The Senate and NITEL liquidation

Will the Senate Committee on Privatisation rescind on its resolve not to allow liquidation of NITEL/Mtel even after a liquidator, Olutola Senbore and Co., was named on Thursday?Senator Gbenga Obadara, who chairs the committee, said no. “We have said it so well to the Vice-President who chairs the National Council on Privatisation that supervises the […]

Will the Senate Committee on Privatisation rescind on its resolve not to allow liquidation of NITEL/Mtel even after a liquidator, Olutola Senbore and Co., was named on Thursday?
Senator Gbenga Obadara, who chairs the committee, said no. “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 said.
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.
However, the Director General of Bureau of Public Enterprises (BPE) Mr Benjamin Dikki said the Federal Government adopted the guided liquidation for the moribund NITEL transaction because the company’s liabilities far outweigh its value.
The Director General noted that the sale process was the best option for NITEL/MTEL as any other mode of sale would have incurred huge liabilities for the government.
He appealed to the Senate to support the NITEL liquidation, saying Nigerians would gain immensely from it.
The Federal Government announced the liquidation option last year after series of failed efforts to sell NITEL over the past 11 years.
Liquidation involves bringing a business to a formal end because of insolvency or other reason.
When a company is liquidated, its assets are sold and creditors are paid from the proceeds while whatever remains is shared among the shareholders.
Government said NITEL and its mobile arm M-Tel would be sold through “guided liquidation” in view of the company’s huge liabilities.
NITEL used to be a monopoly but lost its relevance over the past decade with the growth of GSM companies, whose over 100 million active 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.
Up for grabs in the NITEL liquidation process are the SAT-3 submarine cable, exchanges, transmission stations, cabling network and landed property.
But the company is also neck-deep in debt, owing workers many months’ salaries, and a lot of its assets have either been vandalized or stolen.
NITEL 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.
The government said it approved the liquidation after considering a report by a technical committee (TC) set up by BPE.
“The TC recommended that ‘guided liquidation’ should be adopted as the strategy for the privatisation of NITEL/M-Tel in view of the huge liabilities of both companies and that there was no viable financial alternative presented by the management of NITEL/M-Tel.
“The NCP supported the recommendation of the Technical Committee that opted for ‘guided liquidation.’
“The NCP also observed from the NITEL/M-Tel presentation that they were receiving some revenues from SAT-3 which were not fully accounted for and in respect of which there had been no audit for several years.
“In spite of the revenues, the management of NITEL/M-Tel had been obtaining their salaries from the Federal Government of Nigeria. Consequently, the NCP directed the Sub-Committee of the Technical Committee on Information, Communication, National Facilities and Agric Resources to immediately carry out investigations and ensure that all revenues received were accounted for”, the government had said.
Will the executive has its way in this liquidation imbroglio? Will Obadara and his committee members come up with a fresh angle to it this week? The answers to these questions may determine the future of NITEL