Managing Director of the Ministry of Finance Incorporated (MOFI), Armstrong Takang, has said the federal government does not know the value and performance of its assets.
Takang spoke on Wednesday at the launch of the Renewable Asset Management Company (RAMCO), established by MOFI, the Rural Electrification Agency (REA), and the Infrastructure Corporation of Nigeria (InfraCorp) to manage publicly funded renewable energy assets.
According to the MOFI boss, determining the value and ownership of government assets is one of MOFI’s three major mandates, alongside professionalising the management of government-owned entities and mobilising capital at scale.
He said the government could account for its debt obligations but had historically struggled to establish the value and performance of assets acquired with public funds.
“We can almost tell you to the last kobo how much we owe, both domestic as well as foreign,” Takang said.
“The question is, what do we own? That is a question that has remained unanswered for a very long time.”
Takang said MOFI’s initial exercise to establish the government’s assets identified N1.25 trillion, while the country’s debts were running into tens of trillions of naira.
“The question is, where are the assets that we spent all this money on?” he asked.
“And what are those assets doing in terms of delivering on the impact for which we invested in them?”
He said identifying the assets is necessary to determine whether they are generating the expected economic impact and revenues, including contributions towards debt-servicing obligations.
Takang said MOFI is seeking to ensure that public assets generate sufficient revenues to support their maintenance and reduce the need for fresh government allocations.
He said the issue is particularly evident in renewable energy projects deployed across educational institutions and teaching hospitals.
“We know of stories such as Ajaokuta Steel, Delta Steel, let alone many others who are pretty much in the annals of the history of the country,” Takang said.
“In terms of the fact that we spend billions of dollars on those assets, they really never went anywhere.”
Takang said the launch of RAMCO represented a change in how the government manages public assets by separating asset ownership from professional management and creating mechanisms for sustainable revenue generation.
He said MOFI had tested a different ownership and management model on a renewable energy asset in Canada, with results that demonstrated the potential of professional asset management.
“To date, the amount of revenues we have generated in one year from a small asset is more than the dividends we have collected in 13 years of our shareholdings in the Disco,” he said.
Takang said the experience showed that having a proper framework for managing public assets was critical to improving returns from government investments.
“It is a fact that our ability to have a framework for managing our assets is fundamental in better managing public assets and public resources,” he said.
He said RAMCO would not only manage existing renewable energy assets but could eventually leverage their balance sheets to raise additional capital and expand infrastructure.
Takang added that “once we’ve corporatised RAMCO and we have a strong balance sheet, there’s really no reason why we cannot leverage on that balance sheet to raise additional capital, to expand on this infrastructure and begin to create new platforms that other investors can invest in”.