Fresh Intrigues Over Electricity Reforms • ‘Power Brokers Frustrate Manitoba’ • Contract Not Revoked • Anti-Privatisation Forces, Others Clash


A COCKTAIL of intrigues is brewing in the nation’s
seat of power, the presidency, for the soul of the electricity industry,
especially the juicy transmission sector. There is but one aim in all this: To cancel
Manitoba’s contract at all cost. It was learnt Thursday night that contrary to
the spate of publications in a section of the media, the Manitoba’s contract
has not been revoked.

The nation’s capital Abuja is awash with meetings
and intrigues as various pro- and anti-privatisation groups battle over the
fate of the three-year management concession contract won by the Canadian firm,
Manitoba Hydro International (MHI) to manage the Transmission Company of
Nigeria (TCN).

The influential power brokers in the power sector
that are fingered to have underdeveloped the sector through official
manipulations are at work to send the Canadians away to have their way.

It was learnt Thursday night that some
minority groups are fighting too to ensure that the powerful forces bent on
driving Manitoba away are frustrated. The doves are said to be persuaded that
whether the management contract won by MHI is annulled or the company
given the execution letter to begin the restructuring and revitalisation of the
TCN will determine whether the power sector reform privatisation programme is
on course or gets to a crushing stop.
Even through the anti-privatisation forces on
Wednesday declared victory as they manipulated the media to announce the
annulment of the management concession contract, the day of long knives is
still on between Nigeria’s privatisation agency, the Bureau for Public
Enterprises (BPE), the Bureau for Public Procurement (BPP), Federal Ministry of
Power and the Presidency. The situation is simple the issue of MHI managing the
TCN is inconclusive.
The worry of power sector stakeholders in Abuja
yesterday is that the Federal Government has refused to issue a definite
statement on the state of affairs nor has it communicated to the firm the way
forward. Yet the anti-privatisation forces have gone ahead to dismantle
communication facilities including the telephone lines of MHI at the
headquarters of the PHCN, where they are sharing offices with the TCN.
Investigation by The Guardian yesterday shows that their telephone lines have
been disconnected, limiting their official communications.
The TCN is one of the 18 successor firms unbundled
from the former PHCN. But unlike the 17 others slated for either outright
privatization or sale of equity, it was slated for management contract, meaning
that it is firmly in government control but managed by a world-class power
sector firm.
Nigeria’s power reform roadmap is anchored on the
setting up of an independent regulator for the sector (Nigerian Electricity
Regulatory Commission (NERC), setting up of the commercial framework for the
sector (via cost reflective electricity tariffs) and the Nigerian Bulk
Electricity Trading Company (bulk trader), privatisation of PHCN six successor
generation companies and 11 PHCN successor distribution companies, and the
continued strengthening of the fuel-to-power segment.
Manitoba Hydro International was scheduled to take
over TCN on September 1, 2012 in the management contract worth $23 million
(N3.68 billion). But up till yesterday, the government has not named a
supervisory board of about seven persons that will work alongside the incoming
TCN expatriate firm’s management. Yet, MHI had been in Nigeria since the end of
July, already drawing funds from the contract through the advance payment of
commitment sum of $2.5 million (N400 million) with the signing of the contract
between the Director General of BPE, Bolanle Onagoruwa and Mr. Lonrne Halpenny,
Managing Director of MHI on July 23, 2012.
But instead of working to constitute the
supervisory board of the new TCN, some interest groups are scheming for a
review of the management contract between Nigeria and MHI. Under the contract,
MHI will have on ground eight expatriate principal management workers who would
be in charge of the offices of the Chief Operating Officer (COO) and directors
of Transmission Service Provider, System Operations, Market Operations, Finance
Director, ICT, National Control Centre and Human Resources.
Some who are opposed to the management concession
contract with MHI including union and senior officials of the Ministry of Power
initially wanted the contract reviewed so that Nigerian officials of the old
order in TCN can provide directors for the departments of Market Operations,
Finance Director and National Control Centre. As one of them told The Guardian,
“yes, it is our view that the position of Market Operator position under the
MHI contract should not be held by the Canadians. We want a Nigerian appointed
to the position. In fact, market operations and systems operations under the
TCN should not be part of the management contract. The positions should be held
by Nigerians.”
With the current campaign and reports, it is clear
that unless President Goodluck Jonathan disannuls the annulment of the MHI
contract, victory is sure for the anti-privatisation forces.
Already, they have positioned “a management
contractor” like Power Grid of India whose technical proposal was initially
found inadequate as it failed to meet BPE’s benchmark to have its financial bid
opened. That was why the financial bid of  Manitoba was opened at the bids
opening event. Still, some others are angling for the Chinese transmission
But the fear is that being a government institution
that manages a centralised market in China, the Chinese firm may not have the
required experience in a market driven operation as envisaged in Nigeria. For
the Power Grid of India, for now, the fear is that it has no
international  experience as it has only operated in India. This is in
contrast to Manitobia, which has varied international experience. There is also
another issue bothering some stakeholders spoken to in Abuja. This is the issue
of the 30-day directive given to the Ministry of Power, not the BPE to organise
a new management contract bidding process and get a winner. One source said:
“The fear is that the BPP is inadvertently working
with anti-privatisation forces in misleading the President in claiming a
management contractor can be procured in 30 days. This may be a tall order. It
is not as easy as it sounds. The most feasible period could be six months.
“Another issue is that the BPP complained that
BPE shortlisted from its data base of world class management contractors. Yet
it recommended to the President that a shortlist of five management contractors
be undertaken. One wonders if this is not its own goal. Again, the Ministry of
Power, which is saddled with the job of conducting the bidding has no
experience of privatisation as the management contract is a form of
privatisation. The BPE, despite its experience in privatisation spanning over
two decades, still needed the expertise of foreign consultants. And check the
records, BPE worked for over a year with British Power International, a
reputable consultancy, as advisers in procuring a management contractor. I
think someone may be deliberately misleading Mr. President in order to halt any
progress in ensuring regular supply of electricity in the foreseeable future.
“The other issue Nigerians should worry about is
this: What is the signature of a Nigerian official worth? Perception they say,
is reality. If the international investor perceives that the contract he won
could just be annulled with a technicality, how many reputable firms could come
in here to invest? I think the issue before Mr. President is whether we as a
nation can sign a document and ignore the document and initiate another issue
on the same issue. Where is our credibility? This issue goes beyond the
Canadian firm. This is about who we are as a people. Can we be trusted in a
contract situation?”
The Guardian had last week reported on the moves to
dispense with the contractual agreement between the BPE and the MHI on the
management of the TCN. And Wednesday, the fate of the contract hung in the
balance following the confirmation by Special Adviser to the President (Media
and Publicity), Dr. Reuben Abati that the contract had been cancelled. 
Abati confirmed to a foreign news agency that President Jonathan had cancelled
the Manitoba power contract with immediate effect because due process was not
followed in the award of the contract.
According to him, “the President would not want to
compromise due process in anyway. I assure you that this does not in any way
affect the ongoing privatisation of the power sector.”
Chief Executive Officer (CEO), Mr. Don Priestman
told The Guardian that his firm was confused at the situation.  He said:
“Well, I heard about the cancellation of the contract through the media. There
has been no form of communication. We are disappointed. We are here to do
a job and we have not been given the authority we need. The transmission
is essential in the privatisation process. If the privatisation process is
to succeed, the transmission system is very important. And we have the
expertise and what it takes to do the job. We do not want to be caught between
the conflicts between government organisations. We are still hopeful that
common sense will prevail and we will be asked to do the job for which we came
here. We are watching and waiting for what government is saying.”
Asked the options before his firm, Priestman said,
“we will for now watch and see how things unfold.”
Source: Guardian


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