Jonathan Okays $2.5bn bid for NITEL

By Efem Nkanga, 10.13.2010

President Goodluck Jonathan has finally approved New Genera-tion Consortium’s bid to acquire 75 per cent of the Nigerian Telecommunica-tions Ltd (NITEL) and its mobile arm, M-TEL, for $2.5 billion.The Bureau of Public Enterprise (BPE) said yesterday that the president, apart from giving approval for the conclusion of the privatisation process, also directed that the outstanding salaries and allowances of the staff of the two companies should be paid.


New Generation Telecommunications Consortium, made up of China Unicom of Hong Kong, Minerva Group of Dubai and Nigeria’s GiCell Wireless Ltd, has now been given the go-ahead to pay a bid security of $750 million as a pre-condition for the issuance of an offer letter in its bid to acquire NITEL and M-TEL. According to the BPE statement, signed by its spokesperson, Mr. Chukwuma Nwoko, in accordance with the provisions of the request for proposal (RFP), the bid security sum is to be paid within 10 calendar days from the date of issue of a demand letter from the BPE.


The balance of the bid amount of $1.750 million should be paid within 60 days from the date of the issue of an offer letter, he said.The consortium had on February 16 emerged the preferred bidder with an offer price of $2.5 billion during the opening of financial bids for the privatisation of NITEL and M-TEL.


The reserve bidder, Omen International, came second with an offer of $956,996,091. Brymedia emerged third with $550 million. Other contenders who include   AFZI/Spectrum Consortium, fourth with a bid of $375.5 million and MTN Nigeria Communications Ltd, which bid $25 million for SAT-3 only.Following the emergence of the preferred bidders, an outcry was raised that the process had flaws, following controversial denials by some members of the consortium that they had no knowledge of the deal.


This controversy consumed the job of the then Director-General of the BPE, Dr. Christopher Anyanwu, and led to the National Council on Privatisation (NCP) setting up a seven-man committee in March to conduct further due diligence on several bidders. The NCP had at its meeting of March 12, 2010 set up an eight-member ad hoc committee under the chairmanship of the Attorney-General of the Federation to review the NITEL/ M-TEL sale transaction.


The committee, after further due diligence, found out that the transaction complied with due process as outlined in the BPE’s Procedures Manual and that necessary approvals were obtained through the Technical Committee (TC) and the NCP at every stage of the transaction.The bidding process, however, expired on August 16, before any action could be taken. Despite the expiration of the bidding process as contained in Article 324 of the RFQ, NCP urged President Jonathan to uphold the result of the bidding because it was a transparent process.


The council then exercised its powers to extend the process by mandating BPE to forward the memo to the president, even though Article 3.4.3 of page 25 of the RFP states that the bids lapse six months after submission.The BPE sent an official memo to the president to approve the outcome of the bid and allow the sanctity of the process to be upheld.


The committee warned that it was in the interest of the Federal Government to conclude the process and push the onus of the transaction to the bidder in order to avoid potential claims for damages from aggrieved bidders. Its report stated that though proper due diligence was imperative, it could not be considered as ground to vitiate the transaction. It reiterated that it was important to maintain the sanctity of the transaction by giving the preferred bidder the chance to pay.


BPE said yesterday that the president’s directive on the payments of outstanding salaries and allowances owed the workers was based on the recommendation of the Presidential Task Force on NITEL/M-TEL Labour Restructuring Taskforce.


The Debt Management Office (DMO) has also been authorised to issue a bond while the Federal Ministry of Finance has been directed to raise the amounts immediately required to resolve the matter of staff liabilities.The bonds will be subsequently redeemed from the proceeds of the sale of the twin corporate units, BPE said.




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