The technical committee of the National Council on Privatization (NCP) is scheduled to meet on Tuesday (today) in Abuja, its first meeting after the recently concluded bid for the privatisation of the Power Holding Company of Nigeria (PHCN) successor distribution companies.
Chairman of the committee, Atedo Peterside, told PREMIUM TIMES in a telephone interview on Sunday that the meeting would be followed immediately by that of the enlarged NCP to be presided over by its chairman, Vice President Namadi Sambo.
Allegations of manipulation of the bid guidelines by the Bureau of Public Enterprises (BPE) in favour of some bidders with connections to the ruling peoples Democratic Party (PDP) and the Presidency have trailed the exercise, raising the suspicion among observers that the integrity of the bid process may have been compromised.
Although Mr. Peterside declined to disclose the full agenda of the meeting, he, however, hinted that it would provide the committee the opportunity to undertake a comprehensive review of the entire exercise.
The issues to be discussed, he said, would be the general review of the bid exercise after which the Council would come up with the final report.
A source close to the Presidency, who spoke with our reporter on condition of anonymity (because he was authorized to speak on the matter), said top on the agenda for discussion would be the controversy that trailed the bid by Interstate Electrics Limited, which failed to meet the August 21, 2013 deadline for the payment of the balance of 75 percent bid price for Enugu Distribution Company, but was later allowed to complete the process more than two weeks later on Saturday, September 6.
Interstate, promoted by businessman Emeka Offor, was declared the preferred bidder for the Enugu Electricity Distribution Company, August 29, 2013, with Eastern Electric Company, sponsored by a consortium of investors, including Geometric Power Limited, led by the former Minister of Power, Bart Nnaji; the five South Eastern state governments; Nestoil , a major indigenous upstream industry operator; Aba Power Kimited and founding Chairman of Diamond Bank, Pascal Dozie, as the reserve bidder.
Although Interstate Electrics Limited reportedly made an initial payment of about $12million, the company was one of two companies that failed to complete the payment of the balance of 75 percent of its bid price offer (about $95.4million) before set deadline.
Going by stipulated bid guidelines, any bidder who fails to meet the deadline for the payment of the bid price must immediately forfeit its status as preferred bidder to the reserved bidder to step in and acquire the company.
Rather than sanction Interstate Electric, by disqualifying the company, like other defaulting bidders, for failing to meet the August 21, 2013 payment deadline, the BPE reportedly procured an approval for a questionable waiver of the bid guidelines and secretly granted the company a 20-day extension to enable it pay up.
The decision by the Director of BPE, Benjamin Dikki, not to adhere to the bid guidelines strictly by insisting no sanctions or penalties be meted out to Interstate for failing to pay in full the value of its bid offer before the deadline reportedly brought him in a collision course with the Technical Committee, whose Chairman, Mr. Peterside pointedly rejected any attempt to bend the rules in favour of any bidder.
In a response to a memo by Mr. Dikki to justify the waiver to Interstate, Mr. Peterside had alluded to the dire implications of every action taken by managers at the bids submission and payment stages on the integrity of the entire privatization process, pointing out that “failure to penalize a bidder who pays late effectively translates into a financial discount/reward on account of the time value of money.”
Mr. Peterside, who also drew Mr. Dikki’s attention to the “moral hazard issue and the dangerous precedent” he would be setting for future transactions, wondered about the moral justification of BPE’s decision if other bidders who submitted their bids and made their 25 per cent payment on time were disqualified at the bids submission stage.
“The logical extension of your recommendation is that sanctions should not be applied because you are afraid of legal action? I really do not understand this line of reasoning. Are you going to do the ‘wrong’ thing for fear of legal action? It is the ‘right’ thing that we should be doing. While not caring about legal action, have you really thought about the need to preserve the integrity of the entire process and the reputational damage that the NCP will suffer?” Mr. Peterside said in a response to Mr. Dikki’s memo.
Although Mr. Peterside had recommended that Interstate be allowed to pay the shortfall of about $30.41million for Sapele Generation Company, and $61.62million for Shiroro Generation Company with 20 days from August 21, 2013, in addition to a penalty interest of about Libor +5 per cent per annum or 16 percent per annum on the Naira equivalent, he insisted on the company being disqualified, while the reserve bidder should be invited to take over, “to maintain the integrity of the process.”
Asked what would be the decision of the NCP on the Interstate bid controversy, Mr. Peterside was not categorical on what would be the line of action against the company.
“One does not require the consent of an account owner to pay money into an account if one has the account details. But, one needs such consent when money is to be withdrawn. If a bank receives money into an account after the payment deadline, it is left for those running the transaction to know what to do. Everybody knows, it was well documented in the media that a few bidders made their payments after the deadline. There was a consistency test, which it (Interstate) failed. It appealed and its appeal was upheld. On what action the NCP will take against Interstate, I don’t know, because no one would be able to tell the outcome of a meeting till after the meeting,” he said.
Several attempts to contact the Director of BPE, Mr. Dikki proved abortive, as he did not answer repeated calls to his telephone. He did not also respond to a text message sent to him on Monday.