The National Council on Privatisation and the Bureau of Public Enterprise defy a court injunction to approve the take-over Enugu DISCO to Interstate Electrics Ltd despite its failure to meet the payment deadline
| By Anayo Ezugwu | Oct. 7, 2013 @ 01:00 GMT
IN spite of a subsisting court injunction, the National Council on Privatisation, NCP, and the Bureau of Public Enterprises, BPE, have defied it by handing over the Enugu Electricity Distribution Company to Interstate Electrics Limited. The injunction restrained them from doing so after Interstate Electrics failed to meet the August 21, deadline for the payment of 75 percent of the bid value of Enugu Distribution Company, DISCO. In what looked like a kangaroo meeting, the NCP approved the late payment by Interstate Electrics and the handing over of Enugu DISCO to it.
This decision has already raised eyebrows because the September 20, meeting was held behind the ministers of finance, power, petroleum resources and other critical stakeholders, who were not in the country at that time and would have likely objected to bending the privatisation rules to favour Interstate Electrics. Realnews learnt that some top officials in the presidency were behind the manipulation which was tailor-made to favour political allies and associates. A dependable source told our reporter that Interstate Electrics won the Enugu DISCO bid purely on political consideration and has no expertise to execute the project which is cost intensive.
Realnews learnt that it suddenly dawned on Interstate promoters after they got the NCP approval to take-over the Enugu DISCO that they have no expertise to run it. On the basis of that realisation, a source said, representatives of Interstate decided to approach the authorities of Eastern Electrics for guidance on how to take-off. “Interstate just realised that they don’t have the expertise to carry out the project. They think it is a contract project that will attract payment from the government. They don’t have any infrastructure on ground and as it stands now, they have to distribute power through the national grid which is dilapidated,” the source said.
The handing over of Enugu DISCO to Interstate has generated a lot of controversy in the country. Some concerned citizens of the eastern part of the country have expressed the fear that handing over the assets to Interstate would take the region backward in terms of developments. Osita Okechukwu, a native of Enugu State, cried foul over the choice of Interstate Electric. He said Enugu residents are at a loss as to how Interstate was chosen as the preferred bidder. “One is at a loss how a company that failed woefully to pass the initial assessment litmus test of consistency got negative net present value, and to worsen the matter, failed to pay before the deadline, could be handed over the lifeline of enterprising and hard working Nigerians from the south east and some parts of south-south,” he said.
Okechukwu said Interstate ordinarily stood disqualified because it failed to pay the outstanding 75 percent of the purchase consideration for Enugu DISCO by August 21, 2013. He urged the NCP headed by Vice President Namadi Sambo to address the issue in the interest of the credibility of the privatisation process. The contentious approval of the bid by Interstate Electrics, despite its failure to meet the payment deadline, was made possible following the personal intervention of Namadi Sambo, Vice-President and Anyim Pius Anyim, secretary of the government of the federation, because of their alleged political affiliations with the promoter of the company, who is a chieftain of the ruling Peoples’ Democratic Party, PDP.
Information available to Realnews, revealed that following the inability of Interstate Electrics Limited to meet the payment deadline, Benjamin Dikki, director-general, BPE, was reportedly liaising with the offices of the vice president and the SGF to get them to prevail on the NCP to grant the company a waiver, contrary to the bid guidelines, which required the reserve bidder to be invited to take over in such a circumstance.
Indications are that in the heat of the controversy, Atedo Peterside, chairman, Technical Committee, NCP, had queried Dikki’s justification to propose to the NCP to grant a waiver to Interstate, drawing his attention to the dire implications on the integrity of the entire privatisation process, for failure to penalise a bidder who pays late. In the memo to Dikki, Peterside also spoke of the moral hazard issue and the dangerous precedent the BPE boss would be setting for future transactions, if the bid guidelines were not strictly followed and Interstate Electrics disqualified.
Peterside, strongly advised that Interstate be disqualified and the reserve bidder, Eastern Electric Company, sponsors be invited to take over, to preserve the integrity of the process and save the NCP reputational damage. He noted the recklessness, indiscipline and lack of seriousness by the promoters of Interstate Electrics over the transaction. He also pointed out that the failure of Interstate Electrics to make any payment towards the settlement of the outstanding balance of $93.24 million (N15 billion), only to show up with a mere term sheet on the eve of the August 21, 2013, payment deadline, was evidence of unseriousness and/or lack focus.
But, surprisingly, while briefing journalists after the meeting on Friday, Peterside, said the NCP had decided that the sale of the Sapele Electricity Generation Company be withheld, since the preferred bidders had failed to meet the payment deadline for the 75 percent balance as at date. He, however, declined to comment on the approval of the bid by Interstate Electrics for Enugu Distribution Company, as Eastern Electric, which emerged the reserved bidder, was already in court to contest the acceptance of the bid by Interstate Electrics after it failed to make full payment before the deadline on August 21.
Eastern Electric, through its lawyer, Wole Olanipekun, on Tuesday, September 17, asked a Federal High Court sitting in Abuja, to declare that Interstate Electrics was no longer eligible to pay the 75 percent transaction price, having failed to meet the August 21, deadline. He also asked the court to direct the BPE to invite Eastern Electric to pay for the asset as the reserve bidder.