FG submits four options for NITEL sale
Headlines Monday, February 21st, 2011
Following the failure of the preferred bidder for the Nigerian Telecommunications Limited to meet the deadline to pay up; there have been speculations about what the next line of action will be. EVEREST AMAEFULE, writes on the options open to the Federal Government When on February 16, 2010, the Bureau of Public Enterprises opened the financial bids of companies that had expressed interest in acquiring the Nigerian Telecommunications Limited, little did anyone know that the transaction would linger till now.
Following the inability of the preferred bidder, New Generation Consortium, to meet the deadline set for the payment of the full bid price, the Federal Government may have been in a quandary as to what steps to take next on the troubled company.
New Generation Telecommunications Consortium had bid $2.5bn for the company to emerge the preferred bidder, while Omen International offered $956m to become the reserve bidder.
Investigation by our correspondent showed that the National Council on Privatisation, chaired by Vice-President Namadi Sambo, was weighing four options to conclude the transaction that has left NITEL worse off in the past one year.
It was gathered that the Director-General, BPE, Ms. Bolanle Onagoruwa, had in a memo to the vice-president, suggested the options left for the Federal Government to take.
One of the options is to accede to the request of New Generation Consortium by giving it more time to source for the necessary funds and conclude the transaction.
Another option, according to a source familiar with the transaction, is to cancel the bid by New Generation and invite the reserve bidder, Omen International, to make necessary payment and take over the company.
The third option is for the Federal Government to invite all the initial bidders, except New Generation, and engage them in a “willing seller, willing buyer” negotiation.
The other bidders were Brymedia Consortium, which offered $551m; AFZI/Spectrum Consortium, with an offer price of $375.5m; and MTN Nigeria Communications Limited, which bid $25m for only the SAT-3 component of NITEL.
However, the last option, which no one seems to be interested in because of the burden of history and the deteriorating assets of the telecommunications company, is to abort the entire transaction and start a fresh process of privatisation.
The BPE spokesman, Mr. Chukwuma Nwokoh, confirmed the development in a telephone interview with our correspondent.
He said, “We have made recommendations to the National Council on Privatisation. We are expecting instruction from the vice-president. This is the position. When our principal responds, we will tell the public. We have nothing to hide.”
The Managing Director of GiCell Communications Limited and spokesman for the New Generation Consortium, Mr. Usman Gumi, admitted that the road towards the acquisition of NITEL had been long and tortuous.
He, however, insisted that the consortium had the necessary funds and required an approval from the privatisation authorities in order to proceed with the transaction.
He said, “We have provided evidence of proof of funds. Let us wait for government’s decision before we jump into a conclusion. We have confidence in the efforts we have put in and we have absolute confidence in the government to do what is right for Nigeria.”
For the consortium, the long and tortuous journey started soon after it was announced as the winner of the bidding process.
Controversy started a day after the bid opening as the technical partner to the winning consortium, China Unicom, Hong Kong, dissociated itself from New Generation.
Following the controversy, President Goodluck Jonathan constituted a seven-man committee to carry out further due diligence on the bidders.
It later turned out that the disclaimer was hasty as the London subsidiary of China Unicom had an understanding with the consortium, which had yet to be firmed up.
However, the controversy deepened when the Nigerian Ambassador to the United Arab Emirates, Mr. Bashir Yuguda, alleged that the financiers of the New Generation Telecommunications Consortium, the Minerva Group of UAE, could be a money laundering vehicle.
The ambassador said that the Nigerian mission in the UAE reached this conclusion after a painstaking investigation that he commissioned following the initial controversy that trailed the transaction.
He regretted that as Nigeria’s eye in the UAE, he was not taken into confidence before the company’s foray into the country, just as he advised the BPE to conduct additional due diligence on the Minerva Group.
However, the Minerva Group accused the ambassador of overreaching himself, alleging that he was been used by a failed bidder and was harbouring a special interest.
Eight months after, the Federal Government approved the bid offered by New Generation to purchase 75 per cent equity in NITEL for $2.5bn and demanded for a 30 per cent deposit within 10 working days.
By then, the Minerva Group had grown weary or could not muster the funds to pay up as schedule, causing New Generation to default and seek for an extension. It got the first extension and still failed to pay up.
The Managing Director of the Nigerian Communications Satellite Limited, the 15 per cent equity holder in NITEL, Mr. Ahmed Rufai, supported the idea that New Generation Consortium should be given additional time.
He canvassed structured financing of the deal, adding that raising the required financing in a country with significant political risks, such as Nigeria, would not be an easy task.
By structured financing, Rufai suggested that the consortium could be asked to pay $1bn, while the remaining $1.5bn could be spread over a period of time.
“Should the transaction be terminated, what we are going to lose is a lot of money. If I were to advise, I would ask the government to give them more time,” he said.
The President, Senior Staff Association of Corporation, Transport and Communications, Mr. Adentunji Adesukanmi, said the government needed to show more seriousness by moving the transaction forward.
According to him, both the second and third bidders should be given the opportunity to make payment as soon as possible to avoid further degradation of NITEL facilities.
-Punch
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