A Review of the Nigerian Energy Industry

‘TCN owing taxes, contractors over $1bn’

Prof Chinelo Nebo01 July 2013, Lagos – It is now almost a year since the Federal Gvernment contracted and signed a-three year management contract with Canadian firm, Manitoba Hydro International, MHI, to refresh operations at the Transmission
Company of Nigeria, TCN, in line with ongoing reforms in the country’s
power sector.

It has been, however, gathered that “all is still not well” at the TCN.

A top presidential source in Abuja, who gave incisive details on the rivalry of interests in the management of TCN operations, stated that there was an increasing groundswell of opposition to the management contract, which was threatening operations at the transmission

The source divulged details of various oppositions to the effective takeover of TCN by Manitoba, as well as the lingering debt profile of the transmission company in taxes and unpaid legitimate claims of its
contractors, all of which was put at about $1 billion.

It was equally learnt that the seven-man supervisory board of TCN, which was inaugurated in March 2013 by the Minister of Power, Prof. Chinedu Nebo, may have compromised its responsibilities of providing effective direction and counsel to the management of TCN, following
the swell of unwholesome “internal and external” pressures.

Manitoba was contracted for $23 million by the government through a competitive bidding process that was conducted by the Bureau of Public Enterprises, BPE, to run TCN for a period of three years.

However, the contract which should have commenced in September 2012, remained
dormant as a result opposition to it as Manitoba was denied a “schedule of delegated authority” for several months before Nebo eventually handed it over to them and also set up a supervisory board
to oversee the work of the company.

The seven-man board is headed by a former chairman of the Revenue
Mobilisation and Fiscal Allocation Commission, RMFAC, Hamman Tukur
and it include Mr. Akinsola Akinfemiwa, as its vice-chairman, CEO of
TCN, Don Priestman, Director, Human Resources at BPE, Larai Shuaibu
and a representative from the Ministry of Finance.

Other members of the board are Peter Ewesor, from the Ministry of Power and former Governor of Ebonyi State and Minister of Education, Sam Egwu, as an independent member.

“There is no point hiding the fact that the TCN is insolvent. The company owes more than $1 billion in debt of unpaid taxes and claims of its contractors who are unwilling to bid for any of its contracts anymore because they can’t get payments for jobs that they had satisfactorily executed.

“Right now, the company relatively needs about $1 billion annually to stay afloat but it got just about $160 million appropriated to it in the budget for this year; how can it amortise its debts and win back the confidence of local financial institutions to lend finance to its expansion plans?

“That is almost impossible now but I am aware that the president and Minister of Power and Finance have been on the situation; I must tell you also that the president has shown very good commitment to the situation of the transmission network,” the source stated.

Speaking further on opposition to Manitoba’s assumption of duties at TCN, the source said: “It has been effective opposition to the management contract and Manitoba is very careful not get involved in anything that could taint its corporate profile.”

“Just imagine that the board is yet to sit for once, three months after it was inaugurated by the minister. From all indications, some
members of the board have compromised on their responsibilities as a board and this happened just after some top Nigerian officials of TCN pressured them to disregard Manitoba and management contract on grounds that they can do better to reposition TCN.

These officials had made their opposition to the management contract known to some of the board members and since then, it has been a swelling of opposition to the contract, in fact, Manitoba does not have access to the bank accounts of TCN, they are not in charge of the bank accounts as well as the market funds which is still been
administered by the ministry of power,” the source added.

Based on the contract which could be renewed for another two years at the discretion of the government, Manitoba is expected to revamp TCN to achieve technical and financial adequacy in addition to providing stable transmission of power without system failure.

Under Manitoba, TCN is expected to become a commercially viable and
market-driven company capable of performing optimally and Manitoba is
expected to work with existing in-house team to manage the daily operations of TCN which will include major functions such the contentious market operations (MO) and system operations, SO, amongst

Meanwhile, barring any last minutes hitches, the federal government will this week begin the payment of severance entitlements to the 43,400 verified workers of defunct state electricity utility, the
Power Holding Company of Nigeria, PHCN.

PHCN was unbundled and 17 successor companies created out of it; 16 of these companies are slated for privatisation in the ongoing reform of Nigeria’s power sector, while one of the unbundled companies, the TCN had been placed under management contract by the government.

Minister of Power, Prof. Chinedu Nebo, confirmed in a telephone conversation Sunday in Abuja that plans to begin the payment of severance benefits of the workers had progressed and about 18,000
of the workers would be paid their benefits in the first tranche of payments.

– Chineme Okafor, This Day

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