20 February 2013

Nigeria: Finally, FG Ready to Hand Over TCN to Manitoba

After years of pussyfooting, the Federal Government is finally ready to hand over the management of the Transmission Company of Nigeria (TCN) to a Canadian power firm, Manitoba Hydro Power (MHI), next week.

The handing over of TCN, a critical component of the power reform and privatisation programme, is coming seven months into the $23.7 million three-year management contract it signed with the foreign firm last July.

Minister of Power, Prof. Chinedu Nebo, said Tuesday in Abuja at the ongoing 13th edition of the Nigeria Oil and Gas (NOG-13) conference that the government was now ready to hand over to Manitoba, the required and controversial "schedule of delegated authority" that would enable it to effectively take control of TCN by next week.

Nebo, who made a presentation on the progress of government's reform exercise in the power sector, also explained that workers of successor companies of the Power Holding Company of Nigeria (PHCN) who had sought for the payment of their severance benefits in the wake of the privatisation of PHCN would begin to get their severance pay cheques next week.

He said the Bureau of Public Enterprises (BPE) would Thursday begin to sign all the necessary documents with preferred bidders for power distribution companies (discos) in anticipation of their imminent takeover of affairs at successor PHCN companies.

The industry documents to be signed by the expected owners of PHCN successor companies include the vesting contract, gas sales agreement, power purchase agreement, transmission agreement and share transfer agreement.

Nebo said: "The process of privatisation is heading towards its completion and awaiting payment. By Thursday (tomorrow), many of the preferred bidders will sign-on and will be required to pay the first tranche of the money that they have been asked to pay so that eventually they will take over these companies.

"I can also assure you that within the next week, Manitoba Hydro will get their schedule of delegated authority and we are also making arrangement to pay off PHCN workers but not everybody will be paid at the same time; we will make the payments in batches."

The government had in July 2012 after a procurement process that was conducted by the BPE, signed a three-year management contract with Manitoba.

The $23.7 million contract was supposed to reposition TCN into a technically, financially efficient and stable transmission company in anticipation of its expected roles in Nigeria's emerging power sector.

The contract had however remained dormant in the past seven months following the seeming reluctance of the government to grant Manitoba control of proceedings at TCN through "a schedule of delegated authority" which would contain all the major responsibilities of Manitoba.

Manitoba is in accordance with the contract expected to take up staffing and management of key departments of TCN such as the Systems Operations (SO), Transmission Service Provider (TSP), National Control Centre (NCC) Osogbo and Market Operations (MO), which was reported to have been a controversial aspect of the contract.

The controversy over the management contract had forced President Goodluck Jonathan to cancel it last November.

Manitoba had signed the management contract with the BPE, following a long drawn out process that lasted more than five years, in which the Canadian firm and Power Grid of India had their technical and financial proposals evaluated to determine which of the companies would be selected as management contractor.

The selection process for a management contractor was started under the administration of former President Olusegun Obasanjo in 2007, but was stalled by his successor, the late President Umaru Musa Yar'Adua, who rolled back the power sector reform and privatisation programme.

However, when Jonathan took over in 2010 and launched the Power Sector Road Map that same year, the Federal Government directed the BPE to continue with the process from where it had been stopped, rather than re-advertising for prospective companies to express interest all over.

The decision was because the government was eager to jump-start the power privatisation process without the bureaucratic red tape.

But presidency sources had told THISDAY last November that the president based his decision to cancel the contract on a memo sent by the Bureau of Public Procurement (BPP), which for several weeks, had been pushing for its cancellation on the premise that it did not pass through due process as provided under the Public Procurement Act.

However, following concern raised by stakeholders over the surreptitious cancellation of the contract, Jonathan backed down.

It was learnt that the Ministry of Power was not notified on the cancellation of the contract, but rather, its officials were made to understand that the president had ordered a review of the contract.

An official of the power ministry had told THISDAY, which exclusively reported the cancellation of the contract last November, that the management contract might not have been cancelled, adding that the president had decided that the contract be reviewed by a team of experts.

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