September 1, 2019

AGF faults cancellation of $100m concession agreement

By Chris Ochayi

The Attorney General of the Federation and Minister of Justice, Mr. Abubakar Malami, SAN, has faulted the cancellation of the $100 million concession agreement by Transmission Company of Nigeria, TCN, with Phase3 Telecom Ltd AND Alheri Engineering Services, describing it as “illegal and nullity”.

The Federal Government had on March 20, 2006, facilitated the signing of $100 million Concession Agreement that mandated the concessionaire to Design, Build, Finance and Operate, DBFO, fiber optic network infrastructure in the country.

Arising from the need to review the concession terns as envisaged in the agreement, following the liberalization of the National Long-distance Fibre Optic landscape in Nigeria, TCN reneged reports by an audit firm and recommendation of the Infrastructure Concession Regulatory Commission, ICRC.

In a letter addressed to the then Minister of Power, Works and Housing, Mr. Babatunde Raji Fashola and dated January 10, 2018, with reference number: LE14/TCN/02., the Minister of Justice condemned the purported termination of the concession agreement by TCN advised that based on reports of ICRC and Audit Report by a firm – SIAO – the terms of contracts be reviewed.

The termination, according to the AGF, “was arbitrary, premature, illegal, null and void, having been issued in violation of the terms of Agreement which mandates under Article 31:1 that Parties shall go to arbitration panel where disputes cannot be resolved amicably.”

According to the AGF: “Several meetings were held at the instance of ICRC, with Concessionaires and TCN in attendance.  When the dispute could not be amicably resolved, it was agreed by ICRC, TCN, and Concessionaire, to jointly engage an auditor to review the issues in dispute and make recommendations to bind and guide the parties going forward.

Consequently, an audit firm –SIAO- was appointed to carry out financial and technical audits of the situation. In summary, SIAO found that the Agreement and financial obligations thereunder are not sustainable in line with present realities in the industry.”

Findings by SIAO, according to Malami’s opinion on the report submitted by ICRC: “TCN failed to give effect to the findings of SIAO and every attempt by the Concessionaires to meet with TCN towards resolving the dispute was to no avail.

“It is important to note that a dispute resolution meeting was held on 18th August 2017 where TCN inter alia requested for Concessionaire’s proposal for restructuring which was submitted by Concessionaires on 24th August 2017.

“Unfortunately, however, rather than respond to the restructuring proposal one way or the other for further engagement with a view to resolving the dispute or refer same for arbitration as agreed by the Parties under the Agreement, TCN via a letter dated 30th August 2017 terminated the Agreement.

“Upon the letter dated 30th August 2017  TCN has subsequently taken further actions to deny Concessionaires access to their sub-stations where Concessionaires have installed active transmission equipment, thereby preventing Concessionaires from monitoring the national fibre network.

“TCN has also locked Concessionaire Equipment Room’s nationwide, thereby making access impossible for maintenance to the fibre optic network infrastructure. These acts by TCN have allegedly led to the disruption of services nationwide,” the AGF said.