Bending the Rules of Privatisation

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Dikki

Atedo Peterside, chairman, technical committee, National Council on Privatisation, and Benjamin Dikki, director-general, Bureau for Public Enterprises, disagree over moves to bend the privatisation rules to accommodate the failure of a preferred bidder

|  By Anayo Ezugwu  |  Sep. 16, 2013 @ 01:00 GMT

PRESSURES have continued to mount in the power industry over the refusal of the National Council on Privatisation, NCP, and the Bureau of Public Enterprise, BPE, to invite the reserved bidder to step in after Interstate Electricity Limited, the preferred bidders failed to beat the August 21, payment deadline for Enugu Distribution Company. Interstate Electrics, the preferred bidder was expected to pay the balance of 75 percent by that date. Since the deadline ended, the BPE is yet to invite the reserve bidder, Eastern Electrics, to step in.

Interstate Electrics paid $12 million, being part of the 75 percent of the bid sum to the BPE on August 29, eight days after the deadline had expired. C. Don Adinuba, communication consultant to Eastern Electric Limited, said that the late payment showed clearly that Interstate does not have what it takes to run the Enugu Distribution Company, Disco, and the technical experience to run a modern electricity business.

“Indeed, it is befuddling that the BPE accepted the payment in the first place. Payments for the 15 power generation and distribution companies closed at 5pm on Wednesday, Augus, 21, 2013, that is, a whole eight days ago. All the bidders paid except Interstate, thus showing a profound lack of seriousness on the part of the consortium. This business needs a huge capital outlay, considerable technical skills and a realistic business plan. Enugu Disco has been in a dungeon for decades, like other companies created out of the highly corrupt and grossly inefficient Power Holding Company of Nigeria, PHCN. The reserve bidder, Eastern Electrics, ought to have been invited immediately Interstate failed to pay up. Interestingly, Eastern Electrics has pledged its readiness to pay the reserve price of $126m for the Enugu Disco. Given the involvement of respected international and Nigerian firms in this consortium, there is a good chance that Eastern Electrics will do a good job. The preference of the BPE and the NCP to give Enugu Disco, which is the sole supplier of electricity to the Southeast and parts of the South-South, to Interstate at all costs, would seem to support the speculation making the round that some key officers in the Jonathan administration are hell bent on destroying the socio-economic life in Igboland,” he said.

Peterside
Peterside

Investigations showed that the BPE was in the process of granting a 21-day grace period to enable Interstate to pay up the balance for the power firm. The extension of time, however, has pitched Atedo Peterside, chairman, technical committee, National Council on Privatisation, against Benjamin Dikki, director-general, BPE Whereas the former insists that it is wrong to grant Interstate an extension of time, Dikki is reportedly canvassing for an extension of the payment time. Peterside has advised against any extension of time for Interstate, adding that such would not only impinge on the integrity of the transaction and the NCP, but would also translate into a financial discount to the preferred bidder.

“Your narration shows that this bidder appears to be reckless and indiscipline, and did not make any payment whatsoever towards the $93.24m outstanding. Showing up with a mere term sheet on the eve of an important payment deadline, is evidence of unseriousness and/or lack of focus. The term sheet should have been presented weeks or months before the payment deadline and not 24 hours before the deadline. This was clearly a ruse to buy some time. In the circumstance, I would strongly advise that the preferred bidder be disqualified and that we, instead, turn to the reserve bidder in order to maintain the integrity of the process,” he said.

On the fears expressed by the BPE boss that Interstate could go to court if the bid was cancelled, Peterside said the privatisation agency should be concerned about doing what was right irrespective of any court action. “I will, however, like us to simultaneously appeal to the NCP chairman to evoke a presidential pardon and refund the 25 percent payment already made by the preferred bidder if he signs a document that disavows any future legal action. If the preferred bidder does not accept to sign such a document, then he should forfeit the 25 percent down payment to the federal government of Nigeria and should be free to pursue any legal action that he deems fit, and we should be ready to defend our actions in court.”

According to some electricity industry analysts, if the extension is granted, there will be no moral justification when similarly some investors were shut out at the preliminary stages in the same circumstances. Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry, said expectation was that, by now, the NCP and BPE ought to have resolved the issue of that failure and maintain the momentum of the power privatisation process.

 “I think in the past, not this ongoing privatisation, there were instances where extension was given. But I think the NCP and the BPE should go strictly by the rule. If what the rule says is that failure to meet with deadline, the reserve bidder should come, I think that is what they should do. Normally, the procedure is that if it is clear that the preferred bidder does not have the capacity to pay, the reserve bidder should be invited to come in,” he said.

But prior to the payment of the 75 percent balance by the 13 preferred bidders, the BPE had strongly dismissed any suggestions of extension of deadline, when it became obvious that some of the investors, especially the buyers of the distribution companies, were lobbying for extension to September 21. Analysts said they expect the NCP and the BPE not to bend the rule at this critical juncture, adding that doing so might make a dent on the momentum of the privatisation process.

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