12 August 2014

Nigeria: Electricity - How NCP, BPE Undermine North's Interest - Investigation

The National Council on Privatisation (NCP) and the Bureau of Public Enterprises (BPE) are currently toying with the economic fortunes of the northern states by their handling of the privatisation of both the Kaduna and Kano Distribution Companies, LEADERSHIP investigation has revealed.

LEADERSHIP gathered that majority of industrial establishments in the north are located in Kano and Kaduna but the decision of both NCP and BPE to neglect to invite the reserve bidder for the Kaduna Disco following the repeated failure of the preferred bidder, Northwest Energy Limited to pay the 75 per cent of the bid price within deadline is delaying the day regular electricity would power the economic recovery of the northern states from economic stagnation.

A Source close to BPE confirmed to LEADERSHIP that the extension of the deadline for the payment of the outstanding 75 per cent of the bid price by Northwest Energy amounts to bending the privatisation guidelines. For example, Section 15 (138) of the Request for Proposals (RFP) for the Privatisation of PHCN Successor Companies states: "The designated preferred bidder will be invited for negotiations with BPE. Failure to enter into negotiation will result in the forfeiture of the preferred bidder's bank guarantee of the bidder, and BPE will invite the first (1st) reserve bidder for negotiation."

The failure of BPE to invite the first reserve bidder is also a clear departure from the transparent manner it handled the GSM auction when Consolidated Investments Ltd, the predecessor of Globacom missed the payment deadline by a few hours and was disqualified immediately. Heavens did not fall. Pleas by PNB Paribas, their bankers that the money was in escrow account and would be paid on the next business day did not sway BPE. It is therefore a big surprise that BPE seems to be bending the rules.

A source explained that there are many reason for worry over the decision of BPE to treat Northwest Energy with kid gloves. One readon is the failure of the Northwest Group to properly fund the Kano Disco which it won through its associated company, Sahelian Energy. Investigation showed that Sahelian Energy has been unable to pay the salary of its staff for the past two months. "Also, Sahelian Energy has not funded its operations account for the past two months; technically it has become insolvent, " a source stated.

In addition, LEADERHIP confirmed that not less than 85 transformers in Kano are damaged but Sahelian Energy has been unable to replace them. " With this level of inefficiency, electricity consumers are being denied one of the benefits of the privatisation of the electricity sector," a source noted..

Industry sources wondered why two very important and strategic Discos should be be given to companies that have a common ownership and have demonstrated uncommon incompetence just because they are being protected by powerful people who are apparently bigger than BPE and NCP.

Some said the failure of Kaduna and Kano Discos would sound a death knell for the industrialisation and subsequent economic recovery of the north.

"If the truth must be told, the north will not recover from this sophisticated 'economic warfare' being unleashed against it by BPE in the next fifty years," an industry player warned.

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