House of Representatives wants federal government to halt the proposed liquidation of Nigeria Telecommunications Limited and Mobile Telecommunications Limited
| By Anayo Ezugwu | Nov. 25, 2013 @ 01:00 GMT
THERE are strong indications that the Nigeria Telecommunications Limited, NITEL and the Mobile Telecommunications Limited, MTEL, would be revived soon. The House of Representatives has directed the National Council on Privatisation, NCP, to compel the Bureau of Public Enterprises, BPE, to halt the proposed liquidation of the companies and consider revamping it through bailout.
The House passed a resolution recommending a bailout for the companies by the Central Bank of Nigeria, CBN, instead of commercialising or privatising the companies. The House took the decision based on a report presented by its committees on Privatisation and Commercialisation, Finance, Communications, Public Procurement and Information Technology.
The House approved a recommendation of the committees that instead of selling NITEL and MTEL, the CBN should give it a lifeline with the recommendation of the National Council on Privatisation, NCP, which is refundable in five years. “The National Council on Privatisation, should recommend to federal government to include NITEL and MTEL in CBN bailout intervention fund with a total sum equivalent to $1 billion to be refunded with interest over a period of five years,” the House resolved.
The House also recommended that the NCP should immediately direct the Bureau for Public Enterprises, BPE, to stop the on-going process of liquidation of NITEL and MTEL under the circumstances. Other recommendations are: “The NCP should direct NITEL and MTEL to commence the process of conducting technical and financial audit of the two companies as approved by the board; the NCP should direct its records office to eliminate the existing variance of over N170 billion under the supervision of the office of the auditor general of the federation.”
Besides, the House also recommended that: “The NCP should direct the BPE to comply with the Federal High Court judgements in favour of the 3000 ex-staff of NITEL and MTEL treated as casuals and the other one in favour of NITEL and MTEL pensioners. The House also directed that the NCP should consider Public Private Partnership, PPP, as a privatisation strategy of the companies and maintain the national carrier status for security reasons. It also directed that the federal government should direct the ministry of finance to comply with the agreement between NITEL and the ministries departments and agencies, MDAs, to deduct from source, the reconciled N6.2 billion and remit to NITEL for immediate settlement of outstanding staff salary arrears and other fringe benefits and the resuscitation of the company. The recommendation clearly stated that the benefits of NITEL workers be duly paid with the presidency’s intervention.
“The federal government should plead with the state governors to reconcile the N4 billion NITEL debts and pay accordingly. The federal government should direct the Nigerian Communications Commission, NCC, and the NITEL management to determine the fees due to the new regime from single to double tandem that was unfair to NITEL,” the report stated.
Also, the House recommended that the NCP should immediately direct the BPE to stop the on-going process of liquidation of NITEL and MTEL under the circumstances. “The NCP should consider the proposal for revamping the companies while the privatisation process as submitted by the ex-staff, consultants and others as an alternative to outright liquidation of NITEL and MTEL should be halted. The federal government should direct the NCC to include the present management of NITEL and MTEL in the National Broadband Implementation Roadmap. The NCP should direct the BPE and present management of NITEL/MTEL to include the MTEL Creditors’ Forum among those to be paid.”
According to Everest Amaefule, a telecom analyst, the attempts to privatise NITEL were marred by insincerity of purpose and manipulation of the process by government officials and private sector operators. According to him, while the federal government refused to make fresh investments in the company when the sector was witnessing massive fresh investments, Pentascope International was depleting the accounts of the telecommunications firm.
“At the end of Pentascope’s mission in Nigeria, NITEL was worse off which led to another round of privatisation circle in 2005,” he said. Amaefule regretted that even at the worst of times before the takeover by Transcorp, NITEL/MTEL had maintained a minimum of 15 per cent of the Nigerian telecom market while under Transcorp the market share of both companies dwindled to zero per cent.
Before the liberalisation of the telecom sector in Nigeria, which brought in new operators, NITEL had a monopoly of the industry and succeeded in penetrating most towns and cities in the country with investments worth millions of dollars. The value of these investments has continued to depreciate in different locations daily.
The first attempt to privatise NITEL was in 2001 when Investors International of London Limited, IILL, emerged the preferred bidder. IILL bid for $1.317 billion to acquire 51 per cent stake in NITEL and MTEL on November 28, 2001. It proceeded to pay a 10 per cent deposit of the bid sum amounting to $131.7 million to the Bureau for Public Enterprises, BPE. However, it could not complete the payment of the sum when it was due in February 2002. This prompted the federal government to forfeit the $131.7 million deposit.
In 2003, Pentascope, a Dutch firm, took over NITEL and the company generated N51.43 billion as revenue in one year from 555,055 connected lines. But 23 months after the takeover, the connected lines dropped to 440,000 and the firm incurred a debt of more than N40 billion. The federal government’s deal with Pentascope was later revoked.
In 2005, Orascom, an Egyptian telecoms giant, also failed to buy the company because its 257 million dollars bid was below the price of NITEL. The takeover of NITEL by Transscorp in 2006 was celebrated in the country but the excitement was short-lived after the 500 million-dollar deal failed to turn around the fortunes of the company. Also, the last attempt to sell the company to New Generation Telecommunication Consortium of China at the price of 2.5 billion dollars for 75 per cent stake in NITEL/MTEL was terminated due to failure of the Chinese consortium to pay the bid price.
Thereafter, every move to save the moribund company has failed. In February, 2012, the National Council on Privatisation approved a guided liquidation as the strategy for disposing the beleaguered telecommunication company and MTEL, but a claim by the Assets Management Company of Nigeria, AMCON, that NITEL was heavily indebted to some banks stalled the planned liquidation. AMCON claimed that NITEL/MTEL’s indebtedness to the banks amounted to N52 billion. The debts were part of the banks’ liabilities which AMCON had taken over and consequently laid claim to the assets of NITEL/MTEL. AMCON’s claim had thereby stalled the planned liquidation. As a result of AMCON’s claim, the NCP commissioned an audit of the assets and liabilities of the company to determine what could be sold and what could not be sold.