BPE Finally Terminates Nitel Privatisation Process

Kunle Aderinokun, Efem Nkanga and Chineme Okafor

16 June 2011

Lagos/Abuja — The Bureau of Public Enterprise (BPE) has terminated the privatisation process of the Nigeria Telecommunications Limited (NITEL) and its mobile subsidiary, Mtel, which it began in 2009.

The BPE, in a statement issued yesterday, said it terminated the process because of the inability of Omen International Consortium, the reserve bidder in the NITEL/Mtel sale transaction, to revalidate its bid bond of $105 million as at the deadline of June 10, 2011.

The statement signed by the BPE spokesman, Chukwuma Nwokoh, said with the termination of the process, the Bureau was exploring various options to consummate the sale of the telecommunications company.

Nwokoh also clarified media reports attributed to its Director General, Ms. Bolanle Onagoruwa, regarding the various options being considered in addressing the NITEL challenge.

He said Onagoruwa had emphasised that several options, which included amongst others, liquidation and negotiated sale, were under consideration, and that the Federal Government had not yet taken a decision as to which of the options to pursue.

Omen had disclosed that it had made a payment of $150 million into the account of the BPE in order to revalidate its bid bond for the acquisition of NITEL.

Omen had informed BPE through a letter sent to the Bureau on Friday, June 10, that its financiers had put in place a pre-advice via SWIFT MT799 subsequent to a payment advice via SWIFT MT760 for the amount of $105 million, which covers the amount required to revalidate the bid security with a credit position of $45 million with BPE.

Nwokoh however stated that the deadline granted to Omen International to revalidate its bid bond lapsed on Friday.

He added that in spite of a grace period granted till close of business on Wednesday, June 15, 2011, payment was not received. Thus, the transaction was closed.

BPE had in April said that if Omen did not meet up with the deadline for payment, it would consider other options for the conclusion of sale of the first national carrier.

Onagoruwa said the agency was considering three or four options to conclude the protracted privatisation sale of NITEL.

As part of the options, Onagoruwa noted that the privatisation of the telecoms company might go the way of willing buyer, willing seller. She added that the Bureau was also looking at the liquidation option, which according to her could be “guided”.

Onagoruwa noted that starting afresh the process of the privatisation was an option but a “painful one” the agency might take.

Following the failure of the preferred bidder, New Generation Consortium, to pay 30 per cent security bid of its $2.5 billion bid offer, the reserve bidder, Omen, was called upon to revalidate its bid bond.

Omen had written a letter to the BPE, asking to be allowed to revalidate its bid status after the inauguration of President Goodluck Jonathan on May 29.

Omen, in the letter, identified the recent crisis that engulfed some parts of the North after the presidential elections on April 17 as having sent a wrong signal to its foreign partners.

The firm asked that it should be given till the 10th of June 2011, 10 working days after the swearing-in of President Jonathan, to pay the bid security of $105 million and the National Council on Privatisation (NCP) granted that request. The consortium had asked for the extension to allay fears of its international partners that the riots would truncate the nation’s democratic process.

The consortium said that the extension would assure foreign investors that socio political development and stability of the country had not been compromised before committing themselves to the investment of nearly $2 billion in acquisition, funding and rehabilitation of existing facilities/network rollout.

BPE, in reply to Omen’s request, said it was committed to the sale of NITEL by giving the consortium the extension, but Omen was not able to revalidate.

Several attempts in the past to privatise NITEL had not yielded positive results, making some stakeholders to assert that NITEL is jinxed.

The value of the once thriving company has been steadily obliterated and NITEL is now perceived as a worthless entity.

In 2001, Investors International London Limited (ILL) made the first attempt to acquire NITEL but defaulted in paying the bid price of $1.317 billion, thus forfeiting the bid.

Pentascope of Netherlands was appointed to revamp Nitel, but that attempt also failed and left it debt-ridden.

Orascom also attempted to acquire NITEL with $256.5 million but lost the bid to Transcorp which acquired NITEL for $500 million. The sale to Transcorp in 2006 was the most successful with Transcorp acquiring a 75-per-cent stake which was later reduced to 51 per cent due to issues of finance.

Transcorp at the time got a $500 million facility from a consortium of banks led by UBA Plc to acquire the shares. The Transcorp attempt also failed to revive NITEL.

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