Manitoba exit: Panic grips investors over policy somersault

By LOUIS IBA

An air of panic looms amongst investors in Nigeria’s power sector following a recent government pronouncement, which revoked the contract it signed with Canadian firm, Manitoba Electric Limited, for the management of the electricity Transmission Company of Nigeria (TCN). “The signal to the investment community, both local and international, is very discouraging,” said a top official of one of the regulatory institutions in the power sector.

“A regime of policy inconsistencies, where government awards a contract and, over a short period of time, gets it revoked, may turn out to be very harmful to Nigeria’s power sector privatization programme because no investor wants to go to such an environment, where there is no security of investment as protected by the law,” added the official, who preferred to remain anonymous. The government had revoked the contract estimated at $23 million (about N3.7 billion) over breach of regulatory processes that led to the emergence of the Canadian firm as the preferred bidder. But the revocation has been misread as having more political undertones than technical demerits, as the government would want the public to believe.

One senior official in the Power Ministry said the Canadian firm remained one of the best the country could have hired to execute the management of TCN given its global pedigree in that field, and he said had the government been so convinced of graft in the processes that led to the award of the contract to the firm, there existed other options to keep the contract in operation, rather than an outright cancellation, which he reasoned was not in the best interest of the country.

“Malitoba remains the best firm Nigeria would have hired to manage TCN, no one can fault that,” said the source. “And if there was a problem it is the government that should be held responsible; it is the BPE and BPP officials that supervised the exercise that should be held accountable. They should be probed and fired if found wanting. But an outright cancellation at this time is detrimental to the country,” he reasoned.

Until the revocation, Manitoba officials had been barred – or frustrated – from taking control of the management of the Transmission Company of the Nigeria (TCN) almost two months after the government had ceded the contact to the firm. Sources said trouble started following the untimely exit of former Power minister, Prof. Barth Nnaji, who mid-wived the deal with Manitoba, a development that threw up the Minister of State, Darius Ishaku, as the new helmsman. And it is alleged that Ishaku and the new team in the Power Ministry had a different vision from what the erstwhile minister, Nnaji, had. “When Nnaji left, the people that took over had a different idea; they saw the Manitoba deal from a point of view that necessitated a review and most senior officials in the ministry wanted to re-write the rules,” said a source about the deal.

“But the Manitoba establishment would take none of that and that is where the deal got stuck.” Nigeria targets a divestment earning of over N400 billion from the sales of its power utility establishments to private sector investors. But the privatization process supervised by the Bureau of Public Enperprise (BPE) has been mired in a lot of allegations of graft and favoritism as most preferred bidders are cronies of government or are considered to have links with political office holders. But Atedo Peterside, chairman of the Technical Committee for the National Council of Privatisation has come out to defend the process saying it was devoid of any form of graft.

Peterside, however, acknowledged that the allegations held prospects of “potentially damaging” the privatization process which he said targeted raising a divestment proceeds of close to N400 billion. Current generation capability in Nigeria stands at about 5000megawatts and existing transmission facilities are so obsolete to carry even that capacity effectively. And with a fresh target of 10,000megawatts by 2015, the need to pump in fresh investments into the transmission network cannot be overstated.