A Review of the Nigerian Energy Industry

Nigeria govt revokes N4bn Manitoba TCN contract

Clara Nwachukwu & Michael Eboh

15 November 2012, Sweetcrude, LAGOS — THE Nigerian government, Wednesday, terminated the $24 million (about N3.79 billion) management contract awarded to Canadian company, Manitoba Hydro International for the management of the Transmission Company of Nigeria, TCN, citing lack of due process in the award of the contract.

Strangely, the admission of the management contract not following due process is coming more than three months after the signing of the contract, in July, by the same government, which declared Manitoba as the preferred bidder.

According to a statement from the Presidency, signed by Dr. Reuben Abati, Special Adviser to the President on Media and Publicity, President Goodluck Jonathan cancelled the power contract with immediate effect because due process was not followed in the award of the contract.

“The President would not want to compromise due process in anyway. I assure you that this does not in any way affect the on going privatisation of the power sector,” the statement said.

Manitoba Hydro International was scheduled to take over TCN on September 1, 2012 in the management contract worth $23 million to turn around the fortunes of the TCN, as part of the electricity reform programme.

Manitoba signed a contract with the Federal Government, as represented by the Bureau of Public Enterprises, BPE on July 30, 2012.

Presidency alliance with India’s Power Grid
However, investigations revealed that there is more to the contract revocation than the allegation of flouting due process.

A competent Presidency source, who spoke on phone, revealed that the revocation might not be unconnected with the Presidency’s desire to hand over the management contract to India’s Power Grid Corporation, one of the three firms originally shortlisted for the contract. Others being Canada’s Manitoba Hydro, and Electricity Supply Board of Ireland.

The same National Council on Privatisation, NCP, headed by Vice President Namadi Sambo, had overseen the contract process, and had approved the exercise every step of the way, including the shortlisting of candidates and the agreements signing ceremony.

The BPP clause and other intrigues
Also strangely, the NCP directed that the BPE should have referred to the Bureau of Public Procurement, BPP, to validate the management contract, which in itself was not a procurement contract, but part of the privatisation process.

Besides, the NCP has not been constituted, and as such, there is nobody like BPP.

Even more intriguing was the fact that the BPE Act did not stipulate that it can validate its decisions, just like the BPP Act does not extend to the functions of the BPE.

Indeed, the exclusive right of the NCP to preside over privatization and sale of public assets was also recognized by the Public Procurement Act (2007), when it stated in Part X – Disposal of Public Property (section 55) that “This section shall apply subject to the Public Enterprises (Privatisation and Commercialisation) Act 1999.”

Although, the Director- General, BPE, Ms Bolanle Onogoruwa, simply said “No comments” to enquiry sent through her email, but our source recalled earlier interpretation of the laws establishing the two agencies, saying: “Our understanding of the above provision is that the powers of NCP to approve privatisation transactions have not been taken away by the BPP’s Act, but rather constitutes an exception to the jurisdiction where BPP can exercise such power.

“We believe that the assertion in your letter that BPE should take its approval requests to Federal Executive Council is wrong and not in accord with extant laws of the land. It further means that BPP cannot confer or arrogate to itself any powers or authority not bestowed on it by the Act of parliament creating it even when it is approached by whatever means to do so as it will be acting ultra vires its powers and therefore null and void its action.

Revocation throws up new challenge
The Chairman, Nigerian Electricity Regulatory Commission,NERC, Mr Sam Amadi, in a telephone conversation, agreed that the revocation had thrown up more challenges for the industry and the electricity privatisation.

He, however, argued that it was better for the government to admit it had made a mistake now, than later, when more damage would have been done.

He said: “We will simply have to move on and conclude the process transparently and credibly,” adding that achieving this within the stipulated 30 days is the bigger challenge.

Manitoba cries foul
However, Mr. Don Priestman, Managing Director, Manitoba Hydro, condemned the cancellation of the contract, saying: “We had a clear contract and we were meant to be given delegation of authority, but that did not happen.

“There are forces working against reforms of the power sector in Nigeria, as similar contract Manitoba has in Kenya is working well.”

Although, he did not say it, but Manitoba may decide to go to court, to claim damages considering that it had already signed a contract with the Federal Government. Experience has shown that such cases were usually won by the litigants.

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  • Since due process was not followed, we hope that an investigation was been conducted and the government officials who did not follow due process have been identified and punished. We are sick and tired of government taking one step forward and another ten backward because the country certainly cannot make progress that way. So far as we are concerned, the revocation stinks of fraud.

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