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Report… Ghost of privatisation haunts BPE

In from Ali Smart . . . .

As the Americans would say, “hemmed in on all sides.” The Bureau of Public Enterprises (BPE) is practically hemmed in on all sides as the agency is now fighting the battle of its life.

BPE has been in the news in recent times for the wrong reasons, chief among which borders on sale and privatisation of some state assets in the last few years.

While the agency has never shied away from controversies in the past, indications are that the current probes being instituted by the National Assembly may see heads roll in the coming weeks.

How privatisation became BPE’s nemesis

From the privatisation of the once vibrant behemoth, NITEL and one of its subsidiaries, MTEL, to independent power plants, PHCN, Nigeria Airways, among other state assets across the country, it is clear that the sale of these assets may not have passed through the due process given the public outcry in recent times.

Ever controversial NITEL

Perhaps one of the most controversial state assets that have been privatised is the Nigerian Telecommunications (NITEL) and its mobile arm, MTEL.

There are moves by the Presidency to probe lingering allegations of irregularity in the sale of Eleme Petro Chemical Plant, constructed at a cost of $2.4bn but sold to a Thailand-based firm, Indorama for $215m.

Details of the privatisation process of NITEL and MTEL which was completed in December 2014 after the financial bid was opened in October 2014 by the Goodluck Jonathan administration shows the process was flawed.

It may be recalled that a consortium run by Skye Bank’s chairman, Tunde Ayeni, the founder of Sahara Energy, Tonye Cole, and two other companies, received the nod from the Nigerian government to take over the two companies for $242.3 million (about N42.4 billion).

Their investment vehicle, NATCOM Telecommunications, emerged the sole bidder. NATCOM has as members NATSPACE Telecommunication Investment Limited, PCCW Global Limited, Prime Union Investment Limited, Olutoyi Estate Development & Services Limited, Legal Resources Alliance & Co., Sahara Energy Resources Limited, and LM Ericsson Nigeria Limited.

Of the seven firms, Mr. Ayeni, a businessman and lawyer owns three.

He is the founder and operator of Prime Union Investment Limited, Olutoyi Estate Development & Services Limited, and Legal Resources Alliance & Co.

Mr. Cole is the owner of Sahara Energy, while LM Ericsson is a subsidiary of Swedish group, Ericsson.

NATCOM emerged winner after NETTAG Consortium, another little known group, was disqualified for failing to attach a $10million bid bond to its bid submission as stipulated in the Request for Proposals (RFP) to prospective bidders.

A jinxed  NITEL?

Before the acquisition by Ayeni and co, four previous attempts to sell NITEL didn’t work out.

It may be recalled that as part of the reform of the telecommunications sector, the government in 2001 tried to sell its 51 per cent equity to Investors International London Limited (IILL) as the strategic core investor, but it hit a brick wall.

Attempts by Pentascope in 2015 to handle the telecoms behemoth also failed just as Orascom Telecoms bid in 2005 as strategic core investor to Transcorp  was cancelled in 2009.

The last effort was the strategic core investor sale in 2011, where New Generation Communications Limited and Omen International emerged preferred and reserved bidders respectively, which again failed.

However, following the last failed attempt, former Vice President Namadi Sambo-led National Council on Privatisation, adopted the guided liquidation strategy for the sale of NITEL/MTEL.

Matters arising over sale of NITEL

Feelers from the Presidency shows that the government may likely review the process leading to the acquisition of NITEL to ascertain whether the country was shortchanged one way or the other.

Perhaps taking a cue from the Presidency, the lower legislative chamber has also instituted a probe of the sale of the two national carriers.

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The decision of the lawmakers was sequel to the adoption of a motion by Henry Nwawuba (PDP, Imo), who regretted that it was the failure of the National carriers to live up to the expectations of Nigerians that led to their privatisation and subsequent sales in December 2014 to NATCOM for $252.3m

The Committee on Telecommunication tasked with the responsibility of conducting the comprehensive investigation into the liquidation and takeover of NITEL and Mtel by NATCOM is due to submit its report to the House in a couple of weeks.

More controversial sales

Like a ghost from the past, the sale and privatisation of state assets such as Eleme Petrochemical Plant in Port Harcourt is now haunting the BPE.

Okoh, said much of the figure released as some projects’ official cost is actually ‘political cost’ which includes costing of corruption.

Ripples Nigeria can authoritatively report that there are moves by the Presidency to probe lingering allegations of irregularity in the sale of Eleme Petro Chemical Plant, constructed at a cost of $2.4bn but sold to a Thailand-based firm, Indorama for $215m.

Ripples Nigeria gathered that a member of the Federal House of Representatives, Hon. Haliru Dauda Jika had in a motion titled “Urgent Need to Investigate the Sale of Eleme Petrochemical Company for $215m while it cost $2.4bn to Construct” called for the review of the sale.

BPE had actually made the controversial sale during the heydays of former president Olusegun Obasanjo era. It was learnt that a Rivers State stakeholders group led by Mr. Thompson Kpagih had last week in a petition to the lower legislative chamber called for a review of the controversial sale.

In the petition, the group recalled that: “The Eleme Petro Chemical Plant was constructed by a world class consortium of premier engineering and EPC contractors of Chiyoda Corporation, JGC and Kobe Steel of Japan; Technimont of Italy, and SpieBatignolles of France at a cost of $2.4 billion by the Federal Government and it began operations in 1995.

“The plant sits on 400 acres of land, has a state of the art Olefins plant, Polyethylene/Butane and Polypropylene plant; Captive power plant; utilities; Effluent treatment plant; Storage Tanks; Bagging Plant; Numerous Warehouses for raw material and finished goods, and several other supporting facilities.

“However, the Federal Government’s privatisation process for this plant was fraught with various allegations of irregularity and under hand dealings as higher bids by Nigerians by Transcorp/Dangote Consortium were put aside and the $2.4bn plant was sold to Bangkok-based Indorama Petrochem Company Limited for a paltry $215m,” he stated.

Like Eleme, like NIPP

The sale of 10 National Integrated Power Projects (NIPP) by the BPE has also come under probe.

The planned probe of the sale is sequel to a motion by Senator Mohammed Hassan (Yobe South) and five others on alleged “Unwholesome practices by Manitoba Hydro International Nigeria Limited under the direction and control of the BPE.”

Manitoba is a Canadian company contracted to manage the Transmission Company of Nigeria (TCN).

The Senate had last Thursday mandated its joint committee on Power and Privatisation to investigate the sale with a view to resolving the issues involved.

Hassan said, “We are worried that the TCN is imposed with this burden, under the management Services Contract, of paying all taxes for the management contractors while Manitoba does not pay taxes on monies paid under the contract.

“The Management Service Contract prepared by BPE for the management of TCN is fraught with apparent illegalities and total violation of the laws of Nigeria.”

Echoing similar sentiments, Chairman, Senate Committee on Appropriation, Senator Mohammed Danjuma Goje lamented that the entire privatisation exercise seemed to be a failure.

He said that there seemed to be no difference between the pre-privatisation and post-privatisation era.

Expectedly, Senate President, Abubakar Bukola Saraki, who summed contributions by Senators, said that it was unthinkable how a government agency would decide to wave $3billion and sell the projects for $5 billion after an over $8 billion investment.

BPE’s rebuttal

The BPE has however denied any wrongdoing in the process leading to the privatisation of most of the state assets.

At separate interviews, two officials of BPE, gave plausible explanations. BPE, they said, strictly followed experts’ advice before proceeding with the privatisation process.

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While commenting on the sale of the Eleme Petrochemical Plant, the Head of Public Communication at BPE, Mr. Alex Okoh, said much of the figure released as some projects’ official cost is actually ‘political cost’ which includes costing of corruption.

But can the platitudes by BPE spin-doctors save the agency from appearing in the dock anytime soon to defend its role in the privatisation process, and will this save them from the wrath of Nigerians?

Expatiating, Director of BPE’s Oil and Gas Department, Mr. Yunana Malo asserted that the BPE strictly followed experts’ evaluation and advice, adding that over-invoicing and deliberately inflated costs during the process of construction gave the plant a mere book value that was so high.

“For instance; a plant of the same capacity was constructed in Libya at about the same time at a cost of less than one billion dollars while ours was $2.4bn and it had not reached final completion when we started handling it.

“Based on the reserved value, the Federal Government decided to sell 75% of its share in that company to Indorama; it was sold as a project which means that there was a segment that was yet to be completed and you have to factor in the cost of completion and then make assumptions on likely rate of return.

“Based on the range of values that our advisers gave us, Indorama gave us a quotation which we considered to be low and eventually, they bought at a higher price.

“By the way, what government has gotten from Eleme petrochemical plant right from the time it was sold till now, in terms of dividends, taxes and benefits to the community as well as contributions to the nation’s economy has more than outweighed the value of $2.4 billion.

“We are actually far better off today than we were when Eleme was still a project as 98% of Nigeria’s requirement for petrochemical products is met by Eleme petrochemical plant and now, we don’t spend forex to import petrochemical products.

“If all other companies we invested in are operating like this, the cry for foreign exchange would not be there.”

But can the platitudes by BPE spin-doctors save the agency from appearing in the dock anytime soon to defend its role in the privatisation process, and will this save them from the wrath of Nigerians?

Time will tell.

 

 

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Ripples Nigeria

We are an online newspaper, very passionate about Nigerian politics, business and their leaders. We dig deeper, without borders and without fears.
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