18 November 2012

Nigeria: TCN - Dramatic Twists in Manitoba Deal

Contrary to a claim by the President's aide on Media and Publicity; Dr Reuben Abati that the contract awarded to Canadian power company-Manitoba-to ... ( Resource: Manitoba's Contract Not Cancelled - Jonathan )

Yet again, the move by the Federal Government to divest majority holdings in state power utilities to curb daily blackouts has taken some ironic twists and turns recently with reports that President Goodluck Jonathan is reviewing the $23-million deal with Manitoba Hydro International, a Canadian firm, for the Transmission Company of Nigeria (TCN).

Impliedly, the swift move by the Presidency is to douse the growing tension over the fate of its power sector reform and privatization programme as speculations were rife last week that the government had terminated TCN's three-year management contract with Manitoba.

Officials of the Ministry of Power in Abuja had confirmed that they are yet to receive notification on the cancellation of the contract but said what they knew was that the president had ordered a review of the contract.

On the other hand, the Canadian firm had reportedly said it has not received any notice from government on the contract's termination and insisted that it has not been shown the exit; however, it further submitted that a review was being done to ensure that whatever abnormalities that needed to be rectified in the contact are effected.

Similarly, the president's Special Adviser on Media and Publicity, Dr. Reuben Abati, when clarifying government's position on the matter, said his boss has directed that the contract be reviewed by a team of experts, which will be concluded this week.

Though no immediate reason was given by the presidency for the review of the deal, fears were expressed in some quarters about political interference working against efforts to secure foreign investment into the power sector.

Manitoba, which was founded in 1880, is reported to be a major supplier of electric power and natural gas in the province of Manitoba, Canada and presently operates 15 interconnected generating stations.

Beyond its Canadian shores, Manitoba has provided utility and asset management; consulting; and training solutions to over 70 countries worldwide. Reportedly, it provides its customers with some of the lowest electricity rates in North America.

However, an attempt by Manitoba to pitch in the lucrative Nigeria market is, literally, in indeterminate state. Its multi-million dollars TCN deal has generated huge storm as a result of a bidding process which was been described as "flawed", and stand-off between government and electricity workers union shortly after the contract was sealed in July.

Sunday Trust had gathered that the award of the management contract to Manitoba was backed by the former Minister of Power, Barth Nnaji, who the PHCN workers accused of using the Canadian firm as front to hijack the privatised company. No sooner had the contract been concluded than the electricity workers union embarked on an industrial action to protest against the new management.

Though, the TCN management contract was signed in July with a commencement date of September 1, Manitoba from the first day had to contend with debilitating issues ranging from workers protests, official interference, bickerings and sabotage.

The electricity workers fearing layoffs have protested, including in recent days, over the management contract. They contended that labour issues, such as pension and gratuity, must be sorted out before the beginning of the management contract.

Following the emergence of Manitoba, some powerful interests in the Ministry of Power were reportedly unimpressed with the arrangement to transfer the management of the transmission plants the Canadian firm.

The politics of the management contract began immediately it was sealed, Sunday Trust learnt. For several weeks, the company was not allowed to settle till security operatives were deployed to facilitate the process. Owing to interference by officials in the Ministry of Power, the take off of the deal was stalled, while the Canadian firm was prevented from effectively taking over TCN.

Amidst ongoing confusion over the TCN deal, another interesting angle sprung from a petition by the Power Grid of India, which faulted the process by which Manitoba emerged as the preferred bidder to manage TCN. Observers believed that the petition triggered the chain of events that led to the contract's review by government.

Power Grid reportedly wrote to the Bureau for Public Enterprise (BPE) alleging that Manitoba's selection was done before the financial bids were opened, a decision they saw as not being in conformity with the rules outlined by the BPE.

Of the four firms that had expressed interest in managing TCN in 2007, Manitoba and Power Grid were the only two that had their bids prequalified when the process to select a management contractor for the transmission was restarted by the BPE in 2010.

Sunday Trust reliably gathered that the Canadian company emerged as TCN's new managers when its major backer, the then Power Minister, Prof. Nnaji was still pulling the strings. However, he was later removed by the president for having substantial interest in two of the firms that bidded for the Afam power plant.

Strangely enough, the Indian company contended that it had won the bid in a rigorous exercise conducted way back in 2007, which made it the preferred bidder for the transmission company.

Indeed, the offer of the management of TCN to Manitoba had ignited bad blood among the top government officials in the National Council for Privatisation and their business allies. The uproar generated by the Manitoba offer was such that moves were made to void the bidding process.

The Bureau of Public Procurement (BPP), for several weeks, has been pushing for the annulment of the contract on the premise that it did not pass through due process as provided under the Public Procurement Act.

BPP Director General, Mr. Emeka Eze, had reportedly send a memo to the president advising the contract's termination and that his office be allowed to appoint a new contractor. However, the president approved that the power ministry undertake the job of appointing a new company to manage TCN within 30 days.

On its part, the Bureau of Public Enterprises (BPE) refuted claims by the Bureau of Public Procurement (BPP) that it erred in its process of procuring a management contractor for the Transmission Company of Nigeria (TCN).

BPE in response to the BPP explained that such interpretation by BPP of its actions was wrong in view of provisions in the extant laws.

According to the BPE: "The exclusive right of NCP to preside over the privatisation and sale of public assets was also recognised by the Public Procurement Act (2007) when it stated in Part X - Disposal of Public Property (Section 55) that 'this section shall apply subject to the Public Enterprises (Privatisation and Commercialisation) Act 1999."

The BPE also wondered why BPP, which has been operating without a governing council since inception, as provided under the Public Procurement Act establishing it, would accuse it of violating its own Public Enterprises (Privatisation and Commercialisation) Act.

It reminded the BPP that it undertook the management contract for NITEL through which Pentascope emerged and it got the NCP approval for the Dutch company's selection in 2003.

BPE further explained that a management contract is a form of privatisation, like liquidation, concessions and others, and wondered why the BPP did not demand that it took the sale of generation and distribution companies unbundled from the Power Holding Company of Nigeria (PHCN) to FEC for approval.

Ostensibly, the current impasse over the takeover of management of TCN has brought into sharper focus the challenge of implementing power reform that would ensure provision of adequate and stable electricity for millions of Nigerian businesses and homes.

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