document of the world bank report no: icr00001418

Document of The World Bank

Report No: ICR00001418

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-35200)

ON A

CREDIT

IN THE AMOUNT OF SDR 90.2 MILLION (US$ 114.29 MILLION EQUIVALENT)

TO THE

REPUBLIC OF NIGERIA

FOR A

PRIVATIZATION SUPPORT PROJECT

February 28, 2011

Finance and Private Sector Development Department West/Central Africa Department Africa Region

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CURRENCY EQUIVALENTS (Exchange Rate Effective December 2010)

Currency Unit = Naira

N 1 = US$0.01 US$1 = N152.45

FISCAL YEAR

January 1 to December 31

ABBREVIATIONS AND ACRONYMS BER Borrower’s Evaluation Report BPE Bureau of Public Enterprises CPS Country Partnership Strategy CPU Central Procurement Unit DISCO (Power) Distribution Company EMCAP Economic Management Capacity Credit EMT Economic Management Team EPIC Electric Power Sector Reform Implementation Committee EPSRA Electric Power Sector Reform Act FCTWB Federal Capital Territory Water Board FGN Federal Government of Nigeria FMOT Federal Ministry of Transport GENCO (Power) Generation Company ICRC Infrastructure Concession Regulatory Commission IFC International Financial Corporation IPP Independent Power Producer LSWC Lagos State Water Corporation MDA Ministries, Departments and Agencies MOC Ministry of Communications MTR Midterm Review MYTO Multi-Year Tariff Order NASS National Assembly NCC Nigerian Communications Commission NCP National Commission for Privatization NEEDS National Economic Empowerment and Development Strategy NEEP National Electric Power Policy NEGIP Nigeria Electricity and Gas Improvement Project NEPA National Electric Power Authority NTP National Telecommunications Policy PAD Project Appraisal Document PE Public Enterprises PHCN Power Holding Company of Nigeria PPP Public Private Partnership PSP Privatization Support Project SC Successor Company SME Small and Medium Enterprise TRANSCO (Power) Transmission Company TTL Task Team Leader

UA Universal Access UAF Universal Access Fund USPF Universal Service Provision Fund

Vice President: Obiageli Katryn Ezekwesili

Country Director: Onno Ruhl

Sector Manager: Paul Noumba Um

Project Team Leader: Peter Mousley

ICR Team Leader:ICR Primary Author:

Peter Mousley Zachary Kaplan

NIGERIA Privatization Support Project

CONTENTS

Data Sheet

A. Basic Information .............................................................................................................. iB. Key Dates .......................................................................................................................... iC. Ratings Summary .............................................................................................................. iD. Sector and Theme Codes ................................................................................................. iiE. Bank Staff ........................................................................................................................ iiF. Results Framework Analysis .......................................................................................... iiiG. Ratings of Project Performance in ISRs ....................................................................... xiiiH. Restructuring (if any) ................................................................................................... xiiiI. Disbursement Profile .................................................................................................... xiv

1. Project Context, Development Objectives and Design .................................................... 12. Key Factors Affecting Implementation and Outcomes ................................................... 73. Assessment of Outcomes ............................................................................................... 134. Assessment of Risk to Development Outcome ............................................................. 235. Assessment of Bank and Borrower Performance .......................................................... 246. Lessons Learned ............................................................................................................ 277. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ............... 28 Annex 1. Project Costs and Financing ...................................................................................... 30Annex 2. Outputs by Component .............................................................................................. 32Annex 3. Economic and Financial Analysis ............................................................................. 35Annex 4. Bank Lending and Implementation Support/Supervision Processes ......................... 41Annex 5. Beneficiary Survey Results ....................................................................................... 43Annex 6. Stakeholder Workshop Report and Results ............................................................... 44Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ................................. 46Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ................................... 48Annex 9. List of Supporting Documents .................................................................................. 49Annex 10. Additional Project Performance Indicators ............................................................. 51Nigeria Map .............................................................................................................................. 55

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A. Basic Information

Country: Nigeria Project Name: PRIVATIZATION SUPPORT PROJECT

Project ID: P070293 L/C/TF Number(s): IDA-35200

ICR Date: 02/28/2011 ICR Type: Core ICR

Lending Instrument: SIL Borrower: THE FEDERAL REPUBLIC OF NIGERIA

Original Total Commitment:

XDR 90.2M Disbursed Amount: XDR 74.5M

Revised Amount: XDR 74.5M

Environmental Category: B

Implementing Agencies: Lagos State Water Corporation Bureau of Public Enterprises Federal Ministry of Finance Nigerian Communications Commission nigerian electricity regulatory commission Federal Capital Territory Water Board

Cofinanciers and Other External Partners: B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 09/25/2000 Effectiveness: 11/21/2001 11/21/2001

Appraisal: 11/15/2000 Restructuring(s): 06/28/2005

Approval: 06/14/2001 Mid-term Review: 02/13/2004

Closing: 12/31/2006 12/31/2009 C. Ratings Summary C.1 Performance Rating by ICR

Outcomes: Moderately Satisfactory

Risk to Development Outcome: Substantial

Bank Performance: Moderately Satisfactory

Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Satisfactory Government: Moderately SatisfactoryQuality of Supervision: Moderately Satisfactory Implementing Moderately Satisfactory

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Agency/Agencies: Overall Bank Performance:

Moderately SatisfactoryOverall Borrower Performance:

Moderately Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance

Indicators QAG Assessments

(if any) Rating

Potential Problem Project at any time (Yes/No):

Yes Quality at Entry (QEA):

None

Problem Project at any time (Yes/No):

Yes Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Moderately Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Central government administration 78 23

Law and justice 1 1

Power 11 17

Telecommunications 36

Water supply 10 23

Theme Code (as % of total Bank financing)

Regulation and competition policy 50 23

State enterprise/bank restructuring and privatization 50 77 E. Bank Staff

Positions At ICR At Approval

Vice President: Obiageli Katryn Ezekwesili Callisto E. Madavo

Country Director: Onno Ruhl Mark D. Tomlinson

Sector Manager: Paul Noumba Um Demba Ba

Project Team Leader: Peter J. Mousley Paul Ballard

ICR Team Leader: Peter J. Mousley

ICR Primary Author: Zachary A. Kaplan F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The project objectives were:

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(i) support transparent and effective implementation of the Federal Government of Nigeria#s privatization program, as a basis for fostering accelerated economic growth; (ii) [through] expanded private investment and improved efficiency in the productive sectors, and in infrastructure; (iii) create an enabling environment for private sector participation and competition in infrastructure services, notably in telecommunications and electric power. Revised Project Development Objectives (as approved by original approving authority) The objectives were not revised. (a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Expanded private sector investment and Employment: (Value quantitative or Qualitative)

Value quantitative or Qualitative)

600 PEs at federal level.

About 100 public enterprises in agriculture, services and infrastructure will be transferred to private ownership

Privatization of 75 public enterprises as specified in the MTR

165 privatizations taken to the point of sale with 109 transactions completed generating US$1.89billion.

Date achieved 12/16/2002 06/28/2005 04/06/2004 12/05/2009 Comments (incl. % achievement)

Achieved

Indicator 2 : Increased private participation and efficiency in infrastructure: (Value quantitative or Qualitative)


No private sector involvement in telecommunications and power.

NITEL will be privatized and competition will be introduced from 2001. NEPA will be restructured by 02. Some Gencos concessioned'01-02 - Other sold'03-06; Discos privatized'03-04; tender for PPP of LSWC end'01.

NITEL had been privatized with FGN. FGN cancelled the sale after successful company failed to fulfill post privatization commitments. 16 unified access service licenses and 4 digital mobile licenses have been issued.

Date achieved 12/16/2002 06/28/2005 12/31/2009 Comments (incl. % achievement)

Mostly Achieved: Electricity and Telecommunications legal and regulatory initiatives completed after delay at Parliament. Power Sector Reform was re-launched in October'10 with the FGN issuance of a Policy Statement.

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Indicator 3 : Creation of pro-competitive and transparent markets and regulatory frameworks in infrastructure. (Value quantitative or Qualitative)


Baseline constituted existing telecommunications and electricity sector legislation that did not provide for the market liberalization that Government Policy targeted. There was no regulator in electricity sector; NCC legistation outdated.

FGN will create pro-competitive regulatory frameworks; FGN will present new Tele-communications and electricity laws for approval in 2001; NCC will extend its mandate; mew power agency established.

Electricity Power Sector Reform (EPSR) and Telecommunications bills enacted. NCC and NERC operational and performing.


NCC and NERC Bills passed into law and regulatory agencies established and operating. Additional legislative actions that impact the continuing reform needs in key infrastructure sectors including transport (ports, rail, road, inland water

Indicator 4 : Increase Basic Infrastructure and Utilities Services in rural and urban areas. (Value quantitative or Qualitative)


Teledensity levels at 0.3%, water production capacity estimated at 320 MLD, >80% of NEPA 5888 MW capacity inoperative.

1 line per 100 inhabitants by 2003; double number of villages with telecom access; electric power meter numbers by 1 million; LSWG production double by 2005 and collection increase by 50%

Teledensity target acheived; 17 LGAs and 257 communities with access; LSWC declined from 377 to 200 ML/day; Rate collections from N30 million to N60 million monthly; FCTWB add 33000 new house connections with over 100000 new people with access


Acheived fully for telecoms, partially for LSWC, and unsuccessful for NEPA.

Indicator 5 : Reduced deficit for PEs, particularly in infrastructure (Value quantitative or Qualitative)


Estimated $4.5billion invested by FGN in PEs annually over the two decades prior to the launch of the privatization

No agreement of specific targets established. Assessment of project subvention

US$1.89 billion in privatization proceeds to the FGN reflects the approximate

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program. savings could not be adequately completed. Project Team advised to drop this measure during CPPR discussions in 2008.

potential fiscal savings as a result of the privatization program. Corporate tax receipts for these companies reflects additional revenues since privatization an


As agreed with the FGN and the country management unit efforts to report against this indicator was stopped

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Highly motivated and well trained BPE Staff with improved skills set and institutionally strenghtened NCC with well-trained staff. (Value quantitative or Qualitative)

Value (quantitative or Qualitative)

No baseline

80% of BPE Staff to have attended approved training courses. Establishment of NERC and NCC as sector regulators with improvements in service outreach and quality.

Broad-based BPE training included a Strategic Management Training Program that targeted all senior management (Deputy Director and above) and other key stakeholders (legislature, Ministries). NCC training of 200 staff completed.


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G. Ratings of Project Performance in ISRs

No. Date ISR Archived

DO IP Actual

Disbursements (USD millions)

1 11/02/2001 Satisfactory Satisfactory 0.00 2 05/17/2002 Satisfactory Satisfactory 2.01 3 12/30/2002 Satisfactory Unsatisfactory 5.82 4 05/29/2003 Satisfactory Unsatisfactory 8.61 5 11/26/2003 Satisfactory Unsatisfactory 10.83 6 05/26/2004 Satisfactory Unsatisfactory 19.17 7 06/29/2004 Satisfactory Satisfactory 22.13 8 12/14/2004 Satisfactory Satisfactory 27.16 9 04/07/2005 Satisfactory Moderately Satisfactory 30.11

10 07/26/2005 Satisfactory Moderately Satisfactory 34.26

11 12/28/2005 Satisfactory Moderately

Unsatisfactory 43.85

12 04/26/2006 Satisfactory Moderately Satisfactory 47.58 13 12/21/2006 Satisfactory Moderately Satisfactory 57.56 14 06/27/2007 Satisfactory Moderately Satisfactory 67.02 15 12/28/2007 Satisfactory Moderately Satisfactory 75.94

16 06/18/2008 Moderately SatisfactoryModerately

Unsatisfactory 78.36

17 12/25/2008 Moderately Satisfactory Moderately Satisfactory 87.29 18 06/29/2009 Moderately Satisfactory Moderately Satisfactory 93.06 19 12/22/2009 Moderately Satisfactory Moderately Satisfactory 101.75

H. Restructuring (if any)

Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made

DO IP

06/28/2005 S MU 33.71

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I. Disbursement Profile

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1. Project Context, Development Objectives and Design

1.1 Context at Appraisal 1. Country and Sector Background: During the 1970s and 1980s, Nigeria had developed a large public enterprise sector covering a broad spectrum of economic activities. These covered large basic industries, manufacturing, agriculture, services, public utilities and infrastructure. They included telecommunications, power, steel, petrochemicals, fertilizer, vehicle assembly, banks, insurance and hotels. 2. At appraisal, there were about 600 public enterprises (PEs) at the federal level and about 900 smaller PEs at the state and local levels. The estimated 1,500 enterprises accounted for about 30-40 percent of aggregate fixed capital investment and about 50-60 percent of formal sector employment. It was estimated that successive Nigerian governments invested over two decades about Naira 800 billion (approximately US$90 billion equivalent) in the PE sector, which remained one of the largest in Africa. The returns on these large investments were generally poor, and in a number of cases negative. The presence of non-performing PEs - some of which were mothballed, notably in the fertilizer, aluminum smelting, pulp and paper, sugar and steel industries - had effectively impeded entry by potentially more efficient private operators. 3. In electric power, telecommunications, ports, water supply and other sectors, the major inefficiencies of PEs added substantially to the costs of production of private firms. The National Electric Power Authority (NEPA)'s unreliable power supply was estimated to impose an additional cost of around US$1 billion annually on the economy. Only 12 percent of Nigerians had metered access to electricity (many others had access through illegal connections). Telephone coverage was only three telephone lines per 1,000 persons with most of these lines confined to the major urban centers, one of the lowest tele-densities in the world. With escalating demand for more reliable and affordable services, the general public had stepped up its pressure for efficient public services that were more responsive to consumers. In Lagos State, access to piped potable water was limited to less than 30 percent of the population. The water utility, Lagos State Water Corporation (LSWC), had chronic lack of maintenance and insufficient financial resources for emergency repairs. 4. The main sector issues were: (a) poor performance of public enterprises, which dominated major sectors of the economy and were a drag on economic growth, productivity, investment and in case of core infrastructure resulted in extremely poor service provision – across power, transport and telecommunications; (b) inadequate sector policy and regulatory frameworks which impeded competition, discouraged private entry and private investment; (c) excessive bureaucratic controls and government intervention; (d) weak political will and institutional capacity to implement reform. 5. Government Strategy: Faced with continuing poor performance of PEs and limited managerial capacity, the government strategy was to undertake a three-phase privatization program aimed at improving services and efficiency, promoting transparency and realizing results in the medium-term. The Federal Government of Nigeria (FGN) had decided to transform its role from owner, financier and operator of PEs to one of policy-maker and, where necessary, regulator for the provision of public

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services. This was formalized in a comprehensive Privatization Program that was given legal force through the 1999 Public Enterprises (Privatization and Commercialization) Act which also established the high level and politically powerful National Council on Privatization (NCP) and the implementation agency – Bureau of Public Enterprises (BPE). This was further reinforced by the role accorded to the BPE in the National Electricity Act to lead the restructuring of NEPA. 6. Sector issues addressed by the project: The Privatization Support Project (PSP) addressed key constraints in the PE sector by supporting capacity building (legal and regulatory as well as related institution building) and implementation for the FGN's PE privatization program through the financing of the key advisory expertise required for the preparation and market placement of privatization\commercialization transactions. This included a particular focus on reforms in three infrastructure sectors – telecommunications, electric power and urban water. 7. Rationale for Bank assistance: The PSP was one of the first generation of projects approved by the Bank after the 1999 elections. The initial Bank Strategy, set out in a Interim Country Strategy Note approved in May 2001 had, as a primary objective to help the FGN build capacity to manage its resources effectively and implement policies that will attract private investment to enhance economic efficiency and growth. The strategy's key elements included technical assistance to provide advisory services for FGN's privatization program, including divestiture of PEs in the major infrastructure sectors, notably telecommunications and power. The project was consistent with the Bank’s assessment of priority assistance needs. It aimed to complement the Economic Management Capacity Credit (EMCAP) which was assisting the FGN in strengthening key aspects of economic management. 1.2 Original Project Development Objectives (PDO) and Key Indicators

8. The project's development objectives were: (i) to support transparent and effective implementation of the FGN's privatization program, as a basis for fostering accelerated economic growth, through expanded private investment and improved efficiency in the productive sectors, and in infrastructure; and (ii) to create an enabling environment for private sector participation and competition in infrastructure services, notably in telecommunications and electric power. Key Indicators were:

Expanded private investment productivity and employment Increased private participation and efficiency in infrastructure Creation of pro-competitive and transparent markets and regulatory frameworks

in infrastructure Increased basic infrastructure and utilities services in rural and urban areas Reduced public deficit for PEs, notably in infrastructure.

9. The statement of PDO and Key Performance Indicators (KPIs) varied within the PAD (reference Section A2 of PAD, pages 2-3 and Annex 1 pages 37-41) and in comparison to the DCA (reference Schedule 2, pages 25-27). While the MTR did involve a restructuring of project components, there were no changes to KPIs with the exception of the number of targeted privatizations (down from “around 100” to seventy-five). As the privatization reform progressed, the Bank team adapted the project in terms

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of activities – keeping it firmly in line with PDO and KPI objectives. At the time of the first extension in 2006, consideration was given to revising KPIs to eliminate the duplication\confusion across the key project documents, but not pursued for two reasons. First, changes to KPIs as the project was nearing its closing date were considered inappropriate. Second the KPIs detailed in Section 2A of the PAD had clear resonance and traction with the clients and provided not just “well-owned” targets, but allowed for adjustments in the actual measures used to assess progress towards these KPIs that enabled the project to remain relevant and effective during a period of considerable reform momentum. This is further emphasized in the detailed quarterly progress reports that the different project executing agents provided over the 2006-2009 extension phase of the project. Data on progress against additional KPIs as stated in Annex I of the PAD are discussed in Annex 10.

1.3 Revised PDO (as approved by original approving authority) and Key

Indicators, and reasons/justification

10. The objectives were not revised. 1.4 Main Beneficiaries

The expected beneficiaries of the project included: 11. Urban and rural consumers: The privatization of PEs in the power, telecommunication and urban water sector would initially improve access and affordability for urban consumers. The rural access programs in electric power and telecommunications supported by the project would put in place affordable private and community supply in rural areas. 12. Small and medium enterprises (SMEs): Improved infrastructure would assist SMEs that were particularly constrained by poor infrastructure and particularly power services. Recent diagnostic work indicated that over 20% of many Nigerian enterprise investments went to financing alternative power sources (namely generators). In the recent 2008 Investment Climate Assessments, it was determined that infrastructure related costs amounted to 16% of sales for a Nigerian firm versus 2% for the South African, 5% for Chinese and 10% for Indian firm. This represents a significant competitive disadvantage. 1.5 Original Components (as approved)

13. The project consisted of six components as follows: Component 1: General Privatization Support - US$43.20 million 14. The project supported the FGN's programs for sector reform and privatization including in two major infrastructure sectors - telecommunications and power. It also financed the preparation and execution of PE divestiture transactions in the other sectors, led by the Bureau of Public Enterprises (BPE).

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Component 2: BPE Institutional Support - US$57.21 million 15. The project financed and strengthened the Government institutions responsible for undertaking the privatization program and sector reforms. It provided BPE with technical advisory support including: (a) long-term international advisors; (b) a "core team" of Nigerian professionals; (c) an international expert team on privatization techniques; (d) in the electric power sector, it would fund the full-time technical team to be recruited to support Electric Power Sector Reform Implementation Committee (EPIC). Component 3: Privatization Consensus Building - US$ 66.47 million 16. This component aimed to build consensus among the new members of the legislature and the public at large due to the sometimes conflicting views and understanding of the effects of the privatization program on the economy. Activities envisioned included: (i) communications and public relations campaign at home and abroad to explain and publicize the reforms with the help of specialist advisors; (ii) workshops and seminars in Nigeria on the main issues confronting reform, organized under the auspices of National Commission for Privatization (NCP) and the respective line ministries for these sectors; (iii) study tours for Nigerian policymakers and stakeholders to countries that have implemented similar reforms. Component 4: Telecommunication Sector Reform - US$18.49 million 17. Activities under this component were separated into the following sub-components:

Development of National Policy on Telecommunication: Preparing a new National Telecommunications Policy (NTP) that would replace the policy published in October 1999. Legal and Regulatory Reform and New Entry: (a) reviewing existing legislation and preparation of new telecommunication and related secondary legislation; (b) preparing new licenses for NITEL and other service providers; and (c) preparing new and amendment of existing regulatory instruments, such as frequency management, numbering plan, and tariff and interconnection regulations. Institutional Strengthening of the Nigerian Communications Commission, NCC: (a) developing an institutional strengthening plan; (b) preparing and implementing a human resources development and training plan for NCC; and (c) financing the procurement of a financial management system. Privatization of NITEL: (a) appointing technical and financial audit consultants to carry out the necessary due-diligence and financial audit of NITEL; (b) hiring privatization advisers (financial and legal) to assist in the sale process; and (c) marketing and promoting the program. Rural and Universal Access: (a) supporting consultants that would be appointed to assist TSRIC's universal access subcommittee in developing a universal access strategy and in defining the optimal institutional arrangements to implement the strategy; (b) hiring consultants to assist in identifying viable strategic options and operational schemes for the provision of the necessary infrastructure and services; and (c) providing seed investment for the demonstration projects. Radio-spectrum Management: (a) radio-spectrum monitoring modernization plan to develop institutional capacity; (b) definition of future requirements, and support for the procurement of the needed equipment and systems; and (c) procurement and

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operationalization of NCC's part of the radio-spectrum allocation and monitoring system.

Component 5: Power Sector Reform - US$25.23 million 18. Activities under this component were separated into the following sub-components:

Development of National Power Policy: The FGN had approved a policy statement that set out the new institutional arrangements for introducing competition and an appropriate regulatory framework to the power sector. Preparation of this statement was supported by consultancy services under the PPF for the PSP. Legal and Regulatory Framework for the Power Market: Financing consultants to carry out a cost-of-service study, a quality of service study and a tariff strategy study, and developing key regulations covering tariffs, etc., and also providing financial support to the regulatory agency to cover its start-up expenses. Corporate Restructuring of NEPA for setting up corporate entities, and design and formation of the new power market: Retaining the services of advisors to assist with restructuring the present vertically integrated structure of power supply by breaking up NEPA's corporate functions into a number of entities, and the design and formation of the new wholesale market for power. Privatization of entities formed from NEPA: Retaining the services of: (i) financial/lead privatization advisors to develop, prepare and execute a strategy for the privatization of the generation and distribution entities formed from the unbundling of NEPA; (ii) legal advisors for the privatization process; and (iii) technical/environmental consultants. Support for power generation concessions: Funding for consulting services for the concessioning of some of NEPA's hydropower stations, as well as for expert support for procuring and negotiating contracts with independent power producers (IPPs). Increasing access to power supply from non-grid sources in both rural and urban area: Financing the services of consultants and specialists in rural and non-grid electricity supply and marketing to help examine these issues and develop a strategy for increasing access to electricity.

Component 6: Lagos State Water Corporation - Restructuring and Private Sector Participation - US$14.36 million 19. This component supported the financing of: (i) emergency action plans identified as essential to support LSWC prior to the introduction of a private sector participation solution through a privatization transaction to be led by International Financial Corporation (IFC) as the principal privatization transaction advisor; and (ii) a part of the specialist consultant costs for the privatization transaction. 1.6 Revised Components and Project Re-Structuring

20. First Restructuring: The main features of the PSP restructuring that was concluded in June 2005 included:

Telecommunications Sector Reform Component: The reallocation of the Credit increased the project’s financing by about US$9.6 million to US$26.56 million to

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cover the additional expenses for rural access programs (US$7.2 million), radio spectrum monitoring and management support (US$0.4 million), regulatory work and technical assistance (US$1.2 million), and market studies and management information systems (US$0.8 million) Privatization Program Component: US$40.65 was allocated for BPE’s activities, which represented a reduction of about US$20.44 million from initial allocations. Urban Water Supply Component (which was only for LSWC was amended): US$2.5 million was made to critical spare parts for emergency repairs and maintenance; US$0.90 million for stakeholder and customer communications; US$0.2 million for training and capacity building; and US$33.0 million for civil works for water supply infrastructure. The Development Credit Agreement (DCA) was amended to include Federal Capital Territory Water Board (FCTWB). The activities under this subcomponent consisted of: (i) improving access to potable water supply in the urban area of FCT; (ii) providing potable water to areas where none existed; and (iii) promoting and enhancing Public Private Partnership (PPP) in the FCT. Gas and Power: An amount of US$l0 million was allocated for the technical assistance and advisory services for a feasibility study of a gas pipeline and independent power production project. Procurement: Additional procurement methods were added for consultant services, through least cost selection and consultant qualification, to enable the implementing agencies to more appropriately procure consultant services, particularly to carry out the project environmental and financial audits and other specialized technical work.

21. Second and Third Restructuring: During implementation, the Credit Agreement was revised a further two times after the formal restructuring to reallocate funds among expenditure categories. The second amendment of the DCA was in November 2006 for the establishment of a Special Account for the FCT Urban Water component and also to revise allocations accordingly to the different expenditure categories of the Schedule 1. The third amendment was done in October 2008 to adjust amounts in line with revised project procurement plans and insert a four month post-project close payment period. 1.7 Other significant changes

22. Project Schedule: The closing date of the project was extended twice: First extension was for two years from December 31, 2006 to December 30, 2008 in order to make possible further delivery of critical development objectives of the project as agreed under the 2005 restructuring. The second extension was for one year (through December 30, 2009) in order to allow (i) FCTWB to complete civil works contracts under way for the rehabilitation of water supply infrastructure; (ii) BPE to continue transactions due diligence work in support of the Federal Government’s evolving power, gas and transport sector reforms; and (iii) NCC to complete two “Universal Access” rural telephony pilots and complete the ongoing telecommunications equipment development and upgrading. 23. Concluding the LSWC component: By 2006, the Bank realized that the level of rehabilitation needed for LSWC was high and that it could no longer be covered within the project budget and timetable. Agreement was reached with the Federal Ministry of Finance for PSP support to LSWC to be closed with effect from December 31, 2006 and

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that, ongoing work with LSWC be supported under the Second National Urban Water Project. 24. Balance of Project Funds Cancelled: Based on projected disbursements to the end of the project on December 31, 2009 an amount of US$23 million of project funds was cancelled. This cancellation reflected, inter alia: (i) delays to execution of key transaction advisory contracts – particularly in power and energy sectors; (ii) significantly reduced disbursements against the Gas-to-Power activities incorporated into the project as a result of the 2005 restructuring; (iii) downward revision to estimated costs of FCTWB activities. 25. Other Donor Participation: USAID new Country Strategy resulted in a change of priorities in Nigeria towards social sector objectives and termination of the USAID support to the privatization program. However, DFID did introduce a Pounds Sterling 7 million capacity building program with BPE that coordinated closely with the PSP. The DFID support focused on specialized technical assistance – including financing of legal advisory services and the case study review of selected privatizations which has been a key input to the preparation of this ICR.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry 26. Project Preparation. As part of the project preparation, the sector background was studied, the main sector issues were analyzed in depth, and the Government strategies to deal with these issues were also considered. There was urgency on part of the FGN to put this project in place, as it was in support of one of the key components of the new government’s economic strategy which was focused on economic recovery and growth through macro-economic stability, institutional governance reforms and market liberalization. Soon after assuming power in June 1999, the Obasanjo administration signaled its strong commitment to privatization of state-owned enterprises as a critical element of this economic strategy. A number of actions underscored this commitment: (a) the creation in July 1999 of the NCP chaired by the Vice President of Nigeria, reporting directly to the President; (b) the early adoption of a list of major PEs to be privatized - including notably in electric power and telecommunications; and (c) the restructuring of BPE under strengthened leadership in 1999. Further, President Obasanjo approached the President of the World Bank Group very soon after coming to office, requesting support for early implementation of key PE divestitures, notably in power and telecoms. 27. Project design. The project was ambitious in scope – targeting key legal, regulatory, institutional reforms allied to a transactions advisory agenda that targeted, inter alia, privatizations in major infrastructure sectors that had a prolonged reputation of poor performance at both management and service delivery levels. While this broad program – involving initially three and then a fourth key implementing agents (BPE, NCC, LSWC, FCTWB) – was well grounded in legal framework and strongly supported by a statutory executive authority (via the National Council on Privatization – NCP), as with most privatization initiatives, it nevertheless remained a high risk reform. The project – aware from experiences elsewhere and based on specific Nigerian diagnostic - sought to respond to these challenges through an extensive program of capacity building and training, technical assistance and communications outreach. The complexity and

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diversity of the project activities appear to have contributed to the overlapping and extended set of KPIs contained in the PAD. Executing Agents (EAs) and Stakeholders did not fully internalize some of these indicators and establishing a sufficiently integrated and comprehensive baseline and Monitoring and Evaluation arrangement proved difficult across the different EAs. The NCP did not sufficiently serve as a Project Steering Committee and the stakeholders did not want to establish what was perceived as a duplicative entity. This inhibited effective Monitoring and Evaluation coordination across key government partners, although this was mitigated to a significant extent by the standardized quarterly reporting against a clear KPI matrix introduced for use among all EAs over the 2006-2009 extension period. Focused workshops- involving all agencies in 2006, 2007 and 2009- were also conducted to enforce proper review measurement of project activities the KPI matrix for the PSP project. 28. Lessons of earlier operations taken into account. The project design took into account lessons learned in similar privatization programs supported by the Bank Group:

Country-Specific lessons: Institutional sustainability, borrower commitment and adhering to standard international procurement procedures are essential pre-requisites and were addressed in case of PSP by the FGN Privatization law and establishment of the NCP and BPE under legislation. Experiences with Privatization Programs: (a) adoption of efficient and transparent procedures for PE divestiture transactions is key to stakeholder confidence and sustainability; (b) effective coordination of high level Government policy making for PE divestitures with decisions on related sector reforms - especially in infrastructure - is critical to effective implementation; and (c) communications and awareness-raising with concerned stakeholder groups concerning privatization generally and for specific transactions is vital to maintaining support for the program. The PSP project sought to support all these key elements as part particularly of the BPE Institutional Support and Consensus Building components. Sector Specific lessons: (a) develop sector policies that promote competition whilst protecting consumer, environmental and social interests; (b) create legal and regulatory frameworks that attract strategic investors and develop efficient markets; (c) provide access to capital to improve and expand services to existing and new customers; and (d) increase access and availability of services, especially in rural areas. The PSP project focused considerable resources on sector legal and regulatory reform – particularly in power and telecommunications, but also extending to transport, energy and general competition policy.

29. Risk Assessment. The Project Appraisal Document (PAD) identified several potential risks and mitigation measures. The overall risk of the project was rated as Substantial in the PAD. The ICR team agrees with this assessment and in particular the political, regulatory, governance and entrenched vested interest risks identified in section F2 of the PAD. These all posed major threats to project performance over its life and, while mitigation was ongoing and largely effectively, nevertheless they were mostly entrenched in the power sector and this had a significant impact on related project activities in the power sector which recorded more limited achievements against PAD targets.

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2.2 Implementation 30. The Bank conducted a Midterm Review (MTR) between February-April 2004. Further factors also impacted implementation, particularly in the run-in to and after the 2007 elections. These different sets of factors are addressed below.

2.2.1 Factors affecting project implementation identified at MTR 31. Slow Implementation of Privatization Program: Implementation of the Phase 2 including the full divestiture of FGN shares in over 60 companies operating in competitive markets was slower than expected. This was due to various factors, including: inability of preferred bidders to pay (e.g. NITEL); failure of preferred bidders to pay on time (NAFCON, and Iwopin Pulp and Paper Co.); insufficient investor interest (Central Hotel Kano); concerns over the preferred bidder’s integrity (Volkswagen AG), and legal disputes with stakeholders (Nicon Hilton Hotel). 32. Political Review Delayed Electric Power Sector Reform: There was a long delay in the passage and enactment of the Power Sector Reform Act in the National Assembly due to high-level political review. This delayed subsequent actions such as the setting up of sector regulation and NEPA’s commercial unbundling. 33. Low Initial Procurement Capacity: In the initial phase of the project, there was limited procurement capacity, particularly at LSWC and, albeit to much lesser extent, BPE. Considerable progress in this respect was achieved after 2005, as reflected in the extent of procurement actions – covering complex multi-million dollar transaction advisory contracts - concluded over the 2005-2006 period.

34. Lack of Project Management and Coordination: More effective cross-agency coordination in the initial phase of the project would have also resulted in better project implementation and oversight performance over this period. For example, while BPE remained strongly committed the reform program, there was resistance in some Ministries, complicated further by union opposition. To a considerable extent in the early period of the project, the support provided to BPE by the NCP allowed them to proceed in spite of the institutional inertia and\or opposition that prevailed in some of the partner ministries and agencies of the Federal Government. The project also anticipated – as restated in the MTR - a Project Oversight and Monitoring Committee being established under the chair of the Minister of Finance, and comprising all key stakeholders to the project (including BPE, NCC, LSWC, and FCTWB). However this committee was never effective and did not meet over the period after the mid-term review through to project closure. As noted earlier, the Executing Agents often noted that the NCP was the official coordinating body for the privatization program and queried the value-added of a separate oversight committee that would comprise much the same institutional membership as the NCP. BPE, in particular, continued to take its directives from the NCP or from the President or the Vice President (and NCP Chair).

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2.2.2 Other factors affecting project implementation 35. In addition to the above factors, the implementation was also affected by the following factors: 36. Stakeholder dynamics: There was, particularly in the run-in to the 2007 elections, especially strong and broad stakeholder factors at play with respect to key transactions, especially in power and transport sectors. These constraints encompassed deep-seated political, institutional and industrial relations issues, animated by a 2007 election process and subsequent energy sector policy review process launched by the new administration in May 2007. This had direct and substantial implications for the privatization program and for BPE’s operating environment and affected the timeliness of the implementation of workplans and procurement plans during 2007 and early 2008.

37. Problems with the labor unions in the power sector were particularly pronounced. While labor retrenchment issues were probably the most difficult aspect that Government negotiators successfully resolved in the case of the Port Reform exercise, challenges with the NEPA work force proved more intractable particularly in the run-in to the elections. 38. Ongoing Power Sector Policy and Institutional Obstacles: Difficulties in the power and the gas-to-power sectors arising out of ongoing and unsettled gas pricing policies and legislative reform, multi-year electricity tariff levels and institutional issues across NNPC, PHCN, NCG hindered pace of privatization/PPP actions being supported under this project. This was further delayed by review of the energy sector undertaken by the administration which came to power after the May2007 election and put on hold the activities in the power sector and gas-to-power.1 While the 2008 Energy Council Final Review did not change the privatization policy in the power sector, it did push back the timetable for privatization for PHCN. Recently in October 2010, the FGN resumed its privatization strategy and announced an enhanced Power Sector Strategy. This Strategy calls for the immediate implementation of the power privatization agenda, as developed with PSP support, including the privatization of a number of DISCOs associated with the letting of management contracts for the transmission and power generation. This new policy initiative, entitled “Roadmap for Power Sector Reform” realigns the sector policy back in line with original plans as set out in the electricity legislation. 39. May 2007 Presidential election and the change of administration: The absence of a functioning NCP in the months leading up to the election, and the delay in re-launching of NCP after the election slowed project activities. This transition process after the election resulted in the establishment of new government including appointment of Ministers, setting up the Economic Management Team (EMT), reconstitution of NCP and the inauguration of the National Assembly and its various committees. Delays during 2007 in ministerial approval of procurement actions also set back the FCT Water Board component, requiring extension of the component completion timeline.

1 For example, privatization/concessioning actions pending for the unbundled PHCN companies (DISCOs and GENCOs) were suspended subject to the outcome of a presidentially-appointed Energy Council Review of the Power Sector.

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2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization Rating: Moderately Satisfactory 40. M&E design: During project preparation, the team developed indicators to monitor the performance of the different project components. These indicators were originally designed to assess the performance of the various components of the project yet they lacked consistency across the Project Appraisal Document itself. While these weaknesses were mitigated (especially after the 2006 extension, see paragraph 42 below), a shortage of baseline figures constrained the indicator’s efficacy in assessing project performance. As a result, the M&E design was limited from the outset of the project. 41. M&E implementation: In the early phase of the project – and prior to the MTR – project M&E was not very active. Following the MTR, and the arrangements put in place as part of the first extension of the project from 2006-2008, M&E was improved and regular quarterly reporting against an updated set of activity outcomes linked to the project KPIs was completed by BPE NCC, and FCTWB. Likewise, a set of five indicators were synthesized from grouping the various indicators discussed in the PAD. This set of five structured the M&E framework through project closure. Additional subsidiary indicators (see Annex 10) were also synthesized from the various PAD indicators in order to measure more specific intervention results. It was also recognized that BPE lacked the IT platform to adequately maintain records of transactions and systematize follow-up monitoring of privatized companies. As a result, over the 2006-09 period, the PSP project undertook a substantial IT upgrade and training program to put in place this capacity. This is ongoing within BPE since the project closure. 42. M&E utilization: Following MTR, data collected from quarterly progress reports by the implementing agencies was evaluated and used for decision making on project activities. For example, based on the available data, credit allocated to FCTWB was reduced from $25 million to $19 million as there was not enough time to execute all the activities before project closure. The additional indicators (see Annex 10) were also periodically used to measure the support provided under PSP. To complement the quarterly reporting and deepen institutional knowledge base on the economic impact of privatization - covering key PAD issues such as employment creation, shareholder value, productivity improvements - 11 case study reviews undertaken in collaboration with DFID, provided key data used to assess these measures. The considerable diagnostic data amassed across the different sectors that have been financed by the PSP project provide key input to the recently re-launched Power Sector program and the preparation of the follow-on projects referred to in more detail in paragraph 49 below.

2.4 Safeguard and Fiduciary Compliance 43. There were no significant deviations or waivers from the Bank safeguards and fiduciary policies and procedures during the implementation of the project.

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2.5 Post-completion Operation/Next Phase Transition arrangements 44. NCC: Assets procured under the project will be absorbed by NCC and maintenance of these assets such as spectrum monitoring management system will be covered under the maintenance agreement with the suppliers to ensure that they are maintained. Regarding the Universal Access (UA) pilot projects as per the contract agreement, the UA service provider is obliged to run these projects for five years. The same consultant who helped NCC to carry out studies to determine the cost of interconnection of telecom traffic between network operators will be retained to review the current needs and status. All staff under the project continued with NCC even after the project closed. Furthermore, NCC has made adequate budget provision for regular operations, and has also established a Universal Service Provision Fund which is expected to scale up UA service provision in the country. Policies and regulations which were supported under the project will be reviewed on a regular basis so that, if needed, they can be updated to be in line with the trends in the industry worldwide. 45. BPE: Enactment of several sector policies, laws and regulations has, in a sustained way, strengthened the role of the private sector in Nigeria’s economy. These regulations also make it statutory that new institutions created under the privatization program have independent and sustainable funding and budgetary provisions from the commercial activities in which they are involved. The PSP has resulted in the transfer of knowledge and technical capacity to the BPE staff. The training program financed by the project, including a strategic management training program that was implemented by the University of South Africa and involved participants not just from BPE but also other key stakeholders from other MDAs and Assembly Members, has also ensured that the BPE staff has enjoyed a considerable level of specialized training that will guide reforms well in future transactions. 46. FCTWB: Ongoing support to FCTWB is being provided under alternative IDA credits, including under the planned PPP project which will be supporting FCTWB to identify a PPP partner for the Kuje Water Works. 47. LSWC: Activities completed under the project have been transferred to the Second National Urban Water Project. 48. Continued Use of Performance Indicators: The same indicators which were used during implementation are continued to be used by BPE, NCC, and FCTWB. In particular, in the case of NCC, tele-density levels continue to be monitored as do the increases in outreach to rural communities first promoted through the PSP financing of the UA pilots and now institutionalized under the Universal Service Provision Fund (USPF) within NCC. As new regulations addressing detailed technical service standards – again supported under the PSP project – are promulgated, then additional metrics come into play that are being diligently monitored by NCC. 49. Follow-Up Projects: There have been two key projects that have served to enable the Bank to follow-up on outstanding issues since the closure of the PSP. The first is the Nigeria Electricity and Gas Improvement Project (NEGIP, project #114277), approved in 2009. This project directly addresses some of the key gas supply issues in the upstream

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stages of the power sector supply chain that will address some of the principal commercial obstacles to private sector appetite to participate in the prospective privatization of PHCN unbundled companies. The Bank also about to approve (Board submission on March 17, 2011) a Public-Private Partnerships (PPP) Project (#P115386) that will seek to increase infrastructure service levels and quality through a six year institutional development and PPPI financing program. The project would also contribute to strengthen institutional governance over key factor markets, improving risk and cost determinants.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation Rating: High Relevance 50. The objectives of the project are still important to the country’s social and economic development and are rated as High. The program has responded to what has proved to be a central and durable feature of the Federal Governments ongoing economic reform agenda. It has remained appropriate to the needs of Nigeria both at the time of project conception and today. The privatization program has generated considerable potential not just through outright privatization and SOE commercialization options but also for a wide range of alternative forms of private participation in infrastructure financing covering leasing and concessions. This relevance to the FGN is all the more cogent as it has been maintained over a 12 year period across three different administrations and Presidents. While timetables and milestones have understandably been adjusted to respond to, inter alia, political and social dynamics, the fundamental policy and the Government’s commitment to the market liberalization and expanded private sector engagement in the economy - that is at its core of the privatization program - has been unwavering. The FGN’s adaptation in the implementation of this program is, in fact, further testament to its resolve to follow through and achieve the policy’s objectives. 51. The FGN’s interest in the enhanced utilization of PPP as a mechanism for procuring and financing infrastructure projects and infrastructure services in the public sector was launched at the August 2008 Infrastructure Summit, followed by the inauguration of the Infrastructure Concession Regulatory Commission (ICRC) and the April 2009 approval of the National PPP Policy. Furthermore, both the CPS and CPS II highlight the FGN’s interest in continuing facilitating private sector development and PPPs. The relevance of the design of the PSP project likewise is rated High as many of the core features are reflected again in the design of the successor PPP project. This includes legal, regulatory and institutional development and transactions advisory support.

3.2 Achievement of Project Development Objectives Rating: Moderately Satisfactory

52. The project was moderately satisfactory in achieving its objectives. The three principal project objectives (see section A.1 of PAD) against which this project was assessed and concluded to be moderately satisfactory were: (i) support transparent and effective implementation of the FGN’s privatization program; (ii) expand private

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investment and improved efficiency in the productive sectors and in infrastructure; and (iii) improve the enabling environment for private sector participation and competition in infrastructure services, notably in telecommunications and electric power. 3.2.1 Achievements of the project

The project’s major outcomes and achievements are as follows:

a) Support the Transparent and Effective Implementation of the FGN Privatisation Program Rating: Satisfactory

53. The project has realized substantial achievements with regards to effectiveness with minor shortcomings with regards to transparency. Effectiveness 54. In the context of effectiveness, the project greatly expanded private sector investment through the privatization of 109 transaction with gross proceeds amounting to US$1.89 billion at the current exchange rate (Indicator 1).Of this amount, the net proceeds reverted to the Federal Government after credit payments and other obligations amounted to US$ 939.3 million2 (at the current exchange rate). The opening up of the telecommunications sector, and to a partial degree the power sector (with Egbin Power privatization) represented a significant increase in private participation in infrastructure (Indicator 2)The support provided to BPE under the Institution-Building and Consensus Building contributed substantially to the capacity of BPE to manage the privatization agenda and facilitate a more competitive investment environment as represented by both the NCC and NERC bills (Indicator 3). 55. The financing of transactions advisors enabled the FGN to bring top domestic and international expertise to bear for diagnostic and market preparation work relating to the privatization of wide range of Public Enterprises, particularly in infrastructure and energy sectors. This introduction of specialized advisors increased competition and private sector appetite by packaging the transactions coherently and systematically to potential investors. Even where transaction work did not lead to a market sale during the life of the project, considerable technical work and lessons learned provides a strong foundation as the FGN continues to move forward in the liberalization and privatization of public enterprises in these sectors such as power. 56. Case studies conducted on 11 privatization transactions (including the concessioning of 24 port terminals have revealed a number of positive outcomes), highlights some measures by which the effectiveness can be measured: Turnover: Average annual turnover (sales revenue) for the group of firms has

climbed by 884 percent in aggregate after privatization.

2 From BPE Privatization Proceeds Account records.

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Productivity: In all cases, average annual productivity, defined as turnover per employee, has increased significantly after privatization. Productivity trend has been highly positive after privatization, increasing more than tenfold (1124 percent) in aggregate Naira terms.

Fixed Assets: Aggregate Fixed Assets climbed 197 percent after privatization, reflecting private sector owners’ willingness to invest in plant and equipment, often to replace equipment that was run down or obsolete after years of neglect under State control. Privatization has helped investment in every case in this group of firms.

Income Taxes Paid: Income taxes paid by the group of firms rose by 932 percent in aggregate.

Dividends Paid: The vast majority of dividends paid prior to privatization went to State entities, whereas the vast majority of dividends paid after privatization went to private shareholders. Total dividends paid rose by 2662 percent in aggregate.

Market Capitalisation: Aggregate market capitalisation has increased by 2083 percent for publicly listed firms if the banks are included, but by a more modest 435 percent if the banks are excluded from the sample and the remaining five industrial concerns are considered. Thus, privatization has allowed this group of firms to take advantage of Nigeria’s buoyant capital markets in recent years.

Employment: In the telecom sector, more than 21,000 people have been directly employed by the GSM operators and an estimated one million people have gained indirect employment such as recharge cards dealers, hawkers, resellers and umbrella phone booth business operators. New investment amounts to more than US$12 billion. The private sector investment in the UA Pilot Projects – most notably the GICELL investment of US$50 million in well in excess of the PSP initial pilot program contribution of US$5 million.

57. This sample of case studies represents around 30% of the value of the privatisations achieved to date as shown in the table below. As such it provides a representative sample of the range of positive economic outcomes derived from the privatization in real, financial and infrastructure sectors.

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Privatization Proceeds (US$ millions) % of total proceeds

Eleme Pterochem 225 11.9%

Oando 195 10.3%

Ports Concessions 115 6.1%

Lafarge WAPCO 26 1.4%

Ashaka Cement 18 1.0%

First Bank 9 0.5%

NTM 9 0.5%

Dana Steel 8 0.4%

NAHCO 8 0.4%

Union Bank 8 0.4%

CCNN 6 0.3%Sub total of sample privatizations 627 33.2%

All other privatizations 1263 66.8%

Total Privatization Proceeds 1890 100% Transparency 58. With the support of the project, BPE developed Privatization Procedures Manual which reflected best practice and Nigerian experience. This Manual was instrumental in establishing a coherent and transparent method by which the FGN would divest PEs. This gave greater confidence to the private sector by clearly outlining the process by which the transaction would be carried forward (Indicator 1, 2 and 3). The same is true of other technical assistance work such as the Post-privatization Monitoring Framework, the Regulations on General Practices of Competition, Regulation on Universal Access, and Regulations on Terminal Equipment Standardization in the telecom sector. The PSP project also supported a considerable upgrade of BPE. The IT capacity including recording technology for negotiations and the development of a platform for project information gathering and electronic filing. These activities also supported greater transparency and predictability in the privatization process which had the indirect effect of improving the attractiveness of PEs for private sector investment (also relevant to other PDOs as discussed later).

b) Increased private participation and efficiency in infrastructure Rating: Moderately Satisfactory

59. Progress across the different infrastructure sectors has resulted in some strong positive outcomes in telecommunications and ports and delayed progress in the power sector. The following summary of each sector highlights the progress and achievements reached with support under PSP. These achievements suit the key performance indicators supported by the project. 60. Ports: A major achievement of the project is the notable success in the reform of the Port sector and the concessioning of 24 of the port terminals in the country, where – with the introduction of private operators – the objective of increased operating efficiency has been met, as demonstrated by the following achievements:

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Cargo throughput has more than doubled for some operators; Berth occupancy rate has significantly improved: Average berth occupancy is now 80

percent; Average ship waiting time at anchorage has been reduced from 21-14 days to 1-0 day,

thereby reducing demurrage; Average ship turn-around time is reduced from 10 to 5 days; Reduction of over US$1,000 freight container due to surcharges associated with port

congestion; Over 5,000 redundant staff of NPA had been disengaged and over N20 billion paid as

entitlement, severance pay and pension buyout; Casual dock laborers have been reduced from about 13000 to about 3000; The installation of scanners in all the port terminals in Nigeria; The port reform in Nigeria has served as a model to some other West African

countries (Sierra Leone and Liberia) who are replicating the reforms in their countries.

61. Telecommunications: Nigeria continues to benefit from support provided under PSP in the telecommunications sector, with its open and competitive regulatory framework, and one of the most competitive telecommunications markets in the World (4 National GSM mobile operators, 2 Fixed Telecom Operators, and over a dozen Private Telecom Operators using fixed-wireless technologies). Furthermore, the poor performance of the fixed-line network is being countered by the rapid growth in fixed-wireless technologies, notably CDMA. The NCC continues to be one of the most independent regulatory authorities on the continent, and continues to rank very high on BMI’s ranking of country regulatory independence and Business Environment. 62. Early results of the UA program are been quite impressive, with the number of subscribers already estimated at 2,800 and expected to increase to 35,000. The combined impact of the 25 percent subsidyi, and use of CDMA technology is allowing the UA Operator to offer very competitive tariffs. Net tariffs/minute is a flat fee of N4 compared to average of N18. Tariff to other networks at N15/minute is about 50% lower than other competitors. Also, the UA Program has resulted in increased direct and indirect employment and poverty alleviation in the affected areas. The UA provider, GiCell, is currently leading a consortium which has taken a 75 percent stake in Nitel. 63. The project support to this – including the technical and capacity building support to NCC both for development of legal and regulatory frameworks, the financing of the spectrum equipment and the launch of the UA pilots - have been key to the ability of the NCC to build market credibility and effectively engage with private sector in investment (over US$5.4 billion to date) and service delivery objectives. NCC particularly notes the learning that was afforded to the institution in the development and implementation of the UA pilots. This has provided core expertise on which they have been able to further build the rural telephony market. 64. Power sector: In March 2005, Electric Power Sector Reform Act (EPSRA) was promulgated, which was a very significant step towards privatization. As a result, BPE proceeded to establish the Power Holding Company of Nigeria (PHCN) which was incorporated in May 2005 and all assets, liabilities and staff of NEPA was transferred to PHCN in July 2005. An Interim Board was established to provide oversight of the PHCN

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assets until such time as they are readied for disposition under different PPP options. PHCN’s 18 successor companies were incorporated in November 2005, and transfer of PHCN’s assets and liabilities to these successor companies was made effective July 1st 2006. Egbin Power was privatized to KEPCO Energy Resources Limited in 2007. However, progress on the power sector privatization workplan needed to be revised, in light of the outcome of an Energy Sector Review, undertaken by a specialized Energy Council established by the President. 65. The conclusions of the Energy Council review endorsed the privatization and market liberalization approach enshrined in the 1999 legislation. Moreover, the Power Sector Reform was re-launched in October 2010 under a Policy Statement entitled “RoadMap for Power Sector Reform – A Customer Driven Sector Wide Plan to Achieve Stable Power Supply”. This policy statement reconfirmed the Government’s commitment to the liberalization of key assets in the power value chain including privatization\concessioning of DISCOs and GENCOs, fostering of IPPs and management contract arrangements for the TRANSCO. This is entirely consistent with the original objectives laid out in the 2005 EPSRA and 1999 Privatization and Commercialization Act. This work will continue to be lead by BPE, building on the considerable diagnostic and market assessment work financed through the project. 66. Urban Water Sector: Likewise, there has been some significant efficiency progress leading to expanded service outreach as a result of the project support (Indicator 2):

LSWC: Emergency rehabilitation work done under the project has helped LSWC to prevent a system failure and maintain the viability of the company. For example, emergency rehabilitation of pumps, generators and related control system in Iju and Akute water treatment plants has led to the following outcomes: (i) increase in water production capacity; (ii) increase in customer billed; and (iii) improved collection per month. In addition, the project financed: (i) several interventions including rehabilitation of lighting, air-conditioning, fans etc at major networks; (ii) rehabilitation of chlorination plant at Adiyan water plant; (iii) rehabilitation of drains, roads and other civil works at Akute and Adiyan stations; (iv) rehabilitation of raw water pump motors; (v) rehabilitation and drilling of boreholes at Surulere mini waterworks; and (vi) servicing of transformers at the waterworks stations as well as the headquarters.

FCTWB: After technical advisory and training, the FCTWB decided to proceed with management contracts in the Gwarinpa, Karu/Nyanya and Gwagwalada districts. The extension and rehabilitation of the pipeline network of Karu, Gwagwalada and Gwarinpa II districts has increased access to potable water in these districts with corresponding increase in house connections. For example, about 5,000 house connections have been achieved in Gwarinpa II district serving a population of about 30,000. The Engineering Design for Kuje Dam and Treatment Plant that will supply potable water to Pegi has been completed. FCTWB have moved forward successfully to put in place arrangements for the entire supply chain that will, over time, create the enabling environment more conducive to private sector PPP risk taking. This is reflected in recent decision of the FCTWB to pursue a more comprehensive PPP transaction (most probably a concession) for the Kuje Water Works.

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c) Improve the enabling environment for private sector participation and competition in infrastructure services, notably in telecommunications and electric power Rating: Satisfactory

67. Telecommunications Sector: A New Telecommunications Bill was approved by the National Assembly and signed by the President into Law on 8 July 2003. This law formalized the opening up of the sector to competition in a manner consistent with international best practices. The Law, for example, established the independence of the NCC with respect to regulatory matters and provided for its funding through license fees. It also required interconnection between all services providers and created a Universal Service Fund (USF) and a National Frequency Management Council. Project support resulted in a series of industry regulations covering: (i) quality of service guidelines for mobile, fixed and internet services; (ii) consumer protection guidelines; (iii) regulations on universal access; (iv)regulations on terminal equipment standardization and type approval guidelines; (v) internet service guidelines. Lessons learned in the design of Output Based Aid (OBA) contracts for rural telephony as a result of the UA pilots has increased NCC capacity to draft and negotiate balanced contracts with the private sector, thus increasing the efficiency and cost effectiveness of further PPP arrangements in this field. 68. Power Sector: Further to the passage of the Electricity Power Sector Reform (EPSR) bill in March 2005, NERC was inaugurated in October 2005 after being cleared by the Senate. These two actions – which were core areas for support under the PSP project- represented major steps forward in the establishment of pro-competitive and transparent markets in the power sector. These legal and institutional steps were further entrenched with the unbundling of NEPA. The Power Holding Company of Nigeria (PHCN) was incorporated in May 2005 and all assets, liabilities and staff of NEPA were transferred to PHCN in July 2005. These reform steps were then followed by the approval of the Multi-Year Tariff Order (MYTO). 69. Support made to BPE, the creation of the Privatization Manual, and the technical support provided by the project for the development of the EPSR, the PSP funded senior technical staff, and goods and equipment to support the NERC to develop its operating arrangements, finalize and review the MYTO, all contributed to an improved enabling environment for private sector participation and competition. 3.2.2 Shortcomings of the project 70. Overall the short-comings of the project were relatively minor. There was an understandable complexity reflected in the number of key executing agents operating across the different components of the project. Aside from the Monitoring and Evaluation Framework and early implementation of this aspect of the project, the components and KPIs remained highly relevant to the project objectives and have provided firm basis against which to assess project performance and adjust activities and priorities during the course of implementation. 71. Power sector: Despite the fast progress in restructuring NEPA into the PHCN after the passage of the EPSR, the high-level FGN review of the power sector, after the inauguration of the new government in 2007, required a pause in the privatization of

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PHCN assets. However, as stated previously, the FGN has resumed its privatization agenda for the power sector following the October 2010 disclosure of RoadMap for Power Sector Reform-A Customer Driven Sector Wide Plan to Achieve Stable Power Supply.” This reinvigorated initiative follows on from the approach and methods first supported by the PSP. 72. Gas-to-Power was likewise affected by the Federal Government review of sector policy undertaken under the auspices of the Energy Council. Given the ongoing policy, legal and institutional review including the ongoing deliberations related to the Nigerian Petroleum Industry Bill, it was not effective to proceed, beyond preliminary work related to investment banking, gas pricing and engineering studies. However, the objectives remained unchanged and the NEGIP project is a key part of the subsequent World Bank and FGN response to the recommendations arising from these initial reports and lessons learned in the course of Bank Group efforts to assist the FGN to augment power provision and private sector participation in the sector.

3.3 Efficiency Rating: Satisfactory

73. The PSP Project supported privatization activities in a wide array of forms including technical assistance, capacity building, civil works, and specific consultancies aimed at facilitating the government’s ability to bring SOE to market. As described both in the Project Appraisal Document and the restructured mid-term review project document, the six components (four when the first three- General Privatization Support, BPE Institutional Support, and Privatization Consensus Building are all grouped together and referred to as the “Privatization Program”) have catalyzed significant levels of increased private sector investment in Nigeria, created new jobs in the private sector, and contributed to the overall “crowding-in” of private sector investment in Nigeria. 74. While the conduct of economic and financial analysis is limited by data constraints and the heteronomy of sectors and outcomes sought, overall analysis can be completed on the project in its entirety to understand the great leveraging effect the PSP investments had in Nigeria. Likewise, spot economic analysis can also be performed on select project components both to provide a project closing summary of the success of the investment and also to compare with the economic projections done at the time of Board approval (see PAD). The economic analysis of the overall PSP project makes certain assumptions in order to produce net present value (NPV) and the internal rate of return (IRR) on project investments (these can be found in detail in Annex 3).

75. The results of these calculations on the PSP project are as follows:

IDA invested3:

$93,057,589

IRR:

115%

NPV:

$529,914,813.49

3 Figure taken from the 2009 ISR

21

76. These resulting figures show the impressive returns to the overall project cost. The internal rate of return of 115 percent substantiates the financial costs invested in the project. This is further strengthened by the high NPV value relative to the IDA investment. 77. While it is not possible to carry out an economic analysis of the LSWC support given that this sub-component was closed, financial rate of returns can be determined for the FCT Water Board activities, which was commenced in 2006 under component 6 of the project. This activity supported improvement of access to potable water supply in the urban area of FCT through the densification and extension of water supply distribution network, the stabilization of Trunk Mains and facilitate the development of private sector participation in water supply. Financial analysis on FCTWB is based on data provided from the FCTWB Borrower’s Evaluation Report4. The assumptions made for this analysis can be found in Annex 3 in detail. 78. The resulting NPV and IRR calculations for investments made for FCTWB show a positive financial result.

IDA Invested:

$16,364,436.845

IRR:

27%

NPV:

$34,122,675.03

79. While FCTWB was not an original investment covered in the original financial and economic analysis in the PAD, the analysis performed on LSWC provides a good comparator against which we can measure the success of FCTWB. The analysis done on LSWC predicted a financial IRR of 19 percent assuming a 10 percent discount rate6. The IRR calculated for FCTWB both exceeds the estimated financial IRR for LSWC. Noting that this analysis used a 12 percent discount rate as opposed to a 10 percent discount rate, the recalculated IRR for FCTWB incorporating this lower discount rate results in NPV that is still encouraging (only about US$4 million less).

4 FCTWB Borrower’s Evaluation Report. December 2009. 5 Data taken from FCTWB Borrower’s Report. December 2009. 6 See PSP PAD.

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3.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory

80. Based on the discussion given in Sections 3.2 and 3.3, the overall outcome is rated as Moderately Satisfactory.7 The project recorded substantial achievements across all aspects of the Project Development goals which remained highly relevant throughout the project life. The project efficacy – maintained throughout a period of considerable political and economic change in Nigeria - as summarized in the Data Sheet and further detailed in Annex 10 is further reinforced by the analysis and comments provided in the Borrower Evaluation Reports (BER). Efficiency estimates, insofar as they can be effectively measured for what was principally a technical assistance project, are highly favorable indicating that the project support for the Government’s privatization program contributed to significant economic rates of return on the project investment.

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

81. Poverty impacts: In the Telecom sector, the project has been instrumental in creating job opportunities, and this increased job opportunities have a direct positive impact on poverty alleviation. For details see Section 3.2 A (a) 82. In the urban water sector, because of the extension and rehabilitation of the pipeline network of Karu, Gwagwalada and Gwarinpa II districts residents are getting regular supply of water from the pipeline, and as a result, they do not need to spend money to buy water from vendors. In addition, residents in the five villages (Giri, Jiwa, Bassan-Jiwa, Guida and Dawaki) along the trunk lines are given water free from bore wells dug by FCTWB in order to prevent them from illegally tapping water from pipelines. These developments are expected to have a positive impact on poverty reduction. 83. Gender aspects: Anecdotal evidence provided by FCTWB indicates that easier access to potable water resulting from the extension and rehabilitation of the pipeline network, has reduced the time burden associated with water collection for women in Karu, Gwagwalada and Gwarinpa II districts. Consequently women are able to use this time for other productive activities. In addition, availability of clean water is helping to lower incidences of malaria and water born diseases. Further, access to ICTs has also created new opportunities for women. 84. Social development: The project has resulted in both direct and indirect impact for the individual households and general community. For example, access to ICT facilities such as television, mobile phones and the internet, has improved the quality of life in rural areas, and has also led to better communication among people though these facilities.

7 The weighted rating before restructuring (when 33 percent of funds were disbursed) and after (when 67 percent was disbursed) also suggests an overall outcome rating of moderately satisfactory, as both periods would be rated moderately satisfactory.

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(b) Institutional Change/Strengthening 85. The considerable institutional development supported by the project – impacting BPE, NCC, NERC, LSWC, FCTWB and NEPA/PHCN, NPA to name the key examples have been detailed earlier in this report. It represents one of the principal benefits from this project. (c) Other Unintended Outcomes and Impacts (positive or negative) Positive 86. Telecom sector: The development of eight telecom regulations was not envisioned at the beginning of the project. This was made possible because of additional financing received after the project restructuring. While the UAPF seed money originally covered just one route, it has been increased to three routes thanks to the project restructuring. Similarly, demand studies were envisioned just for one region, but by the end of the project it was expanded to the national level. Negative 87. As noted above, the degree of political, bureaucratic and labor union issues affecting the privatization program and the PSP project proved to be less amenable to the risk mitigation actions than was envisioned. This eventually caused delays particularly to the transaction aspects of the power sector workplan.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

88. See Annex 6

4. Assessment of Risk to Development Outcome Rating: Significant 89. Telecom sector: Achievements in the telecom sector are highly sustainable and so the risk is negligible to low. 90. General Privatization: Much of the general privatization work – covering real and financial sector is completed as set out in the Privatization Law. What remains is the third phase privatization and commercialization in the infrastructure sectors. It will be key for BPE and ICRC to collaborate to ensure that FGN policy to encourage private investment, technical and managerial expertise into these sectors is managed in a coordinated fashion via privatization, commercialization and PPP approaches. 91. Urban water sector: All activities completed under the FCTWB component are sustainable as they will be maintained by FCTWB’s existing staff. On the other hand, out of four project districts, distribution network has been completed in the three districts of Karu, Gwagwalede and Gwarinpe. Due to time constraint, project was not able to

24

complete Nyanya distribution network. This will be pursued with funding that FCTWB will look to mobilize through other funding sources. The knowledge and experience gained in this initial rehabilitation and extension work and introduction of management contracts has also strengthened FCTWB confidence in approaching the market for PPP approaches to other urban water assets, as evidenced by the work now being done for a PPP arrangement for Kuje Water, with support from ICRC and the World Bank planned PPP project.

92. Power Sector: In the power sector, the risk of sustainability is high. 17 out of 18 SCs are still under the control of PHCN. A new Policy initiative was announced in October 2010 and if this is effectively implemented, the sustainability risk will be significantly reduced.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory.

93. The Bank's performance in the identification, preparation, and appraisal of the project was satisfactory. During preparation and appraisal, the Bank took into account the adequacy of project design and all major relevant aspects, such as technical, financial, economic, and institutional, including procurement and financial management. A number of alternatives were considered for the project design. In addition, major risk factors and lessons learned from other earlier privatization programs supported by the Bank were considered and incorporated into the project design. 94. Project preparation was carried out with an adequate number of specialists who provided the technical skill mix necessary to address sector concerns and a good project design. The Bank provided adequate resources in terms of staff weeks and dollar amount to ensure quality preparation and appraisal work. The project was consistent with the Bank’s assessment of priority assistance needs and government priorities in the sector at the time. The Bank had a consistently good working relationship with the Borrower during preparation and appraisal. (b) Quality of Supervision

Rating: Moderately Satisfactory. 95. Bank's performance during the implementation of the project was moderately satisfactory. The task team remained focused throughout project implementation on the project’s development impact. The Bank allocated sufficient budget and staff resources, and the project was adequately supervised and closely monitored. The task team provided timely professional inputs and regularly prepared Aide-Memoires, alerted the FGN, and the implementing agencies on the issues found during project execution and facilitated prompt corrective action. The Implementation Status Reports (ISRs) realistically rated the performance of the project both in terms of achievement of development objectives and project implementation.

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96. Bank’s procurement and financial management proficient staff worked with the staff of the implementing agencies to explain the rules and procedures to be applied during project implementation, with regard to procurement of goods and works, and selection of consultants, financial management, based on the Credit Agreement. The task team carried out a Mid-Term Review in February 2004. 97. On the other hand, there were two shortcomings in the Bank’s performance. There was a high turnover of TTLs during the first three years of the project. This created a lack of continuity and ownership and different approaches to the supervision of project implementation. This was corrected after the MTR when a single TTL remained in place through project closure. 98. Stakeholder discussions with the Bank team considered at length on political risk associated with the elections prior to the first extension. However, experience showed this risk was miscalculated and this resulted in a 2007 BPE workplan that – in case of power sector – faced realistic time objectives. The FGN continued to reaffirm its commitment to the privatization policy in the sector, but at a reduced pace, with the Energy Commission recommending that an interim phase during which PHCN would rehabilitate assets before proceeding with their privatization\concessioning. While the Bank adapted to this changing policy circumstances, they nevertheless had some negative ramifications for the deliverables set out for the PSP extension period 2006-2008.

(c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory. 99. Based on the Bank performance during lending phase and supervision as discussed above, overall Bank Performance is rated as Moderately Satisfactory.

5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory. 100. As mentioned in Section 2.1, the Government had shown its commitment to the objectives of the project at the time of project preparation. Further, in 2000-2001, significant progress had been made with implementation of Phase One of the privatization program, with the sale of FGN share holdings in eight PEs. This included two cement companies and two banks. The FGN had made important progress in preparation of the telecommunications and electric power reform programs. This included adoption of a new NTP opening the sector fully to competition in 2001, and of a National Electric Power Policy (NEPP). These, as well as adoption of strengthened privatization procedures, were actions completed prior to Board presentation of the project. 101. Other actions taken by the FGN that confirmed its commitment included: (a) enactment of the 1999 Privatization and Commercialization Act, followed by the 2000 decision to increase the shareholding to be sold to strategic investors to 51 percent; (b) establishment of sector reform committees including top FGN officials and stakeholder representatives that had played a key role in design of the reforms; (c) appointment of a new board of directors and chief executive for the NCC, including private sector

26

representatives; and (d) conduct of workshops for stakeholders to share knowledge and encourage debate in key reform areas, such as concessioning in transport and infrastructure. 102. The Government maintained its commitment to the project during the major part of implementation and across three different administrations. There were strong champions of privatization at senior political and bureaucratic level of administration throughout a series of political and economic phases over the past 11 years. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory. 103. BPE has an extremely difficult mandate, navigating multiple political and institutional interests across the executive, the legislature, the bureaucracy, organized labor and the broader public. The legal force provided by the Privatization Act and the status accorded BPE in the Electricity legislation were key factors in ensuring the institution maintained its institutional legitimacy and ability to sustain its role in the reform exercise during difficult periods such as the 2007 elections and ongoing negotiations with organized labor. Sustained political commitment from the highest levels is a key sine qua non and when, due to the demands of the 2007 election, this was not sufficiently the case, it did impact BPEs capacity to implement its work program. One area for more support would have been along the lines of the strategic management for change training that took place in 2009 to find more collaborative solutions when impasses do present themselves. In the case of organized labor, while BPE recruited specialized services to try to facilitate constructive dialogue towards mutually agreeable outcomes, the only instance where there was a resolution was in the case of the NPA. And this benefited also from the very active participation of the then Minister of Finance. 104. The Central Procurement Unit (CPU) of the BPE reviewed all procurement processes by the various sectors and ensured quality before submission to the Bank. The CPU also organized series of procurement workshops and clinics for the sector Procurement Officers. In financial management, budgeting, accounting, internal control, funds flow, financial reporting, external audit were assessed as compliant and satisfactory. No fraud or corruption issues were observed. Overall, performance of BPE was satisfactory. 105. Overall, performance of BPE in financial management rating based on the supervision report was moderately unsatisfactory. There were long outstanding ineligible expenditures that have not been refunded to the project accounts and some expenditure with insufficient supporting documents. Also recent findings indicated some unretired advances. 106. NCC: Project’s activities and transactions were carried out with a sound internal control framework. The staffing arrangement and segregation of duties were adequate. Books of accounts and records were functionally computerized and integrated with NCC’s processes and systems. Financial management rating based on the last supervision was satisfactory. For procurement, most packages were large with very few post review contracts. The implementation of the component was satisfactory and activities were completed earlier than scheduled. Overall, performance of NCC was satisfactory.

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107. LSWC: Various issues affected the performance of procurement management under this project component. This included management/coordination, frequent turnover of project staff including Procurement Officers after capacity building etc. Most of the cost estimates prepared by it were always far lower than the prices quoted during the bidding process. This made it impossible to conclude the bidding process smoothly and award the contracts. Overall, performance of LSWC was moderately unsatisfactory. 108. FCTWB: The performance of FCT Water Board component in financial management was moderately satisfactory and all outstanding advances were retired over the last six months of the project, as reflected in the final Financial Management Report of June 2010. Financial statements for annual audits were produced and submitted timely, and the banking arrangements were adequate. The project’s internal control systems required some improvements with respect to accounting and audit staffing arrangement, safeguarding of project assets, financial transaction procedures, segregation and supervision of accounting duties. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory. 109. In light of the Government and implementing agencies performance as discussed above, the overall performance of the Borrower is assessed as moderately satisfactory.

6. Lessons Learned

a) Important factors for the success of a project 110. Having a political champion at the senior Government level is an important factor for the success of a project, as was the strong legal and institutional foundations put in place for the implementation of the reform. 111. It is also clear that more careful calibration of the employment effects of a privatization program and communication of this to stakeholders would have served to strengthen buy-in from those affected by the reform. More specifically, it is unlikely in the first phase of post privatization when, for the most part, cost reduction and shedding of surplus labor is critical to longer-term competitiveness that direct employment effects are going to be positive. The indirect employment effects, as has been evidenced most significantly in telecommunications sector, are where the real job growth potential lies. As the economy liberalizes and productivity in different sectors improves with the inflow of private sector, value addition in those sectors most impacted does have new opportunities to grow and generate more sustained employment creation. This message and programs – both communication and skills retraining and adjustment – need to be more carefully integrated into privatization implementation activities.

b) Implementation 112. Inter-Agency Coordination: Effective inter-agency coordination and management of the different institutional agendas and interests across the infrastructure sectors are important for the smooth implementation of a project. This was seen to be particularly relevant for the successful realization of the Power, Gas-to-Power and to a lesser extent transport sector objectives.

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c) Capacity Building

113. It is important to build institutional capacity in project management, financial management, and procurement at the beginning of the project. In particular, emphasis should be placed on having adequate procurement capacity in place before project effectiveness. Thus after conducting procurement capacity assessment of the implementing agencies, issues identified should be adequately addressed before effectiveness. Such issue will usually include having adequate procurement capacity, preparation of draft documents (bidding document, RFPs, TORs etc.)

d) Privatization 114. Communications Strategy: It is important to have an active and effective communications strategy that is both pro-active in reaching out to specific stakeholders (e.g. Assembly members, labor, unions) and the broader public and provide specific products and services to deal reactively with media commentary and other eventualities. 115. In order to reduce the risks of failure in future privatization transactions, it is critical to adhere to the following measures: (a) securing bidders’ credibility and commitment through the enforcement of the collection of non-refundable deposits; (b) mitigating the risk of non-payment for shares by ensuring that sale proceeds are received before the coming into force of the sale and purchase agreement and before transfer of assets; (c) strengthening PE due diligence by BPE, in order to appraise actual and potential liabilities; (d) streamlining bidding procedures both upstream (at pre-qualification) and downstream (to avoid post-bid negotiations); (e) improving marketing campaigns to reach out to a broader investor community; and (f) building greater consensus with stakeholder prior to actions; (g) ensuring predictable and transparent transactions actions in line with Policy and Privatization Handbook, to establish integrity and credibility of process in eyes of all the key stakeholders. 116. Privatization is a process which depends on market conditions. More thorough upstream investment and risk allocation assessment would have better assisted the government in the preparation of transactions for market. While BPE capacity to undertake this due diligence augmented considerably over the life of the project, given the complexity of many of the sector issues this involved, even deeper institutional capacity and expertise was required. This would have included more robust IT systems to record and utilize the considerable diagnostic and technical data that has been accumulated on the different transactions across the sectors targeted. These lessons learned have been important to the design of the next generation NEGIP and PPP projects.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/Implementing Agencies 117. Discussions took place with the implementing agencies in Abuja in December 2010. The meeting provided an opportunity for the stakeholders to comment on the draft

29

ICR and for the Bank staff to discuss with them some of the key issues highlighted in their Borrower Evaluation Reports (BERs) that had been prepared as input to the ICR in 2009-2010. 118. Overall, all the key stakeholders (BPE, NCC and FCTWP) spoke strongly of the benefits that had been generated from the project as set out in the BERs that had been prepared. (b) Co-financiers N/A (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) N/A

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Annex 1. Project Costs and Financing (a) Project Cost by Component (in US$ million equivalent)

Components Appraisal Estimate

(US$ million)

Actual /Latest Estimate

(US$ million)

Percentage of Appraisal

1. General Privatization Support

39.89 8.86 23.45

2. BPE Institutional Support

12.77 14.42 28.66

3. Privatization Consensus Building

8.43 1.12 1.93

4.Telecommunications Sector Reform

16.96 26.56 192.39

5. Electric Power Sector Reform

24.62 13.67 57.92

6. Urban Water Sector Reform: (a) Lagos Water (b) FCTWB

11.62

0.00

14.76

15.25

Total Baseline Cost 114.29 94.64

Total Project Costs 114.29 94.64

Project Preparation Facility (PPF)

2.00 0.00 0.00

Total Financing Required

114.29 94.64

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(b) Co-financing

Source of Funds

Type of Financing

Appraisal Estimate

(US$ million)

Actual/Latest Estimate

(US$ million)

Percentage of Appraisal

[Government] 83.40 4.4

[IBRD/IDA] 114.29 75.71 Agency for International Development

16.43

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Annex 2. Outputs by Component

Component Output 1. General Privatization Support Transactions

165 transactions taken to point of sale 24 Port Concessions

Investment

Approximately US$3.69 billion realized for national treasury

Approximately US$10 billion annual transfers to public enterprises saved

2. BPE Institutional Support Training

IT training in: secured Cisco wireless access point; Cisco Unified Communications System- IP PABX system

Equipment and Software

Installation of Microsoft Office SharePoint 2007 server

Design and deployment of BPE website Security system Installation of Project Server for

enterprise project management 3. Privatization Consensus Building Technical Assistance and Policy Work

Privatization Procedure Manual Post-privatization Monitoring

Framework Labor, Environment, and Marketing

Policy Pension Reform Program

4. Telecommunications Sector Reform Spectrum Monitoring and Management Equipment

Central Operation Center 4 Regional Operation Centers 7 transportable mobile monitoring

stations (TMMS) 5 units of V/UHF mobile monitoring

stations with portable monitoring equipment and 3 SHF mobile monitoring stations

3 towers for Zonal offices

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Institutional Strengthening and Resident Advisors

Self-financing Framework Organizational Restructuring Framework Operational systems for Commissions

Training and Development

Training for 200+ NCC staff Equipment for Digital Bridge Institute,

Digital Resource Library, Hands-on Laboratory

Universal Access Pilot Projects

Establishment of network to 17 local government areas

Attracted US$50 million in private sector investment through investment promotion

Rural Access Strategy Study

Establishment of Universal Service Provision Fund Secretariat

Rural Access Strategy Study

Telecom Guidelines and Regulations

Quality of Service Guidelines Consumer Protection Guidelines Regulations on General Practices of

Competition Regulations on Universal Access Regulations on Terminal Equipment

Standardization Type Approval Guidelines Numbering Plan Regulations Internet Service Guidelines Interconnection Rates, Tariffs and Price

Cap Regulations 5. Electric Power Sector Reform Privatization Transactions

Privatization of Egbin Power Plc

Policy Work

Developed and promulgated Electric Power Sector Reform Act, 2005 (creation

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of PHCN and NERC from NEPA) 6. Lagos State Water Corporation Emergency Rehabilitation

Supply Two engines for EUTZ Generators and spare parts

Refurbished two alternators Refurbished four pumps Refurbished MV switchgear Refurbished eight generators Rehabilitated lighting systems, A/C and

fans Rehabilitated chlorinator plant Replaced raw water pump motors Rehabilitated and drilled boreholes at

Surulere Rehabilitated filters Serviced transformers

7. FCTWB Infrastructure in Rural and Urban Areas

Extension and rehabilitation of pipeline network of Karu, Gwagwalada, and Gwarinpa II

14,000 additional house connections- 5,800 in Gwarinpa II

Provision of water supply to Peg and Apo

Stabilization of Trunk mains and provision of water to Giri village, Jiwa village, Bassan-Jiwa village, Guida village and Dawaki village (total population of 110,00)

Installation of 6,520 Nrs. Prepayment water meters

Technical Assistance and Policy Work

Engineering Design for Kuje Dam and Treatment Plant

Consumer Survey Environmental and Social Assessments System analysis of distribution networks

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Annex 3. Economic and Financial Analysis Background

1. The PSP Project supported privatization activities in a wide array of forms including technical assistance, capacity building, civil works, and specific consultancies aimed at facilitating the government’s ability to bring SOE to market. As described both in the Project Appraisal Document and the restructured mid-term review project document8, the six components (four when the first three- General Privatization Support, BPE Institutional Support, and Privatization Consensus Building are all grouped together and referred to as the “Privatization Program”) have catalyzed significant levels of increased private sector investment in Nigeria, created new jobs in the private sector, and contributed to the inertia that continues to crowd-in private sector investment in Nigeria.

2. In total, privatization proceeds over the period of the project amounted to US$1.89 billion and entailed a total of 165 transactions taken to the point of sale. These transactions have had great leverage effects in several sectors including telecoms and ports. As of December 2009, an additional US$3.06 billion has been invested in the liberalized telecommunications sector9.

3. While economic and financial analysis cannot be performed with a good degree of methodological integrity on all of the components of the project, overall analysis can be completed on the project in its entirety to understand the great leveraging effect the PSP investments had in Nigeria. Likewise, spot economic analysis can also be performed on select project components both to provide a project closing summary of the success of the investment and also to compare with the economic projections done at the time of Board approval (see PAD). Overall Project Financial Analysis

4. The economic analysis of the overall PSP project makes the following assumptions in order to produce net present value (NPV) and the internal rate of return (IRR) on project investments:

Project life is considered over eight years beginning in 2001 and ending in 2009;

Disbursements made after December 31, 2009 are not included into the model;

All currencies are standardized in USD using exchange rates as of January 1, 2011 at 1:149.8 US$:Naira;

Total IDA disbursements are considered expenses in year 0;

8 Report No. 32425-NG. IDA Proposed Project Restructuring and Amendment of the Credit Agreements for the Privatization Support Project (Cr. 3520-UNI) and Community Based Urban Development Project (Cr. 3654-UNI) in the Context of the Portfolio Restructuring and in Alignment with the CPS for the Federal Republic of Nigeria. June 2, 2005. Also See PSP PAD, May 21, 2001. 9 See AM December 2009.

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All categorical expenditures are considered expenses/investment; Revenues are based on recorded FGN net privatization proceeds (159

total privatizations considered)10; Discount rate is 12 percent

5. The results of these calculations on the PSP project are as follows:

IDA invested:

$93,057,589

IRR:

115%

NPV:

$529,914,813.49

These resulting figures show the impressive returns to the overall project cost. The internal rate of return of 115 percent substantiates the financial costs invested in the project. This is further strengthened by the high NPV value relative to the IDA investment.

Financial Analysis of Component 6- FCT Water Board

6. The original project appraisal document allocated US$11.62mn to support the privatization of Lagos State Water Corporation (LSWC) and the implementation of an Emergency Action Plan to support LSWC during the privatization transaction. Following the 2005 Mid-term Restructuring and the 2006 reallocation, funding for LSWC was cancelled and the project instead supported the privatization of the Federal Capital Territory Water Board (FCTWB). Support to FCTWB began in 2006 and continued to the closing of the project. The project supported improvement of access to potable water supply in the urban area of FCT through the densification and extension of water supply distribution network, the stabilization of Trunk Mains and facilitate the development of private sector participation in water supply.

7. Financial analysis on FCTWB is based on data provided from the FCTWB Borrower’s Evaluation Report 11. The following assumptions have been made:

Project life is 10 years; Discount rate is set at 12 percent; Inflation remains constant; All prices standardized in USD using January 1, 2011 conversion rate of

149.8:1 Naira:USD; Revenue projects and cost projects for years 6-10 derived from FCTWB

financial statement; All IDA expenses for FCTWB are accounted as a lump sum invested in

year 0; Projected growth for years 3,4,5 assume a 5 percent increase in profits

from previous year; IDA expenses are calculated up to December 31, 2009;

10 See Bureau of Public Enterprises Privatization Proceeds from 1999-2009. 11 FCTWB Borrower’s Evaluation Report. December 2009.

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8. The resulting NPV and IRR calculations for investments made for FCTWB show a positive financial result.

IDA Invested:

$16,364,436.8412

IRR:

27%

NPV:

$34,122,675.03 9. Attachment A to this Annex shows FCTWB’s expenses, profits, and projected revenues. 10. While FCTWB was not an original investment covered in the original financial and economic analysis in the PAD, the analysis performed on LSWC provides a good comparator against which we can measure the success of FCTWB. The analysis done on LSWC predicted a financial IRR of 19 percent assuming a 10 percent discount rate13. The IRR calculated for FCTWB both exceeds the estimated financial IRR for LSWC. Noting that this analysis used a 12 percent discount rate as opposed to a 10 percent discount rate, the recalculated IRR for FCTWB incorporating this lower discount rate results in NPV that is still encouraging (only about US$4 million less).

12 Data taken from FCTWB Borrower’s Report. December 2009. 13 See PSP PAD.

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Attachment A: FCTWB Financial Statement Summary

0 1 2 3 4 5 6 7 8 9 10Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Domestic Connections 34,000 34,000 34,000 34,000 34,000 37,400 37,400 37,400 37,400 37,400 37,400

Expected Revenues 15,727,637 15,727,637 15,727,637 15,727,637 15,727,637 15,727,637 14,325,768 14,325,768 14,325,768 14,325,768 14,325,768

Actual Revenues 4,949,266 6,868,491 5,987,383 8,395,194 8,634,179 14,325,768 14,325,768 14,325,768 14,325,768 14,325,768

Expected Costs 1,668,892 1,668,892 1,668,892 1,668,892 1,668,892 1,668,892 1,922,563 1,922,563 1,922,563 1,922,563 1,922,563

Actual Costs 4,599,132 4,496,996 21,971,379 5,636,515 6,466,956 1,922,563 1,922,563 1,922,563 1,922,563 1,922,563

Net Profits 350,134 2,371,495 -15,983,996 2,758,678 2,167,223 2,275,584 2,389,363 2,508,831 12,403,204 12,403,204 12,403,204 12,403,204 12,403,204 Note: Final revenues for years 3-5 pending request from FCTWB

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Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members Names Title Unit

Peter Mousley Lead Private Sector Development Specialist

AFTFW

Zachary Kaplan Economist AFTFW Ndeye Anna Ba Program Assistant AFTFW Sati Achath Consultant EASCS Adewunmi Cosmas Ameer Adekoya

Financial Management Specialist AFTFM

Mavis A. Ampah Senior ICT Policy Specialist TWICT Mary Asanato-Adiwu Senior Procurement Specialist AFTPC Bayo Awosemusi Lead Procurement Specialist AFTPC Mourad Belguedj Consultant AFTP4 John P. Byamukama Financial Analyst AFTFE Irene F. Chacon Operations Analyst AFTFW Rona P. Cook Program Assistant AFTFE Steven R. Dimitriyev Sr Private Sector Development AFTFW Kofi I. Egbeto Consultant AFMTG Joseph A. Gadek Sr Sanitary Engineer ETWEA Syed Waqar Haider Sr Energy Spec. AFTEG Isabelle Huynh Operations Officer CITPO Hassan Madu Kida Sr Sanitary Engineer AFTUW Andrew Makokha Sr Water & Sanitation Spec. AFTUW Marilyn Swann Manalo Consultant AFTFW Astrid Manroth Sr Energy Spec. AFTEG Alexander A. McPhail Lead Water and Sanitation Spec AFTUW Iain Menzies Senior Infrastructure Specialist FEUFG Wamuka Geoffrey Mwamuka Finance Analyst CTRDM Comfort Onyeje Olatunji Program Assistant SASDO Adenike Sherifat Oyeyiola Sr Financial Management Specialist AFTFM Justin Runji Sr Transport. Spec AFTTR Justin C. Schwartz Consultant AFTFP Bent R. Svensson Program Manager COCPO Prasad V. S. N. Tallapragada Lead Energy Specialist AFTEG Chukwuemeka Ugochukwu E T Temporary AFCW2 Andrea Vasquez-Sanchez Sr. Program Asst AFTFW Mary Oluseyi Zackius-Shittu Program Assistant AFTSN

42

(b) Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands

(including travel and consultant costs)

Lending FY00 39 235.24 FY01 122 620.10 FY02 2 5.44 FY03 0.00 FY04 0.00 FY05 0.00 FY06 0.00 FY07 0.00 FY08 0.00 Total: 163 860.78

Supervision/ICR

FY00 0.00 FY01 0.00 FY02 55 232.83 FY03 82 252.44 FY04 108 423.79 FY05 84 329.50 FY06 64 251.11 FY07 59 283.00 FY08 31 154.46 FY09 34 197.07 Total: 518 2124.20

43

Annex 5. Beneficiary Survey Results N/A

44

Annex 6. Stakeholder Workshop Report and Results 1. A stakeholders’ workshop was organized in Abuja on 18th and 19th November 2009. The workshop was attended by staff from BPE, NCC, FCTWB, NERC, LSWC and other stakeholders. 2. The objectives of the workshop were to:

Review project results against key performance indicators (KPIs); Assess project outcomes against deliverables agreed to during the project

extensions; Assess how the project activities have impacted targeted beneficiaries, private

sector, labor and the economy generally; Identify gaps, constraints and challenges faced under the PSP and brainstorm on

measures for closing such gaps and meeting such challenges in subsequent projects:

Provide a platform for us to consult widely and to sift the best ideas, to give a voice to stakeholders and to enable us to receive first hand information on the impact of the PSP program; and

Facilitate stakeholders’ awareness on a wider spectrum and consequent buy-in in the PSP program.

3. Workshop reported on the impact of the various activities on the FGN participating MDA under this program. Workshop reflection on the PSP Program was divided into two main parts, the first focusing on general training and the second focused on intervention in each sub-sector- power, transport, telecommunications and water. General Training, Technical Assistance and Capacity Support 4. The general consensus on the role of the PSP Project on general training and capacity building was very positive. The following points summarize the main discussion points:

It was felt that the project was instrumental in improving the areas on general computing training, top management executive training, specialized sector specific training, study tours and on the job training through consultancies

The cumulative effect of the various training programs attended by BPE staff was the transformation of the Bureau into a learning organization and capacity building centre. BPE became the reservoir for both knowledge and skills for other public service organizations. The Bureau’s skills inventory is such that almost all manner of skills and competencies can be obtained.

Recently, state governments desirous of executing development programs through partnerships with private sector also approached the Bureau manpower requirements.

Another important indicator of the enhanced capacity in BPE that was emphasized at the workshop was the reduced use of external consultants in packaging privatization transactions, except highly technical transactions and share flotation. Significantly, from 2005, some of the key transactions were

45

hundred percent carried out in-house in BPE, without external advisers, e.g. Nicon Insurance, Nigeria-Re, Transcorp Hilton, etc.

Sector-Specific Support Feedback 5. Additional break-out discussions were held for each sector- oil and gas, transport, water, telecommunications, and power. From these discussion, the key lessons learnt and views of the stakeholders on the PSP experience are summarized below:

Through the World Bank assistance, Nigeria has been able to utilize international

resources to develop a home grown policy with far reaching effects; The support of the WB has definitely been very positive; That reform can improve the performance of government monopolies; Reform takes long time in conceptualization, planning and execution and must be

approached in a comprehensive manner with strong political support; All key stakeholders must be involved in the process of planning and execution; Reform must be in whole and not in part for desirable result. For example, the

port congestion that still exists post-concession is due to the poor access to port facilities, a factor not considered or factored into the concession process. The same is true of the issues with setting the tariffs at the port due to the absence of a regulator and clear institutional leader;

Contracts should not be split to different contractors such that when one fails or delays will not stall the completion of the job;

Given the FGN’s experience to date with PSP, the workshop concluded that FGN should start with service contracts and gradually graduate upward to concessions depending on circumstances of each zone;

It was agreed that international investors did not seem willing to invest in the urban water sector if the FGN does not have a clear concept of the type of project and outcome desired;

PPPs should be pursued more methodically as a ways to invest in Nigeria’s infrastructure but must be tailored to suit the needs of Nigeria.

46

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

Implementation Completion Reports 1. Implementation Completion Reports were received from Nigerian Communications Commission (NCC), Federal Capital Territory Water Board (FCTWB), and Lagos State Water Corporation (LSWC). The Borrower’s ICR summarized the impacts to-date of resources provided under the PSP project, lessons learnt, and financial performance. The full ICR reports can be referred to for greater details.

Financial Performance Summary

2. The table below summarizes the financial performance information provided in the ISR’s: Final Allocation

(USD$ million) Disbursement (%)

NCC 26.56 99 FCTWB 16.4 65.6 LSWC 14.4 n/a

Key Lessons Learnt

3. Each ICR discussed briefly the key lessons learnt from the project. These are reflected in more detail in Annex 7 but are summarized below:

a. World Bank procurement procedures were at times consuming but ultimately enhanced the quality of contractors, ensured fairer prices;

b. The use of key performance indicators was very helpful in setting useful and practical targets for growth;

c. Financial management systems were very useful in facilitating “hitch-free” disbursement;

d. The development of well-articulated project objectives could have been done more systematically to help guide the project.

Impact of Program

4. All ICR’s included a section on the key impacts of the programs including the measured outputs of each intervention. These impacts have been used to form the review of component impacts and outputs in Annex 2.

ICR Comments

5. Feedback on the draft ICR was provided by the Bureau of Public Enterprises. The comments are included below: 6. Comments on Overall Rating: From the observations in the ICR, the Bureau is of the view that the performance of the project should have been rated higher. For instance, the fact that the BPE & NCC were rated “satisfactory” and FCTWB & LSWC were rated “moderately unsatisfactorily”, the Bureau views that the overall rating should

47

average out and the Borrower performance should become “satisfactory” or at least “moderately satisfactory”.

7. General Observations/Comments: The observations made by the BPE on the ICR are primarily aimed at improving the overall rating of the project performance, as well as assist the Bank in understanding the challenges in some specific areas and/or sectors. [The] Bank should appreciate and accept some responsibility for some of the difficulties faced in the course of implementation of the project such as:

Change of guidelines in retirement of advances/allowances towards the closure of the project.

Ineligible expenditures (BPE disbursed on behalf of NERC with the Bank’s NO)

Frequent changes of TTL’s with different approaches to project implementation

Lack of adequate supervision at the beginning and during the course of project implementation.

Lack of a Project Management and Oversight Committee Coordination leading to conflicts in implementation by agencies.

8. PSP has assisted in making the general reform and privatization awareness program to reform the economy outside of the KPIs and has added other positive impacts which were not captured and thereby indicating several spillover effects. 9. In addition, project planning should take into consideration [in] countries like Nigeria [the] difficult political and socio-economic environment, where so many issues and factors require consensus building for ease of implementation. There should have been adequate planning and consultations before the commencement of project implementation.

48

10.

Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders N/A

49

Annex 9. List of Supporting Documents

Project Implementation Plan Project Appraisal Document for Federal Republic of Nigeria: Privatization

Support Project (PSP) dated May 21, 2001 (Report No: 21921-UNI)

Aide Memoires, Back-to-Office Reports, and Implementation Status Reports

Project Progress Reports

Borrower's Evaluation Report dated March 2010- FCTWB, LSWC and NCC

Technical Audit Report of Outstanding Activities under LSWC, dated June 2008

Final Report: Performance Assessment of Privatized Enterprises, dated December 2008

51

Annex 10. Additional Project Performance Indicators

Indicator Baseline Value Original Target Values (from

approval documents)

Formally Revised Target

Values

Actual Value Achieved at Completion or Target Years

Indicator 1 : Reduce Public Enterprise Share of Non-Oil GDP of 60% Value (quantitative or Qualitative)

No Baseline Established None Set.

Date achieved 12/16/2002 06/28/2005 12/05/2009

Comments (incl. % achievement)

Achieved: This has been easily accomplished taking into account the growth of the private sector economy in telecommunications and services (including finance) alone.

Indicator 2 : Privatized Enterprise Average Performance Increases


No baseline established Productivity +12.5% Investment +62.5% Output +12.5 % Leverage – 5%

Based on case studies of 10 privatized firms, estimated gains are as follows: Productivity: Increases estimated at 1124% in aggregated Naira terms; Investment: Fixed assets increased 197% after privatization. This excludes the telecommunications sector where an estimated $5.4 billion in investments includes an IFC $100 million investment with MTN and most recent GSM provider GICELL $50 million investment with an anticipated further $700 million over the

52

period from 2010-2012. Output: Annual average turnover (sales revenues or gross earnings) increased 884% after privatization. Leverage: No data available on debt\equity ratios.

Date achieved 12/16/2002 06/28/2005 12/31/2009

Comments (incl. % achievement)

Mostly Achieved Subject to acceptance of case study assessments and recognizing that it has not been possible to estimate “leverage” outcomes.

Indicator 3 : Net Increase in Employment per Sector (Value quantitative or Qualitative)


30% in privatized and liberalized sectors

Based on the case studies of 10 privatized companies, the Ports concessions and telecommunications sector , the evidence suggests: - 36% decline in total employment in the ten privatized company case studies (31,587 employees down to 20,240). - Estimated decline from 13,146 employees previously with NPA down to 8,146 (approximately) after severance payments, equivalent to a 39% decline. - In telecoms direct and indirect job creation since the PSP project is estimated at 21,000 (up

53

from 10,000 prior to liberalization) in direct and 150,000 in indirect employment. In direct job growth terms this amounts to 210% increase.

The net amount of job creation based on above is – 5,367 based on direct jobs created and +144,633 if indirect job creation is included. In percentage terms this is equivalent to about -9% or +364% when including indirect and as well as direct job creation.

Date achieved 12/16/2002 12/05/2008 Comments (incl. % achievement)

Achieved Subject to inclusion of indirect job creation in telecommunications sector.

Indicator 4 : Number of Shareholders and Total Stock Market Capitalization


200% increase in numbers of new shareholders and 50% increase in total stock market capitalization

In 2002 stock market capitalization stood at N749 billion. In 2007 it reached N10,301 billion – an increase of 1,275% before falling back N2.2 billion by Feb 2009. This increase, equivalent to 294%, is significantly in excess of the targeted 50% increase in market stock capitalization. In terms of the privatized firms reviewed in the case studies, this alone represented a market capitalization increase amounting to 2083% with and 435% increase without the privatized banks included in the sample. The total increase in shareholders for the ten companies amounted to an estimated 522,000

54

excluding and 2,322,000 including the two banks in the sample.


Achieved

Indicator 5 : Online Generation, Unit Revenue Receipts and Dispute Resolution in Power Sector


Over 4,000MW of online generation capacity; Unit Revenues in excess of N4 Kw\h 75% of disputes resolved effectively.

On line peak generation capacity as of August 2010 is estimated at 3,804 MW. Often it is lower. Despite current tariff of 8.5 Kw\h, estimated losses from most discos, together with tariff collection rates that range from 23% (Yola Disco) to a high of 62% (Ikeja Disco) significantly reduced final unit revenues below target. No record of dispute resolution.


Not Achieved

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NIGERIA

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

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SEPTEMBER 2004

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INTERNATIONAL BOUNDARIES