Anas A. Galadima
20 September 2006
Group Managing Director of NICON Insurance, Barrister Jimoh Ibrahim, said yesterday in Abuja that the prices offered by Transnational Corporation for the acquisition of NITEL and former NICON Hilton Hotel, were too exorbitant and economically unwise. The investments, he said, may not yield fruitful dividends in the near future.
Transcorp acquired NITEL for $750 million while the hotel was bought for N13 billion in the on-going privatisation programme of the federal government.
Barrister Ibrahim was speaking during an interview when he paid a courtesy call on Media Trust headquarters in Abuja yesterday. He was received by the Executive Director (Operations), Alhaji Isiaq Ajibola. Barrister Ibrahim said if the funds used to pay for the acquisition of the two firms were gotten as loans from banks, then the companies may not yield any reasonable profit because the interest rates of local banks where the funds were gotten are higher than the rate of profitability of the companies.
According to him, "Transcorp bought 51 percent of NICON Hotel at N13 billion. That is a dead end. They are in trouble. The interest rate of the N13 billion borrowed is N6 million per day. When NICON is fully booked, it can only generate N5 million per day. When are they going to recoup their money?," he questioned.
"Unless if the money used to purchase the money was a free fund, then they can celebrate. If it was borrowed from a bank, it's the beginning of the end because how do you service it? And it's only 51 percent they own there," he continued.
"Look at NITEL for inst-ance," he continued, "N69 billion was invested. If the interest rate is running from present day, I don't know when this NITEL will start running their GSM and to make the money back."
The NICON Insurance boss however said "maybe they have another good thinking about doing other things with the land there. Maybe it's for branding.
Speaking on NITEL, he said, "honestly, I cannot offer that price for NITEL beca-use it has competitors that are in existence: Globacom, MTN, Celtel, these are great competitors who have acc-ess to international funding. I think they are making a sacrifice because I can't do it."
"From N1 billion every month, we are paying N15 million interest rate (on bank loans). So it's N15 million multiplied by 68. That is the interest rate. I don't know whether I am right or not but the price offered for NITEL is so outrageously unreaso-nable. Unless you have the money in your pocket and you are not borrowing, you have over N100million in servicing interest per month. When will you make calls and raise the money to service interests?
He observed that although the company has a lot of property, there is a glut in the property market in the country today.
Barrister Ibrahim denied allegations by some disengaged management staff of the company that he was conniving with the BPE to deny them their entitlements. He said, "in the first instance, I don't pay pension and gratuities. The money is not with me. The money is with the federal government which is BPE. So I have no reason to connive with an-body," he said.
He said some of the management staff still have questions to answer over their various roles in the management of the firm.
"Somebody who was indicted by government railway panel because of Nigerian Railways, for making NICON to lose $14 million over railway. How do you expect him to collect his pen-sion? The white paper is there and it says we don't know why these people are still in the employment of NICON and as at the time I came, they were still here. The paper said the police should go and investigate and collect the money. The investigation is inconclusive. Why should I clear you?" he questioned.
"A management staff revised debit note worth N2.8 billion in one year, how do you expect him to collect his pension?"
"Somebody leases a Toyota Camry for N9 million. That car is sold for N4 million in the market and they leased it for N9 million and they had in their account N1 billion and you want me to clear that person?"
He spoke on the economic reform programme of the federal government saying that the programme is a very ambitious one that has the capacity to turn around the economy but that there is a gap between the ideals of the reform and its implementation.
He said the first tenure of President Olusegun Obasanjo was largely controlled by interventionists whose identities he did not make completely clear. Some of the people who controlled the government, according to him, were top politicians, party leaders, traditional rulers and other international forces like the IMF.
He regretted that the former minister of finance did not make tax reforms one of her priorities, pointing out that a country without a good system of taxation would be in trouble because it cannot generate sufficient income.
"We have banks in this country making an annual profit of N15 billion and they are not made to pay significant tax."
Be the first to Write a Comment!
Copyright © 2006 Daily Trust. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
