NITEL and the bailout option
The NITEL privatization imbroglio has lingered for more than a decade.Just around June, the Senate Committee on Privatisation vowed when a liquidator was named for NITEL that it would not allow FG to liquidate the company and its mobile arm, Mtel.Senator Gbenga Obadara, who chairs the committee, had said: “We have said it so well […]
The NITEL privatization imbroglio has lingered for more than a decade.
Just around June, the Senate Committee on Privatisation vowed when a liquidator was named for NITEL that it would not allow FG to liquidate the company and its mobile arm, Mtel.
Senator Gbenga Obadara, who chairs the committee, had said: “We have said it so well to the Vice-President who chairs the National Council on Privatisation that supervises the Bureau of Public Enterprises. There is no way the Senate of the Federal Republic of Nigeria can accept guided liquidation of NITEL. What we want is concession of NITEL, a private public participation arrangement.”
He alleged that those who are bent on liquidating NITEL without telling Nigerians its actual worth want to do that in their selfish interest.
They are only talking about the N351bn debt the company owes and they are not saying anything about those who owe NITEL, he said, vowing that the lawmakers would resist the liquidation.
“Even from the N351bn they are talking about, they said NITEL and M-Tel owe the Federal Government N171bn. We have it on authority and the records are here that the Federal Government owes NITEL N250bn in services over the years. If you remove the net, how much remains.
“What we want is concession of NITEL, a private public participation arrangement. The concessionaire comes, revives NITEL for about five, 10 years and returns it to the nation. “Now we are talking about broadband penetration. The president himself agrees the future is broadband. And we know that NITEL has SAT-3 which can make this ubiquitous in the country. And now we want to sell our SAT-3 to somebody. Does that show any reasoning?
“NITEL has the widest network in the country. They have the widest penetration in the country. It is for personal interest that they want to liquidate NITEL. That is why we say no. They have failed for many years to sell NITEL and now we are saying no to liquidation.
“Why do they want to dispose of NITEL? No nation sells its incumbent operator. They had tried to sell what is not attractive. Let them advertise for concession and you will see how many people that will come forward. Let us adopt another approach”, Obadara said.
And the House believes the best approach is bailout. The lawmakers in the lower chamber took the decision based on a report presented in plenary by its Committees on Privatisation and Commercialisation, Finance, Communications, Public Procurement and Information Technology.
The House approved a recommendation of the committees that instead of selling NITEL and MTEL, the CBN should give it a lifeline with the recommendation of the National Council on Privatisation that is refundable in five years.
“The National Council on Privatisation (NCP) should recommend to the Federal Government to include Nigeria Telecommunications Limited (NITEL) and the Mobile Telecommunications Limited (MTEL) in Central Bank of Nigeria (CBN’s) bailout intervention fund with a total sum equivalent to $1 billion to be refunded with interest over a period of five years,” the House resolved.
The House also recommended that the; “National Council on Privatisation (NCP) should immediately direct the Bureau for Public Enterprise (BPE) to stop the on-going process of liquidation of Nigeria Telecommunications Limited (NITEL) and Mobile Telecommunications Limited (MTEL) under the circumstances.”
The House said: “That the National Council on Privatisation (NCP) direct Nigeria Telecommunications Limited (NITEL) and Mobile Telecommunications Limited (MTEL) to commence the process of conducting technical and financial audit of the two companies as approved by the board.
“That the National Council on Privatisation (NCP) should direct their records office to eliminate the existing over N170 billion variance under the supervision of the office of the Auditor-General of the Federation.”
Besides, the House also recommended; “That the National Council on Privatisation (NCP) should direct the Bureau for Public Enterprise (BPE) to comply with Federal High Court judgements in favour of the 3000 ex-staff of Nigeria Telecommunications Limited (NITEL) and Mobile Telecommunications Limited (MTEL) treated as casuals and the other one in favour of Nigeria Telecommunications Limited (NITEL) arid ‘Mobile’ Telecommunications Limited (MTEL) pensioners.”
And “That the National Council on Privatisation (NCP) should consider the proposal for revamping the companies while the privatisation process is as submitted by the ex-staff, consultants and others as an alternative to outright liquidation of Nigeria Telecommunications Limited (NITEL) and Mobile Telecommunications Limited (MTEL).”
The House also directed that; “The National Council on Privatisation (NCP) should consider Public Private Partnership (PPP) as a privatisation strategy of the companies and maintain the national carrier status for security reasons.”
It also directed “That the Federal Government should direct the Ministry of Finance to comply with the agreement between the Nigeria Telecommunications Limited (NITEL) and the Ministries, Departments and Agencies (MDAs) to deduct from source the reconciled N6.2 billion and remit to Nigeria Telecommunications Limited (NITEL) for immediate settlement of outstanding staff salary arrears/other fringe benefits and resuscitation of the company.”
Other recommendations directed that benefits of NITEL workers be duly paid with the Presidency’s intervention.
“The Federal Government should plead with the state governors to reconcile the N4billion NITEL debt and pay accordingly and that the Federal Government should direct Nigerian Communication Commission (NCC) and Nigeria Telecommunications Limited (NITEL) management to determine the fees due to the new regime from single to double tandem that was unfair to Nigeria Telecommunications Limited (NITEL),” the report said.
A telecom engineer and a former NITEL staff Idowu Popoola told Daily Trust that the latest decision of lawmakers has vindicated the stand of some former staff that the company should be revamped by government instead of selling it.
“Let me say I am happy; very happy with the Reps’ decision. I make bold to say if NITEL is revamped it will perform excellently well and compete with the private owned companies because it has infrastructure across the country”, Mr Popoola said.
Yesterday, an official at the Bureau of Public Enterprises (BPE) said the agency was shocked when it heard the decision ordering it to discontinue the sale of NITEL.
The BPE official , who pleaded for anonymity because he is not spokesperson, however said “we are still waiting for the chairman of NCP, the VP, to tell us the next line of action.”
“We are only answerable to him (VP Sambo), not to them (House of Reps). So, will act when he tells us to act.”
NITEL used to be a monopoly but lost its relevance over the past decade with the growth of GSM companies, whose over 130 million subscribers dwarf NITEL’s 500,000 fixed lines.
But NITEL has a lot of fixed assets, valued at about $2.5 billion during the latest botched efforts to privatise the company.
The privatisation process started in 2001, when the Investors International London Limited (ILL) bid to acquire the company but defaulted in paying the bid price of $1.317 billion.
In 2003, Pentascope of Netherlands was appointed as management contractors to revamp the company for another privatisation process.
But this was marred by scandalous revelations that led to cancellation of the contract.
In 2006, Transcorp won a bid to acquire the company for $500 million but they also failed to pay.
In February 2010, New Generation emerged the preferred bidder with an offer price of $2.5 billion in yet another attempt. But this preferred bidder also failed to pay even after it got several deadline extensions.