Govt unfolds new bidding plan for NITEL
By Ade Ogidan, Business Editor
THE Federal Government has concluded plans to bring Nigerian Telecommunications Limited (NITEL) and Mtel to the market once again, in a bid to overcome the jinx that has been the lot of the telecommunications giant's privatisation.
The government, only recently, revoked the sale of NITEL's controlling shares to Transcorp Nigeria Plc, on the grounds of alleged defaults against the erstwhile majority stakeholders, on the sale agreements.
For effect, the Bureau of Public Enterprises (BPE) yesterday disclosed that it had been working with the BNP Paribas of France on the accounts of NITEL, preparatory for a new round of biddings for the ailing but potentially promising outfit.
Besides, BPE in a statement signed by its management, said a revenue-driving exercise has already commenced, to ensure fulfilment of NITEL's financial obligations to its long-traumatised workers and pensioners.
Also, the agency dismissed protests from Transcorp over the revocation of the privatisation deal, saying that the company merely took refuge "in legalese and failed to address the breaches that led to the voiding of the sale."
Stressing that Transcorp "did not demonstrate adequate technical, financial, or managerial ability to grow NITEL and Mtel since it took over the two companies," BPE disclosed that it had been "working on the poor record keeping in NITEL and Mtel, so that it may be possible for the advisers to give prospective bidders adequate information for them to submit bids."
However, efforts are on to make available the audited financial statement of NITEL and MTEL for years 2006, 2007, 2008, and management account for 2009, of which there has never been one since Transcorp took over in 2006, the agency said.
It added: "The advisers are working to come up with attractive transaction structure to ensure that bidders offer the best possible bid for NITEL. We would ensure that the process of competitive bidding is used to extract the maximum bids from prospective core investors.
"BPE and National Council on Privatisation are working hard to ensure that all or part of the N4.5 billion owed by Ministries, Departments and Agencies (MDAs) of government to NITEL are collected and used in paying workers' arrears of salary.
"In addition we would continue to engage labour leaders and appraise them of the state of affairs in NITEL privatisation. Government has already begun payment of outstanding pension arrears.
"Transcorp Plc has said that it does not have the resources to pay salaries and other operational expenses of NITEL during the core investor sale which is expected to end in July/August 2009.
"Government is in the process of agreeing on the transaction structure and the exact shares bidders are expected to bid for; and it is believed that providing clear information to bidders on time would impact positively on the bid proceeds."
BPE explained that the revocation of NITEL's sale to Transcorp was inevitable. "The fact of the matter is that the company had in the past attempted to transfer the assets of NITEL and MTEL without consultation with the Federal Government that has 49 per cent equity in the company.
"For instance, the agreement to hand over SAT-3 and other juicy assets of NITEL to a company called Dimension Data Limited was not brought before the Board of NITEL for approval. When the government got wind of the illegal contract it has no other choice but to block the deal as it was not done in the interest of NITEL.
"Transcorp also set up a subsidiary which it called Telecommunications Backbone Development Company, a company that would rely wholly on NITEL assets for its operation and funding without informing the Federal Government that has 49 per cent equity stake in NITEL.
"It is a fact that as at November 2006 when Transcorp took over NITEL and MTEL the last audited account was for the period ended in December 2004; only 2005 accounts were outstanding.
"But since Transcorp took over, it is yet to produce audited financial statements for 2006, 2007 and 2008. In other words, they have not done much to improve the situation of the company they took over," BPE said.
It continued: "In the recent past, Transcorp had claimed to have invested N6 billion in NITEL and Federal Government is yet to invest proportionally to its equity holding. This claim shows that the Transcorp is not fully abreast of the Share Sale and Purchase Agreement (SSPA) signed between the government and Transcorp.
"For the information of the general public, the SSPA signed by Transcorp clearly stated that Transcorp would inject N8.9 billion within 100 days of taking control of NITEL.
"Transcorp also pledged to raise the revenue profile after injecting the initial capital. This it has clearly failed to do. It is elementary corporate finance that limited liability companies raise their long-term investment fund through issuing new equities or borrowing money from banks and other financial institutions."
