High level intrigue at the Ministry of Power is
preventing Canadian based Manitoba Electric
to formally take over the management of the Transmission Company of Nigeria
(TCN).
The Intrigues have led to Nigeria’s Minister of State of Power
redeployed to the Ministry of the Niger Delta while the Minister of State for
Niger Delta was brought in to oversee the power sector. The Vice President, who sit atop the National
Council for Privatization (NCP) is also said have grown cold feet over the deal
despite being head of the NCP that approved it earlier in the year.
Namadi Sambo, Nigeria's vice President and Chairman of the National Council on Privatization (NCP)
The Minister of State
for Power and the permanent secretary at the Ministry, Dere Awosika, are said
to be putting bottlenecks in the pathway of Manitoba from taking over TCN
threatening the Federal Government’s reform programme in the sector. The
Minister is said to have declined to sign the necessary documents that will
formalize the handover of TCN to Manitoba two months after TCN should have been
handed over to the company. The Minister
is insisting that the Bureau for Public Enterprises (BPE) should have obtained
a no objection notice from the Bureau for Public Procurement (BPP).
There is no explanation on why the NCP that approved the
deal did not ask the BPE to obtain the approval of the BPP before signing the
concession deal with Manitoba. Now that
Manitoba signed the deal and moved in to begin the work of transforming Nigeria’s
power sector, suddenly the due process argument is being used to block the company.
The President is said to have been told that TCN has been
sold to Manitoba and that due process was not followed in the emergence of
Manitoba. Following the allegation, the President has directed that the matter
be looked into. Acting on the President’s order, the Permanent secretary is
said to have issued a memo to the Bureau for Public Enterprises (BPE) demanding
an explanation of the process that led to the emergence of Manitoba as the
management contractor for TCN.
BPE is however at a loss on how to respond to the memo since
the Minister of State for Power, who the Permanent Secretary reports to is a
member of the National Council of Privatisation (NCP) that approved Manitoba’s
bid to manage TCN and therefore actively participated in the process that led
to the emergence of Manitoba that a subordinate is now questioning.
TCN is currently operating under two CEOs. One appointed by
the Government and the other by Manitoba.
The current situation could force Manitoba to declare a
Force Majeure on the contract to manage TCN, said a legal practitioner familiar
with the terms of the contract between the Federal Government and the TCN. According to the lawyer, the terms of the
contract are one of the best the Federal Government could have gotten from the
deal.
If Manitoba declares a Force Majeure it will delay Nigeria’s
dream of stable power supply if not resolved as the independence of the
transmission company is critical to the power reform programme of the
government.
A non-autonomous TCN will impact negatively on the business
plans and projections of the winners of the five Generation Companies and 10
Distribution companies unveiled recently by the National Council on
Privatisation (NCP), said our sources.
The TCN will act as an independent arbiter between the
Generation Companies and the Distribution Companies, confirming actual power
that is purchased by the Distribution Companies from the Generating Companies. “You cannot have that company controlled by
the Government or being dictated to by the Minister of Power which will be like
the Ministry of Finance asking commercial banks what businesses to fun and not fund. No one is going to invest in power generation under such
circumstances,” our source said. Investors are highly concerned about the
current impasse.
The Ministry is however keen on delaying the process because
TCN is the last control they have over the power sector. If TCN goes, they will
no longer have any form of control over the sector, depriving them of a source
of revenue that they have milked in the past.
“We are aware that Manitoba Electric has not fully taken
over TCN. There are issues that have to do with process and the issues are
receiving the attention of the President and Attorney General is involved in
the resolution” said Sam Amadi , Chairman Nigeria Electricity Regulation
Commission (NERC).
Atedo Peterside, Chairman, Technical Committee of the NCP,
also acknowledged that there appear to be some bottlenecks but would not be
dragged into a debate over which government department or official is
responsible for the logjam.
“NCP’s work is to decide on who is to take up a government
asset and then it moves on” He said.
Nigeria is estimated to currently have the capacity to
transmit just 5,838MVA with a transmission backbone of just 4534km. This means
significant investments will be needed in the transmission sector to boost
transmission capacity if the government target of 10,000MW by 2015 is to be
achieved.
Manitoba is said to be considering withdrawing from the
management contract it signed with the Federal Government if the situation persists,
sources say. The situation as it is today is that Manitoba is not legally in
charge of TCN until the Minister signs the necessary documents. This has made
Manitoba’s continuous stay in the process untenable, said sources.
If Manitoba is forced out of the TCN contract, it will be
the third company that has had to be dropped from a management contract with
TCN. Initial efforts to get Eskom of South Africa and an Indian company to
manage TCN also failed. This will
further add to the perception of the high political risk of doing business in
Nigeria with consistent failure by government functionaries to adhere to the
terms of contracts willingly entered into.
But Amadi says that there is no fear of Manitoba exiting. “In
a few days, I expect there will be some clarity on the issues. Our concern was that the TCN should have a
board, and the Federal Government has agreed to set it up”
BusinessDay reports that a former banker with many years of
experience has been appointed as the chairman of the proposed board. The
President is said to have given the ministry to go ahead to announce the board
but the Ministry is delaying the announcement on the pretext that they are still investigating
the process that led to the emergence of Manitoba as the management company for
TCN.
Atedo Peterside also expressed similar optimism that
Manitoba Electric will not leave saying he was confident that the President was
working on a quick resolution of the impasse.
Manitoba had earlier in the year signed a US$23 million three
year contract to manage TCN.
“MHI expects to turn TCN into a technically and financially
efficient, stable, and sustainable company; a company that will be
market-driven and capable of utilizing its maximum generation capacity and then
distributing the energy throughout Nigeria 24 hours a day, 365 days a year,” the company’s website stated after the deal
was signed.
.
Canada based MHI comes with a strong pedigree in the electricity
sector. It is a wholly-owned subsidiary of one of the largest and
longest-standing electric power utilities in Canada, Manitoba Hydro. Manitoba
Hydro was established in 1880 and currently holds assets approaching $13
billion, with $2.4 billion in annual revenues, and over 6,200 employees.
It is a major power utility, involved in the planning,
design, construction, operation, and maintenance of all elements of power
infrastructure, according to the statement obtained from the company’s website.
As a utility
operator, Manitoba Hydro serves over 537,000 electricity customers and 265,000
natural gas customers. In addition, Manitoba Hydro exports up to 40% of its
energy production to the North American marketplace, which includes over 35
utilities and marketers in the mid-western USA, Ontario, and Saskatchewan.
MHI has provided
utility and asset management; consulting; and training solutions to over 70
countries worldwide. In Africa, MHI has
electricity projects in Ghana, Liberia, and Uganda among other countries.
