6. Acutech - An idea whose time has not come. Akwa Ibom State has several institutions of higher learning, both state and federal, and all of them are in poor shape. Oops, I forgot, there is the oil company training facility, which is not in poor shape, but that is another story. There is also the Bigard Memorial Seminary, which is not in poor shape - maybe there is a theme here.
Uniyo is the oldest of such institutions, other than the teachers' colleges. It would have been far more cost-effective for our government to partner with the Federal Government and improve the quality of the output at Uyo and then use the funds left to prop up the secondary schools so their products can get into competitive Universities of Technology (among others) in Nigeria and the world, sometimes with full scholarships. The next best thing would have been to take the now defunct Polytechnic at Ikot Asurua and convert it to an initial campus of a University, if we really had to get one. That would have saved some infrastructural funds and left some for further development. Further, synergies can develop between the new university and the adjacent Bigard Memorial Seminary.
This project should be discontinued at this time.
Finally, it concerns me that we do not appear to have learned the lessons of the past - these massive, government-focused efforts are designed with inherent failure. Although I went in to give some thinking to each of the projects, the main thrust of my writing was to nudge us to begin to rethink our efforts. Sometimes you have to cut your losses. The accountants/economist have a word for it - sunk costs. We need to understand if we keep doing the same things, the results are very unlikely to vary. A complete paradigm shift is necessary for our state to really realize the benefits of its hydrocarbon- derived windfall. Currently, we are pouring this windfall into a bottomless pit and we sorely need to change our strategy.
It also concerns me greatly that we continually favor, massive, resource-draining projects while the foundational element of good education is completely ignored.
Akpabio needs to re-evaluate which projects are viable and ditch those which are not. Four, or eight, years from now when we look back on his administration, the buck would fully stop at his table and he would be the one to blame. Hence it is his prerogative to make the tough calls. This is why Shakespeare noted aptly that "uneasy lies the head that wears the crown".
Ekerete Umoren
Columbia, MD
No comments:
Post a Comment