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NITEL: The drain pipe enlarges

By on March 27, 2011

When in 2002, the Bureau of Public Enterprises wanted to sell 51 per cent of the Nigerian Telecommunications Limited to Investors International of London Limited at the price of $1.317bn, many Nigerians felt disappointed.

They were disappointed because they felt that the price was too small for the first national carrier where the Federal Government had poured so much money. However, the transaction failed.

Since the failure of that transaction in 2002, NITEL and its mobile subsidiary, the Nigerian Mobile Telecommunications Limited, have had various bidders.

Apart from the failure of successive transactions, another thing that has characterised the process of selling NITEL in the past nine years is expenditure without commensurate income.

One of the major components of the costs of privatising NITEL is the cost of disengagement of workers.

The Federal Government had in 2007 spent about N53.7bn on terminal benefits of 17,106 former and current workers of the company following the purchase of 51 per cent equity in NITEL by Transnational Corporation.

The pension payoff scheme, however, had been contentious as the workers had insisted on a payment of five years pension entitlement contrary to BPE’s position of payment graduated according to the number of years a worker had put in.

Eventually workers that had spent between 15 and 20 were paid two and half years of pension while those that had spent 20 and 25 years were paid three years of pensions.

On the other hand, those that had spent between 25 and 30 years were paid three and half years of pensions while those that had worked for between 30 and 35 years were paid four years of pension.

BPE had explained that it did not have enough resources to pay workers the five year payoff originally agreed with the workers as it only realised $500m from the sale of 51 per cent equity in the company.

The workers demand for five years flat payment for everybody irrespective of the number of years spent in the organisation was to cost the Federal Government N73bn to implement.

As the workers and those that were retired continued to push, the Federal Government under President Umar Yar’Adua approved a make-up for the pension buyout. It required N17bn to bring the pension buyout of all the workers to five years of entitlements.

The government directed BPE to settle the liability through the sale of non-core assets of the company.

Again, following the revocation of the sale of NITEL to Transcorp, the Federal Government assumed responsibility for the payment of salaries which had not been paid for several months. It also had to reimburse Transcorp.

Towards the end of 2010, the Federal Government constituted a taskforce for the resolution of labour issues within the company. The taskforce headed by Minister of Labour and Productivity, Chief Emeka Wogu, recommended the payment of N54bn for several category of workers.

A total of 3197 casual workers who were laid off from the service of the NITEL in 2006 were to get N3.28bn.

The workers had gone to court and obtained a favourable judgment which ruled that casualisation was alien to the employment terms that obtained in the public telecommunications company.

The taskforce recommended the payment of N22.22bn to other category of workers whose jobs were terminated in 2006.

The cost of settling outstanding salaries and disengagement entitlements for NITEL staff amounted to N24.71bn while that of M-Tel amounted to N4.76bn, summing up to N29.47bn.

“In compliance with the provisions of the NITEL/M-Tel conditions of service, all allowance not previously paid to staff exited in 2006, abolition of office, repatriation allowance and redundancy benefits, have been computed and included,” the taskforce said.

Some of the payments as recommended by the taskforce have been paid; some payments are ongoing now while some are yet to be made.

Besides, there are other workers that had been excluded from some entitlements that have gone to court to press for their rights. Therefore, chances are that the end of the cost is yet to be seen.

In a telephone interview with our correspondent, the NITEL Branch Chairman of the Senior Staff Association of Communications, Transport and Corporations, Mr. Elias Kazza, said the cost of privatising NITEL had been high because the process had not been sincere and transparent.

Kazza said, “The process has been faulty and abortive. It has not been handled sincerely and transparently. That is why it has been costly. It opens window for all sorts of claims.”

President of the National Union of Telecommunications Employees, Mr. Charles Amankwe, also agreed that the transaction has been a drain on the government.

“It has cost the Federal Government more than what is expected. Imagine what it means, trying to sell something for eight years.”

Amankwe said apart from settling workers, there were other costs that could be amazing. One of such costs, he pointed out, was the difference between the preferred bidder and the reserved bidder that has now been invited to take a chance.

When will the expenses end? For now, nobody knows.

Source : Punch