Director/ Chief Economist at iordinance, which is into economic
consultancy, large scale military hardware supply and security
consultancy. He is also a Public Affairs Analyst with a doctorate
degree from the prestigious London School of Economics and Political
Science. Interestingly, he is also a politician and chieftain of the
ruling PDP. He ran against Olisa Metuh for the position of National
Publicity Secretary of the party. In this interview with SHAKA
MOMODU, Ononuju criticised the way and manner the Sapele and Enugu
PHCN assets are being handled, warning of the dangers ahead if
government refuses to do the right thing. Excerpts…
What is your take on the privatisation of power assets so far by this
administration?
The exercise is noteworthy and commendable. It shows that we have the
political will to do the right thing. Electricity is the most
important component in our infrastructure quest. The government sees
electricity as it's silver bullet to grow the Nigerian economy
organically.
Electricity will help Nigeria to achieve an inclusive growth that will
bring visible benefits to the largest number of Nigerians. It will
jump-start a production-aided growth and enable labour intensive
economic activity on a scale that will greatly benefit the economy
while reducing the present cost of production in all industries.
The exercise was the largest sale of electricity assets ever by any
government on earth. The scale of the offloading was historic.
Do you think Nigeria is finally on the path to stable electricity
generation, transmission and distribution?
Yes, we are on our way. We have taken the first basic steps, if you
want to be taken seriously in any market within an economy, you must
show reasons why stakeholders should trust your motives, through your
actions. The process is progressing as an intention of the Goodluck
Jonathan transformation programme, but has remained inconclusive with
regards to the Enugu Disco and Sapele Genco.
The Nigerian economy will get better as we generate more electricity.
These initial actions are only the beginnings, we must install honest
protocols that will drive the process, General Electric (GE) just
broke ground in Cross River State because Sub Saharan Africa is a huge
market with the largest room for growth and expansion .Julius Berger,
a construction behemoth is in a joint venture in the power industry
with Nestoil Plc, an oil and gas services local content giant and a
few other large international power developers. As real serious
players like these put their money to the process, Nigeria must
maintain the integrity of the process to reassure investors that the
process is stable, free and transparent.
The privatisation has largely been transparent except for a few
instances when BPE and NCP seemed to bend rules in the middle of the
game. Are you worried that this trend can undermine confidence in the
process and consequently defeat the essential purpose of the
privatisation programme?
This is the most dangerous poison introduced in the process. It
tarnishes the Vice President's image as the Chairman of NCP, because
the process relative to Enugu DISCO and Sapele GENCO was crudely
managed and openly established that the rules have been bent to
benefit certain individuals. I fear that the process will not stand
the challenge in the courts, especially now that the Eastern Electric
Consortium has gone to court. We are headed towards a replay of the
Alscon/Rusal debacle because, the cases are similar.
The rules have clearly been bent to accommodate Interstate Electric, a
company that failed the technical evaluations by the BPE and NCP. The
values posted by Interstate Electric failed the consistency test for
the Abuja DISCO and Enugu DISCO. Consistency tests on the bid values
for both DISCOs resulted in negative Net Present Value (NPV). The
requirements for passing the consistency test, and hence passing the
technical bid is that the NPV must be positive. A negative NPV means
that the bid and plans proposed by the bidder are technically and
commercially impossible to implement, and therefore the reduction of
Agregated Technical Commercial and Collections (ATC&C) losses is not
achievable. The BPE and National Council on Privatisation therefore
voted 17-to-0 against Interstate Electrics, and recommended that the
company be disqualified.
OhanezeNdigbo, in a newspaper advertorial in The Sun edition of
Thursday 5th of September backed the position of the five South
EasternStates and requested that BPE hand over the Enugu DISCO to the
reserve bidder, Eastern Electric according to the rules.
Why undermine the long term economic interest of the East even when
the people of the five states of the south east geo political zone are
financial members of the Winning Eastern Electric Consortium. The
five states went into a commendable alliance with Time Power Global
Dynamics, promoted by Nestoil, Pascal Dozie, Chairman of MTN and
Diamond Bank, ABA Power Limited promoted by Geometric Electric.
EmekaOffor promoted Interstate Electrics failed to win according to
the rules as it failed the technical evaluation and again, did not
posses the financial ability to pay for the asset by the deadline on
August 21, and was not granted any extension by the BPE which had
disqualified the company earlier.
Interstate is a rent seeking firm promoted by Mr. Emeka Offor. A
company that was unable to raise the acquisition funds by the 17th as
stipulated by the rules, will find it extremely difficult to raise the
necessary capital to upgrade the Enugu DISCO and deliver on the
aspirations of the Federal Government and economic interests of the
people of the south eastern states whose governments chose to work
with Eastern Electric consortium after careful consideration of all
parties involved. The presidency should overrule the Vice President
and do the ethically correct thing by disqualifying Interstate
Electrics.
What can be done now that some companies, which had issues of
competence have been allowed to acquire these assets?
It is a very Nigerian disease. Instead of entrusting our future into
safe hands, corruption in high places is undermining this noble
intention of government.
The Sapele Power bid is particularly interesting, the CMEC/Eurafric
was unable to meet the august 21 deadline for payment and is still
unable to make payment nearly 60 days after that deadline expired,
while the reserve bidder has still not been called to step up and make
good its own bid, what do you think is going on here?
The Sapele Genco is another sore point in this mess. The only option
left for BPE is to follow the rules and invite the reserve bidder,
JBN-Nestoil Power Services Limited to pay its bid sum and take over
the asset since CMEC/EURAFRIC is unable to complete its payment after
almost 60 days after the deadline. The reserve bidder should be
allowed to exercise its right according to the rules or a court case
looms as in the Enugu Disco.
It cost well over two million dollars to do the requisite due
diligence, and prepare a successful bid, and serious companies do not
spend that much of their hard-earned money and keep quiet when cheated
out of their rights. They go to court to protect the rights of members
of their consortium, and this puts a potential delay in handing over
the plant to the bidder and will definitely delay the country in
getting additional generating capacity, which is the reason for the
privatisation in the first place.
Not long ago both Mike Adenuga and Aliko Dangote have had their bids
disqualified in effort to stick to the exacting standards necessary
for the integrity of the privatisation exercise. The game is over in
Sapele and you can not change the rules in the middle of the game to
benefit certain people, period.
Why do you think BPE and NCP are unable to stick to the rules they
themselves set in the guidlines of the power privatisation process?
The problem is from the office of the Vice President. As the Chairman
of the NCP, his work manual did not say that he should undermine the
process. The overbearing interference from the Vice President has
undermined the good works of patriots like Mr. Atedo Peterside and
other eminent patriots who were deceived and used to mask a shameful
dance that undermines the President's political interest, the long
term economic interest of the Southeast zone and the PDP.
What is the likely impact of bending the rules to satisfy certain players?
Several top PDP members and leaders of other parties and majority of
Nigerians from the south east are upset at the behaviour of the Vice
President, a consortium backed by the five south east states with
notable institutional investors known for consistently delivering
results on their projects and promises won the Enugu Disco fairly.
Nigerians are also amazed, angry and disappointed that CMEC/EURAFRIC,
which after almost 60 days past the deadline for making their full
payment, has still not been disqualified according to the rules. These
obvious cases of bending the rules have sent the wrong signal to
serious local and international investors that the Federal Government
may be ready to ensure that the rules are strictly followed in the
power industry to ensure that serious investors are supported to
develop the necessary infrastructure to give Nigerians the steady
supply of affordable electricity which they so desperately need.
Some have argued that since CMEC/Eurafric has made part payment, even
though it was after the deadline that they should be given more time
while others contend that BPE must stick to the rules that they set
without favoritism to any one company
The integrity of the entire process and trust of all participants is
undermined by an abridgment of the clearly set out rules. If they can
not raise the entire bid sum in the time set out at the beginning of
the bid process, it shows that they will also be unfit to refurbish
and modernize the plant or raise the funds to do so, thereby denying
Nigerians of the steady electricity they have been promised for years.
If the government decides to keep extending the deadline for
CMEC/EURAFRIC to pay their bid sum, it should then also be willing to
bend the rules some more and let the 13 other successful bidders who
paid their money on time to take back some of the money that they have
already paid and use it to conduct other business.
The important point that Nigerians should not forget is that the only
reason that PHCN assets were privatized is so that credible private
companies will acquire these assets, refurbish and modernize them, and
run them like real businesses so that Nigeria will be given reliable
steady power supply. One way of identifying companies that are unable
to achieve this aim is by their inability to clearly pass the
technical tests set by BPE, their inability to perform a proper
evaluation of the asset for which they wish to bid on, and therefore
make a reasonable bid offer on the asset, and then finally their
inability to pay their bid amount on time. With all this in mind, it
is clear that CMEC/EURAFRIC did not perform a proper evaluation of
Sapele GENCO, that their bid is much higher than the actual worth of
the plant, and hence that they have been unable to raise the money to
pay for the plant. There should therefore be no discussion at all
about extending their timeline to pay even by one day, and they should
immediately be disqualified from the process. It is interesting to
note that this same company submitted bids to try and acquire 3 NIPP
plants in the ongoing NIPP privatization, whereas they have not even
been able to pay for Sapele GENCO! This is a travesty and we must
enjoin the government to do the right thing.
The president must not allow rent seekers to undermine the economic
growth of the country because of certain individuals. We must allow
serious companies like JBN-Nestoil to pay for the asset and turn it
around for the greater good of Nigeria . Some members of the
consortium have an unmatched record of delivering the best engineering
works in all of Nigeria 's history, and they must be allowed to do the
same thing in the power industry.
The President must now intervene to restore the integrity of the process.
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