20 August 2013, Abuja – The Federal Government said Monday, that there was no going back on the Wednesday deadline given to the 14 bidders for the 15 successor companies of the Power Holding Company of Nigeria, PHCN, which were put up for sale by the Bureau of Public Enterprises, BPE.
About 10 of the bidders at a round table with the government last week, had requested for a month extension to enable them conclude the financial transactions with their respective banks.
The 14 companies cumulatively paid $559.44 million for the 15 successor companies on March 21, being the mandatory 25 per cent bond requested by government to confirm their statuses as the preferred bidders.
However, the BPE in a statement, said the National Council on Privatisation, NCP, insisted that: “The deadline for payment of the remaining 75 per cent remains Wednesday, August 21, 2013, as stipulated in the Request for Proposal, RFP.”
The statement added, “In compliance with the tenets of transparency and accountability, the Bureau will continue to strictly abide by the terms and conditions in the RFP.”
Liability free assets
Recall that the bidders under the aegis of the Roundtable of Distribution Companies, had also requested that government should fulfill all the “conditions precedent” of the RFP by paying off all the liabilities of PHCN workers.
The Roundtable Chairman, Dr. Ransome Owan, had said: “It is a condition precedent that the Discos would be handed over free from all legacy liabilities.”
He insisted that this was paramount as their financiers “are reluctant to approve loans and condition draw-down. Therefore, it is vital for full payment obligations to the current PHCN employees be finalised before the long stop date of August 21. Lenders expect evidence of these payments before we can draw down on funds to complete our payments.”
In response to the above, the Bureau confirmed in the statement that as at Friday, August 16, a total of N119,176, 731,492.88k had so far been paid to 20,304 of the 40,000 PHCN workers as severance benefits
The council noted that the payments were “in line with the agreement reached with Power Holding Company of Nigeria, PHCN, labour unions dated December 12, 2012. The Federal Government commenced payment of benefits due to the staff on August 1, 2013.
“The payment is being handled by the Office of the Accountant General of the Federation, OAGF, and commenced on Thursday, August 1, 2013.”
Failure will result in losses
Already, there are fears that the bidders may not meet the 5pm Wednesday deadline (tomorrow), as only three met the payment of the balance 75 per cent of their bid prices.
Confirming the development, chairman of the Technical Committee, Mr. Atedo Peterside, said those who failed to meet the 75 per cent obligations would lose the 25 per cent bond already paid.
Peterside said: “As at today, only three companies have paid. Those who are unable to pay by 5pm on Wednesday, will face the consequences; they will lose what have already been paid.”
But, he could not give details of those that had paid, but expressed optimism that the bidders would meet the deadline, as they appeared to be toeing the line in the payment for the 25 per cent bid price by paying up on the last day.
He disclosed that contrary to what the Roundtable wanted the public to believe; only one of the bidders was having challenges raising the balance 75 per cent bid price.
He said: “Only one of them is having problems with the banks and made it look like all of them were. My take on that having been a banker all my life is that if you cannot raise the fund in six months, you cannot raise it ever.
“I tell you that there is no bank in the world that cannot conclude a loan transaction within six months. So when others realised the implication of not meeting the deadline if they went along with the one month extension, they simply pulled back from the group since they signed individual contracts.”
In affirmation, one of promoters of the Vigeo Group, which won the Benin Discos, told Vanguard in confidence that the Group did not see the rationale in aligning with the Roundtable, and that it would pay by Wednesday.
He said: “For us in Vigeo, everybody put in individual bids, so each has to be on its own. Besides, the bid process is very clear, as the conditions were clearly stated.
“Yes, we have not paid, but we will pay by Wednesday. There is no rationale in rushing to pay, since we are looking at the cost of funds.”
There was no confirmation of payment from the Transcorp Group, which won the Ughelli Plant, while a source told Vanguard that the Amperion Group is among the three that have paid.
But, legal experts believe that the development could lead to possible litigations, in the event that some of them were unable to meet the Wednesday deadline.
According to them, “the bidders will not just watch millions of dollars just go like that. They will plead extraneous circumstances like the oil companies plead force majeure, when they are unable to meet their supply obligations.
“But the determination of the suit rests with the judge handling the case; because if he is understanding, the parties may recover some of their money, definitely not all, and if the judge is a straight guy, he will simply insist on the terms of the contract.
“Again, it may take some years before they can recover anything because the cases may drag for long considering they are dealing with government.”
Noting the futility of going to court, Peterside insisted that the terms of the contracts were very clear, saying, “They can go to the highest court because the terms are very clear, they read it, made observations and signed. So they can’t come down the road to say they want more time or that they want to back out.”
*$31million paid by four Power Consortium for Port-Harcourt Disco,
*$31.5 million by Interstate Electrics Limited, Enugu Disco,
*$27,913,633.50 million by North-South Power Company for Shiroro Power Plc,
*$32.25 million by Vigeo Consortium for Benin Disco,
*$75 million by Transcorp/Woodrock Consortium for Ughelli Power Plc,
*$50,249,965 by CMEC/EUAFRIC Energy JV for Sapele Power Plc,
*$41 million by Kann Consortium for Abuja Disco,
*$20,464,968.15 by Aura Energy for Jos Disco,
*$59,467,500 by Mainstream Energy Ltd for Kainji Power Plc; and,
*$34.25 million by Sahelian Power SPV for Kano Distribution Company.
*$33 million by Amperion Power Company Limited for Geregu Power Plc,
*$42.25 million and $14.75 million by Integrated Energy Distribution & Marketing Company for Ibadan and Yola Discos respectively.
*$32.75 million by NEDC/KEPCO for Ikeja Distribution Company; and
*$33.75 million by West Power & Gas for Eko Disco.
– Clara Nwachukwu & Emma Ujah, Vanguard