May 18, 2014

$200m rural telephony project at risk

Telcos threaten telecom blackout in nine states

Telecom mast

By Caleb Ayansina

The National Rural Telephony Project (NRTP) to extend telecommunication services to the rural communities conceived by the Obasanjo’s administration seems to have run into a hitch.

The project was designed to reduce rural-urban migration. To achieve this objective, the Federal Government,  through a $200 million concessionary loan from China, awarded the first phase of the project in 2001 to two Chinese companies – Alcatel Shanghai Bell (ASB) and ZTE Corporation (ZTE).

ASB provided the fixed wire-lines while ZTE provided the fixed wireless – code division multiple access (CDMA) systems.
The country was divided into seven zones – Abuja, Bauchi, Enugu, Kaduna, Kano, Ibadan and Port Harcourt – while each zone is made up of six states (save Kano which has four).

On the average, there are 36 networks in each zone made up of fixed wirelines and fixed wireless CDMA networks.

In accordance with the deregulation and privatization policy of the government, it was expected that the rural telephony networks would be managed by private operators, to ensure sustainability and achieve government’s objectives of universal access to telecommunications by all Nigerians.

The Federal Government, in 2006, commenced the process to lease the networks to private operators to  manage and ultimately own  under the public private partnership (PPP) arrangement.

An inter-ministerial committee was set up under the chairmanship of the Bureau for Public Enterprise (BPE)  to develop the framework for participation of private operators in the NRTP, and also to facilitate the process of identifying and selecting suitable operators.

In December 2008, under the leadership of the then Minister of Information and Communication, Professor Dora Akinyili, the financial bid was publicly opened  and fire companies emerged as the preferred bidders in the various zones as follows:Suburban Limited for Abuja and Kaduna Zones at the cost of $47 million and $42 million respectively, Gicel for Bauchi Zone at $30 million, Voicewares for Enugu Zone at $57 million, Key Communications for Ibadan Zone at $38 million, and Hezonic for  Port Harcount Zone at $38 million.

Since the award of the contracts to the companies, the execution was stalled. The official letters of  contract award, which should have been given to the winners not later than two weeks from the opening of the financial bids, were not released until a year after.

Later, the then Attorney General of the Federation  (AGF), Mr. Michael Aandoka, to whom the negotiated lease agreement was sent for confirmation, advised that the matter be referred to the BPE for a certificate of no-objection. This was after the committee, through the then Ministry of Information and Communication, had obtained the approval of President Musa Yar ‘Adua who ratified the transaction and directed without any conditions  that letters of award be issued to the winners and the networks handed over.

The AGF also wanted the approval of the Bureau of Public Procurement (BPP) even when it  was clear that BPP was not involved in the privatization exercise, and was set up much after the transaction had commenced.
Adding insult to injury for the operators, BPP advised that the matter be referred to the Infrastructure Concession Regulatory Commission (ICRC) for certification.

Stakeholders  who spoke to Sunday Vanguard believed that getting the ICRC involved was politics to stall the process as the body  was not in existence when the process commenced.

“The ministry is to be blamed for the hitches suffered by government projects. You find out that the ministry people don’t care; once a letter comes, they just dump it. They are not interested in the progress of the nation,” one of the stakeholders said.

“After two years, I  can confirm that the Infrastructure Concession Regulatory Commission (ICRC) just wrote a letter to the ministry. The commission alleged that they had written several letters to the ministry but got no response. They just want to make things complicated so that nothing will go forward. The ministry of communication’s lukewarm attitude towards the whole process is the cause of the delay.”

The operators alleged that some telecommunication giants were behind the stalling of the NRTP as they didn’t want it to succeed, because they know that the project  would take over the whole country, forcing down their call tariffs.

Also, the current Minister of Communication  is alleged to be making the process difficult, as she has allegedly refused to discuss the project with the NRTP operators.

One of the NRTP operators, Patrick Okonmah, said: “NRTP has become notorious for its tortuous bureaucratic processes and faulty implementation on the part of the Ministry of Communication Technology and the other government agencies involved in this project.”

Another operator, the owner of Hezonic that won the bid for the Port-Harcourt Zone, Dr Tony Maduake, said: “How can a government spend so much money on a project, and allow it to waste away. They got a loan from China to execute the project and they have even finished paying the loan, and the ministry is not concerned that the project is wasting away.

“If we knew it  was going to be like this, we wouldn’t have got involved. The loss  is incalculable.  It is billions of naira; the time lost, the efforts wasted are unimaginable.

“All these are just complications so that nothing will start. How would one imagine that it could take two government agencies two years to communicate on this project? The ministry is not interested in a project that is supposed to have commenced operation three years ago.

“Between the last three years and now, the government would have made billions of naira on tax, employment generation and levies. The project has the potential of creating 10 million direct and indirect jobs in five years. This project ought to have commenced before Etisalat came into Nigeria after four years of going through the process of bidding.

“As a result of the delay in completing this process by government for nearly seven years, most of the financial arrangements made by the NRTP operators both locally and internationally have abated, as most of the financial partners have either withdrawn support or no longer have confidence in the project.

“As a result, the NRTP operators were advised and applied to the FMIC in 2011 for support to obtain a  sovereign guarantee to raise the necessary funds in local and international financial markets to enable them refurbish, update, upgrade and expand the networks, in addition to completing the second and final phases of the project, since government was no longer minded to invest further in this project.

“This application was made and supported by the Ministry of Communication.  Again, this application is still pending at the Ministry of Finance and the sovereign guarantee has not been granted.”

Maduake called on the FMCT to present a memorandum to the Federal Executive Council for ratification of the lease agreement negotiated and finalized since December 2009, with a view to signing the same with or without a certificate of no-objection from the ICRC.

He noted that the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices Commission (ICPC) should be mandated to move in to investigate the alleged involvement of civil servants in the whole process.  ”In the event that government is no longer interested in continuing with this project, then the NRTP operators should be compensated for the enormous investments they have made over the years and costs incurred since the process started in 2006 which will run into billions of naira”, Maduaka added.