Breaking News
Translate

Twist, turns in Nitel sale cancellation as expert appeals for govt attention

By  Prince Osuagwu
The delay in putting the NITEL sale imbroglio to proper rest is beginning to worry industry stakeholders.
This is generally because of the multifaceted danger and threats the stand-still condition of the sale pose on the both the industry practitioners and teeming subscribers of the network who still wish that their darling network comes back to life again.

Nitel building

That could be perhaps why the, Managing Director/Chief Executive Officer, Voicewares Networks Limited, Engr Gerry Ekesiani, smarting from his victory as the first Vice president of the Association of Telecom Companies of Nigeria, ATCON, also lent his voice to patriotic calls on the federal government to resolve the impasse.

According to him, to leave matters hanging the way they are now would amount to leaving NITEL to continue to rot away at the expense of the Nigerian people.

Speaking to communications correspondents after his election, Ekesiani observed that the bid conducted by the Bureau of Public Enterprises (BPE) was adjudged   transparent, and that New Generation Consortium Limited made the highest bid and was  awarded the preferred bidder and  winner of the auction process.

For him it was unbelievable that some people should mislead the federal government to put on hold a process that was successfully concluded.
Ekesiani  recalled that the bidding exercise was given live television coverage and every stage of the bids opening was done in the open and nobody complained about the entire process till the bid process was concluded. He maintained that it was very strange for any person or group of persons to come up after the exercise was successfully concluded to say that the process was full of irregularities. He therefore, called on acting president Goodluck Jonathan to wade into the matter in the interest of Nigeria’s economic progress.

NITEL’s present problem started not long after New Generation Consortium was declared winner of the bidding exercise, conducted on February 16.  China Unicom purportedly denied its involvement as technical partners to the consortium.

Although the same Chinese firm recapitulated by confirming that China Unicom (Europe) Operations Limited was in deed involved as technical partners to New Generation Consortium, there were still allegation of other flaws in the processes, leading to the setting up of an ad hoc panel by the National Council on Privatization (NCP) to review the transaction.

The panel was said to have confirmed that there were flaws in the sales process and therefore recommended the cancellation of the transaction. However, strong  BPE sources seem to suggest that the federal government panel was in a hurry to recommend the cancelation of the sales process. An inside source at the BPE claims that the panel held only one meeting on March 15, 2010 and did not conduct any literature review on March 13, 2010 as stated in its report to the presidency, and therefore could not have conducted a proper review of the bidding process to be able to come up with a comprehensive and balanced report.

BPE source also said that contrary to the panel’s report that there was no other due diligence report received on members of the consortium,  forty five annexures were prepared for the panel in that regard but the panel reviewed only six.

These annexures, the source said, include certificate of incorporation and CAC form 2 and 7 of New Generation Consortium; company search report on all the bidders; and Minerva’s professional licence to operate in UAE, amongst others. It added that annexures that were not submitted before the committee were however, circulated.  The source said that BPE agreed that it would have been desirable to conduct due diligence on the shareholders, directors and probably visit the companies to confirm their existence but both the BPE and BNP Paribas could not do so due to time constraints.

Also reacting to the issue of both the preferred and reserve bidders sharing the same technical partners, the BPE source maintained that the matter was hotly debated at the Technical Committee (TC) meeting held February 12, 2010 and the TC reasoned that since only one company would emerge as preferred bidder, the bid opening could proceed. It noted the trend in the telecommunications industry where competing network operators have the same technology providers or equipment vendors and that did not affect their operations negatively. The BPE source opined that technical partners are professionals who would not compromise the positions of their competing clients.

The source further stated that strategic alliances were encouraged by BPE provided such partnerships would further enhance the technical or financial strength of the bidders. However, alliances that are unacceptable include those formed to frustrate other candidates from acquiring the company or its assets.

It went on to explain that section 3.4.4 of the Request for Proposal (RFP) gives NCP/BPE absolute discretion to cancel, modify the RFP as well as waive any deficiency or irregularity or omission in any bid proposal as long as such does not affect the substance or validity of the proposal. The technical committee of NCP/BPE exercised this right reserved for them by the FRP.

On the issue of financial capability which the government panel raised, BPE source holds the view that other than the receipt of actual payment or a bank guarantee or a letter of comfort, the financial capability of a bidder can only be determined from its financial statement and its commitment to pay

It said it was the need to increase the assurances of payment that necessitated the request for bid bonds from the bidders, which would be forfeited upon default in payment. It upholds that it was not the practice to obtain bank guarantee or upfront cash payment for such transactions. It added that the relevant financial statements and letters of commitment were submitted to the government panel accordingly.

The sources insists that due diligence was constrained by tight timelines stating that bids were received February 5, evaluated between February 8 and 11, technical committee met February 12 and bids were opened February 16. Noting that the presidency was not favorably disposed to extension of timelines, the source believes the BPE attained substantial compliance with due diligence expectation, given the aggressive timeline.
Still speaking on the meeting of the federal government panel, the BPE source maintained that the panel met only once on March 15 but could not meet on March 16 and 17 before the Federal Executive Council (FEC) was dissolved on March 17, 2010.
He also said that BPE did not compromise on the sale process of NITEL/MTEL, adding that if there were any compromise in the sale process, the bidders would have written petitions.

“But the bids were opened in full beam of live national television broadcast with each bidder attesting to the sanctity of their bids in public glare.  He  claimed that the TC’s exercise of its rights in section 3.4.4 of the RFP could not constitute a compromise.

On NITEL/MTEL debts, the source noted that if government is concerned about resolving the debts owed both creditors and staff, it should approve an offer letter to New Generation Consortium so that it would commence the payment of $2.5billion which could settle all outstanding liabilities without recourse to government covers.

This would, of course bring succor to hundreds of thousands of Nigerians whose lives have been negatively affected by the indebtedness of NITEL to creditors and staff.

On the recommendation of the panel, the source in BPE asserts that putting the sale process on hold because the same technical partner showed interest in both the preferred and reserve bidders was not necessary because the NCP/BPE relied on section 3.4.4 in waiving irrelevant issues concerning any bit as was deemed fit. It insists it would not serve the interest of Nigeria to cancel a transaction that complied with international best practices as that would send wrong signals to international investors.

It also recalled that a lot of international publicity attended the participation of China Unicom, a company listed on the London and Hong Kong stock exchanges. A unilateral cancellation of the transaction would have far reaching negative implications for investor interest in Nigeria, the source said. It therefore, counseled the federal government to order the completion of the sale process with the issuing of an offer letter to New Generation Consortium, since according to it, substantial compliance with due diligence requirement was attained by the BPE.

The source agrees with the need to undertake further due diligence check on the bid winner through physical visit to the organization and authentication of members of the consortium before the signing of the sale agreement.

It reiterated the fact that financial capability can only be proven when the offer letter is issued noting that there are timelines when payments are to be made – 30% within 10 calendar days of issue of offer letter and sixty days for settlement of balance of 70%.

The source said BPE is not opposed to further due diligence by physical visit to the preferred and reserve bidders. It observed that such exercises are part of the BPE processes but usually carried out after bids opening and before signing of sales agreement, as was the case in the sales of  Styr Motors as well as Eleme Petrochemical Company.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.