A Review of the Nigerian Energy Industry

Nigeria: ‘How political interference threatens privatisation’ 

Benjamin Dikki, DG, BPE

• NCP divided over lowering of rules for Interstate
02 September 2013, Abuja – There is apprehension in Abuja and the electricity industry that government’s interference, which impacted negatively on previous efforts at privatisation, is dogging the current exercise.

Stakeholders are worried that, but for government’s alleged interference in the process, the privatisation of 15 successor companies of the Power Holding Company of Nigeria, PHCN, would have been concluded last week.

This delay in concluding  the process is adversely affecting the scorecard already given by international development partners who funded some aspects of the reforms in the power sector. They had called it “a world class model” because of its openness and adherence to all laid-down rules and agreements.

A diplomat told The Guardian that “this hard-earned credibility of the nation’s privatisation process is being threatened by accusations of double-standards in government’s application of the rules of engagement. There were initial allegations that some bidders that failed at the technical evaluation stage and were not qualified for commercial evaluation were suddenly announced as preferred bidders.”

Current attention is focused on the Enugu Electricity Distribution Company where some stakeholders are accusing the National Council on Privatisation, NCP, of desperately lowering the rules for Interstate Consortium, the preferred bidder which failed to pay up when the deadline ended on August 21.

A source said: “Please, recall that there were newspaper reports on October 23, 2012 where it was alleged that West Power and Gas Limited (preferred bidder for Eko Disco) and Interstate Consortium (preferred bidder for Enugu Disco) were not technically qualified for the commercial evaluation stage of the bid process. This led to the announcement of the preferred bidders. But these were reversed. Now, the same government wants to lower the rules again for the defaulting consortium.   There is so much pressure. First, the consortium got the terms relaxed for it in the technical evaluation. When the financial Aggregate Technical Commercial and Cost (ATC&C) loss proposal came, there was pressure. Now, for the third time, the payment goal post is being tampered with. If the consortium is scrambling to get money to pay up for the cost of the bid, how can such a firm raise the huge financial outlay necessary for capital expansion of the Disco?”

A source noted that towards lowering the rules, Interstate on Thursday paid only $12 million out of the $93 million bid balance after the expiry of the payment deadline. And this has drawn criticism from industry watchers who accuse members of the NCP chaired by Vice President Namadi Sambo of impinging on the transparency of the process.

To ensure transparency in the privatisation, NCP at the early stage formed three committees to evaluate the bids that were received. Each of the committees had seven members drawn from the Bureau of Public Enterprises (BPE); Nigerian Electricity Regulatory Commission, NERC; Federal Ministry of Power; CPCS Transcom, the transaction’s advisers; NEXANT, the USAID-funded power sector consultants, and NIAF (DFID funded Nigeria Infrastructure Advisory Facility programme).

The Chairman of one of the three committees of the Technical Committee (TC) of the NCP, Mr. Atedo Peterside, , wrote to the BPE asking it to do the right thing and play by existing rules. Peterside said that his position was simple: “If the rule says where the winner fails to pay, the reserve bidder is then asked to take the slot, so, let the BPE call the reserve bidder. I see no good reason why this should not be the case.”

Former Minister of Power, Prof. Barth Nnaji, whose firm, Geometric Power, is part of the Eastern Electric consortium, the reserve bidder for Enugu Disco, told The Guardian during inquiries that: “I won’t get into commenting. You can see the newspapers talking about the way Enugu Disco was managed. Now, the most important thin

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