24 September 2012

Nigeria: 'CBN's Blacklisting of Debtors Is Unlikely to Threaten Power Bids'

Strong indications have emerged that the decision by the Central Bank of Nigeria (CBN) to bar the banks from extending loans to 113 companies and their directors, totalling 419 in number, including those that submitted bids in the ongoing power assets sale would not affect the privatisation exercise.

THISDAY gathered that the action of the CBN is unlikely to affect the capacity of the affected bidders to borrow from local banks to acquire the assets or raise working capital, post privatisation.

A key member of the National Council on Privatisation (NCP) told THISDAY at the weekend that since the affected companies that appeared on the CBN list of debtors, published exclusively by THISDAY last Friday, just have minority interests in the various consortiums that submitted bids for the power assets, their blacklisting should not disrupt the bids.

One of the Nigerian promoters of Ampiron Power Distribution Limited, which is bidding for Ughelli and Geregu Power Plants, as well as Ikeja Distribution Company, was blacklisted.

However, the NCP member said the action would not affect the bid, as that particular bid is promoted primarily by a Chinese electricity operator and Israeli financiers with financial clout to take over the assets.

Geometric Power Limited, a member of the Eastern Electric Nigeria Limited that passed the technical bid stage for Enugu Distribution Company, was also blacklisted by the apex bank, but the NCP member said CBN's blacklisting should not affect the bid as Geometric has only a minority interest in the consortium.

He stated that in most of the bids, the blacklisted firms owned minority stakes in the consortiums.

According to him, the Group CEO of Oando Plc, Wale Tinubu, was also blacklisted but this development will not affect Oando's bid in the privatisation exercise as the company is just one of the promoters of the consortiums that passed the technical bid round for the distribution assets.

Oando Gas and Power is a member of Oando Consortium, which was prequalified to have its financial bids opened for Ikeja and Eko Distribution Companies.

"So, because the other partners in the consortium have the financial clout to raise funds, the CBN directive to banks should not threaten the bids," he explained.

Similarly, Nestoil, a member of the JBN-Nestoil Power Services Limited, and Eastern Electric Nigeria Limited consortium, which submitted bids for Sapele Power Station and Enugu Distribution Company, respectively, was cleared by the Asset Management Corporation of Nigeria (AMCON) as not being indebted to it.

The NCP, however, noted that the only threat that might be envisaged were the bids submitted by Rockson Engineering Limited.

Rockson, which was pre-qualified to have its financial bids opened for Benin, Ikeja and Port Harcourt Distribution Companies, was blacklisted by the central bank.

This development, the NCP member said, might pose a serious challenge as Rockson and its directors, which submitted stand alone bids for the three distribution assets, was listed by CBN.

The clarification by the NCP member is coming on the heels of the clarification provided the counsel to Bi-Courtney Limited that it is not indebted to AMCON; rather, it stated that it is a net creditor to the corporation.

Bi-Courtney Limited is the concessionaire of the Murtala Muhammad Domestic Airport (MMA2), whose name featured prominently on the CBN debtors list.

According to Bi-Courtney, it has a judgment debt in its favour against the Federal Government, Federal Airports Authority of Nigeria (FAAN), Ministry of Aviation and two others, which shows that it is the Federal Government that is indebted to it and not the other way round.

Bi-Courtney, in March 2009, had obtained a judgment in its favour in the Court of Appeal against FAAN and others for a breach of contract after they had refused to hand over the General Aviation Terminal (GAT) to the company as stipulated under the concession agreement.

Consequently, Justice Gladys Olotu of the Federal High Court in Abuja on April 5, 2012, directed FAAN, an agency of the Federal Government, to pay the firm a huge sum of money based on the judgment of Justice Anwuri Chikere in respect of the original suit that Bi-Courtney won.

Justice Olotu also directed the Attorney General of the Federation (AGF) and Minister of Justice, as the chief law officer and the legal representative of the Federal Government and its agencies, to compel FAAN to comply with the judgment of the court delivered on March 3, 2009 directing it to pay Bi-Courtney the said amount.

She equally ordered the AGF to offset any claim agreed with Bi-Courtney due to it from any agency of the Federal Government, including but not limited to AMCON.

Though the Federal Government had filed five appeals at the Court of Appeal to challenge the judgment, it lost all of them.

When contacted, the Chairman of Bi-Courtney, Dr. Wale Babalakin (SAN), confirmed the judgment debt in his favour and urged the Federal Government to comply with the judgment.

He said: "It is the hope of Bi-Courtney and other investors that with the rule of law, which is the foundation for good business development and is fundamental to the country's democracy, the judgment is enforced by all and sundry.

"Bearing in mind that the Federal Government is a stickler for the rule of law, we remain optimistic that the judgment debt will be paid to Bi-Courtney."

CBN, in a September 17 circular, had barred the Deposit Money Banks from extending further credit to the 113 companies and their directors, until they repaid their loans that had been taken over by AMCON.

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