•The fate of power consumers is in the hands of an ill-prepared player
For a process that ought to have been home and dry by simple adherence to rules and guidelines, it is unfortunate that the sale of the Kaduna Electricity Distribution Company (DISCO), one of the 17 Power Holding Company of Nigeria (PHCN) successor companies put up for sale in December 2010, is still embroiled in controversy.
Northwest Power Limited had emerged top bidder for the DISCO at the conclusion of the exercise. December 23, 2013, it executed the Share Purchase Agreement with the Bureau for Public Enterprise (BPE) which gave it until June 23, to make the 75 per cent balance payment.
Unable to beat the June 23 deadline, BPE allegedly extended the deadline to August 6, to ensure that the company did not lose the mandatory 25 per cent initial down payment made for the acquisition of the assets of the power distribution company. By August 6, the company could still not pay. Instead, it wrote to the National Council on Privatisation requesting for further extension by two months.
It is unfortunate that the guidelines which not only appear so straight-forward, but designed to give credibility to the process are being flouted by the BPE in favour of Northwest Power Limited.
The rules, as spelt out in Section 15 (140) is clear: “Within six (6) months after signing of the Share Sale Agreement, or at a mutually agreed upon time, the Bidder will be required to pay the outstanding seventy-five per cent (75%) of the share purchase price to complete the transaction. Failure to complete the transaction within a mutually agreed timeframe will result in the forfeiture of the down payment as per the terms of the Share Sale Agreement.”
The issue would seem one of fidelity to the process. Having extended the June 23 deadline in clear disregard of the guidelines, it then became a matter of how far the law could be bent to accommodate the interests behind them. In this particular instance, it appears the BPE would rather prefer to act as if the niceties of the law and process do not matter.
It is hard to imagine that the BPE, a creation of statute, would cynically jettison the rule for reason(s) unsupported by the law. We are certainly not persuaded of the factor of an exigency as to warrant the setting aside of the regulations, which, in any case, would amount to endorsing the rule of the thumb, and arbitrariness.
We must say that the development is a telling commentary on the privatisation exercise as a whole. Had the Federal Government not gone into the frenzy of premature self-congratulation soon after the bids were announced, it would have afforded itself the opportunity to reflect on what the emergence of unknown quantities in the global power scene, with neither the financial muscle nor the technical savvy to bring on board, forebode for the sector. Now, if Northwest Power Limited cannot raise the funds to consummate its bid, how then would the company be able to bring the necessary funds to upgrade the erstwhile PHCN systems?
As it is, one can only imagine that the fate of electricity consumers under Kaduna Electricity Distribution Company is in the hands of an ill-prepared player.
The situation is however not beyond salvage. Under the guidelines, the reserve bidder ought to have been called in; time now for the BPE to do the right thing – which means engaging the reserve bidder without further delay.
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