Posted by From Mathias Okwe and Betrand Nwankwo, Abuja on
THE Federal Government yesterday sold three state-owned enterprises to investors at prices considered by privatisation officials as ridiculously low but inevitable.
THE Federal Government yesterday sold three state-owned enterprises to investors at prices considered by privatisation officials as ridiculously low but inevitable.
Most surprising was the price for the Nigerian Telecommunications (NITEL) Limited and its mobile telecommunication subsidiary, the M-Tel, which were sold for $256 million to Middle East-based Orascom Telcom Holding S.A.E. (Orascom Telcom).
The Federal Capital Territory (FCT) Minister, Mallam Nasir el-Rufai, noted that the price is far below the over $7 billion that had been injected into NITEL in the last few years. The minister, a former Director -General of the Bureau for Public Enterprises (BPE), however, added that the development could not be helped following the loss of investor confidence in NITEL.
The $256 million offered by Orascom is far below the $1.3 billion offered for the same NITEL by Nigeria's International Investors (London) Limited (ILLL) in 2001. This was before the government installed the multi-million dollar Nigeria SAT - 3 infrastructure in NITEL, which is considered as the cash cow of the company. The infrastructure was also sold with NITEL as well as the M-Tel component of the group.
Major stakeholders at the NITEL sale in Abuja yesterday also wondered why the government declared Orascom winner for the NITEL and the M-Tel companies when the $285 million license fee it paid to the National Communications Commission (NCC) for the M-Tel is more than the $256 million now offered for the two companies.
El -Rufai, who witnessed the transactions, the first since he left the BPE, described the amount offered by Orascom as disappointing. He, however, blamed the development on the sloppy services offered by NITEL staff, adding that it might have been responsible for the low price it attracted from the investors.
The minister, a member of the National Council on Privatisation (NCP), promised to appeal to the investor to review its price offer for the two companies. He asked the staff of other state-owned enterprises yet to be privatised to learn from the NITEL price mishap and said that in spite of the development, the sale would go on.
The minister asked those who were against privatisation to stay out of the way as they might be "crushed" by President Olusegun Obasanjo "or, in the case of me in the FCT, demolish you."
He added: " You either shape up or be ready to be shipped out of the system."
In her remark before the bid's opening, the BPE Director-General, Mrs. Irene Chigbue, had recalled that the initial attempt to privatise NITEL had brought up Investors International (London) Limited as the preferred bidder and Telnet Nigeria Limited as the reserved bidder.
She recalled that IILL paid 10 per cent of its bid price on December 12, 2001 but failed to pay the balance of 90 per cent as required by the deadline of January 12, 2002. This failure, she added, ran counter to the privatisaton rule and IILL was disqualified.
However, negotiations with Telnet Nigeria limited, were inconclusive as the consortium finally declined to take up the offer thus aborting the whole process.
This time, she noted, the Federal Government approved six companies at the start of another privatisation process. They include Telkom/Vodacom, Huaweii/Jacuz, Orascom, Celtel, Newtel and MTN.
But at the end of the exercise, only Orascom Telecom and Newtel International Limited submitted their final technical and financial bids.
The Guardian learnt that BPE is scheduled to meet with Orascom to know if they can raise the amount at least to between $300 million and $350 million since government is not prepared to sell the two telecom firms as low as $256.5 million.
The Special Adviser to the President on Privatisation, Mr. Vena Ikem, who also expressed concern over the $256 million price offer for the two firms, said that there was still room for an upward price review by the investor. He explained that the huge liabilities of NITEL might be responsible for the low offer.
The events leading to the declaration of Orascom as investor in NITEL/M -Tel for the ludicrous price did not come as a surprise judging from how the process began. First, only two companies, Orascom and Egypt-based Newtel International Limited, emerged for the exercise and they opened their price quotations on a very insulting note.
While Orascom quoted $127.5 million, Newtel offered $154.9 million. This attracted cynical comments and grumbles from the audience who refused to applaud the offers even when asked to do so by the NCP Technical Committee Chairman, Mr. Akin Kekere-Ekun.
Kekere-Ekun thereafter charged the two investors to be serious with their quotations, saying that the government was not a charity organisation.
This, according to him, was necessary because the offers were terribly below the reserved price set by the NCP. He then asked them to take 25 minutes outside to review upward their quotations.
It was a more bizarre scenario when after about 30 minutes, only Orascom returned with a reviewed quotation. Newtel had disappeared.
This was the first time in the privatisation exercise in the country for an investor to disappear mid-way into transaction. After waiting in vain for Newtel, the NCP Technical chairman declared Orascom the only bidder and its reviewed offer of $256.5 million a winning bid. He, however, noted that the offer was below the reserved price. He stated that the NCP would meet and decide if it could sell it to Orascom at the rate.
Orascom, according to the BPE profile, is a leading mobile telecommunication company with GSM operations in seven emerging markets in the Middle East, Africa and South Asia. It has a total population under license of approximately 460 million with an average mobile telephony penetration of approximately 11.5 per cent.
The company operates in Algeria, Pakistan, Egypt, Tunisia, Iraq, Bangladesh and Zimbabwe. The group is said to have 25.5 million subscribers and a yearly revenue of $2.5 billion as at September 30, 2005.
Some stakeholders, who spoke on conditions of anonymity, said the NITEL sale transaction was a kangaroo arrangement put together to deceive the public as the companies had since been tactically transferred by senior government officials to their cronies.
Unconfirmed reports claimed that both Orascom and Newtel belong to the same consortium and were brought into the country by senior government officials to act as their cronies.
This, they claimed, explained why the telecommunication companies in Nigeria were barred from participating in the NITEL transaction to pave way for the emergence of Orascom.
The staff of both NITEL and M-Tel, as well as those of the Communications Ministry in Abuja yesterday expressed disgust over "the shoddy and lack of transparent manner in which the BPE handled the transaction".
A group which called itself, The Telcom Collective, in a paid advert, described the two companies as " unknown quantity'' and called on those charged with the sale to disregard them as they were cronies of some selfish individuals in the country. They also linked Orascom to Pentascope, a company they said grossly mismanaged NITEL.
Meanwhile, in the other transactions, Miramar Group International bought over the Federal Government's 75 per cent equity in the Nigeria Machine Tools, Oshogbo for N1.5 billion, defeating its only competitor, Bronwen Nigeria Limited which offered N450 million.
Also, the 75 per cent government holding in Steyr Nigeria Limited, Bauchi was sold for N700 million to a local company, Kaura Motors Limited which the NCP also said was below the reserved price. Kaura defeated another local company, Barbedos Ventures, which offered N306 million for the same plant.