NITEL’s reserved bidder gets two weeks deadline

The Bureau of Public Enterprise (BPE) said it had given the reserve bidder in the sale of Nigeria Communications Limited (NITEL) two weeks to confirm its interest in the moribund company.

Besides, under the proposed strategy for the power sector, a private sector operator would be allowed to acquire up to 70 per cent controlling interest in any of the distribution firms to improve its efficiency, BPE’s Director-General, Ms Bolanle Onagoruwa, said yesterday in Lagos at a workshop on power sector reform.

She said the bureau wrote the reserve bidder – Omen International Consortium- last month requesting if it would be interested in revalidating its reserve bidder position after the latter missed several payment deadlines.

Specifically, the BPE boss said Omen had been given two more weeks to confirm its February 2010 offer of $959 million, which has since expired.

Onagoruwa said if it fails to pay up, BPE would be left with four options: to set a minimum price for the firm and offer it to the remaining bidders, to liquidate it, to restart the process or wait for the reserve bidder.

Following the inability of New Generations to pay before the expiration of the deadline and after many extensions given by BPE, the bureau advised the Federal Government to cancel the sale of NITEL to New Generations and invite Omen.

New Generation Consortium, made up of China Unicom of Hong Kong, Minerva Group of Dubai and Nigeria’s GiCell Wireless Ltd, had in February 2010 emerged the preferred bidder for the privatisation of NITEL and M-TEL with an offer price of $2.5 billion during the opening of financial bids for the privatisation process.

In a related development, Onagoruwa said a private sector operator would be allowed to acquire up to 70 per cent controlling interest in any of the distribution firms to improve its efficiency.

The BPE boss said the Nigerian Electricity Regulatory Commission (NERC) is reviewing the Multi Year Tariff Order (MYTO) to promulgate a revised MYTO by July.

She said BPE had started the evaluation of hundreds of bids from investors for the successor companies in the power sector, while the list of shortlisted investors should be ready in three weeks.

BPE had between December 13 and 20 last year advertised in local and foreign media the request for the expressions of interest for the successor firms, which include 11 distributing firms, four thermal firms and two hydro firms.

So far, the bureau said 331 bids were received with 174 of them for the generating firms and 157 for distribution firms.

She said the NERC was valuing the assets of the companies to be privatised, but that the selection of winners would not be solely on the offer price, but on the best proposal on how to reduce technical, commercial and collection (ATC&C) losses by the firms.

She put the ATC&C losses in Nigeria at between 40 and 50 per cent as against about three per cent in United Kingdom and United States and about 10 per cent in Brazil.

Since the value of the companies to be privatised will be a public knowledge, she said it would not be the main basis to determine the proffered bidder, but the best proposal on how to reduce ATC&C losses, which would be integrated into the MYTO agreement that would be bidding on the investors.

The BPE boss said the power sector reform was crucial to the government as estimated 100 million Nigerians are without access to electricity whilst the remainder receives low or irregular supply.

She lamented that 30 per cent of electricity billed is not collected, stressing that over $35billion of investments are required in the next 10 years to address the power sector.

Acknowledging that large investments would also have to be made in power transmission and distribution, she noted that $1million is required to generate one mega watt of power.

Source : The Nation