Privatisation: BPE fails to name preferred bidder for N25bn Kaduna Disco: The Bureau of Public Enterprises (BPE) has failed to name a preferred bidder for the Kaduna Electricity Distribution Company (Kaduna Disco), seven days after it announced to do so. According to Daily Sun’s investigation, the BPE had last year offered the Kaduna Disco up for sale to a private investor for a bid sum of $163 million (about N25 billion). Northwest Power Limited, the preferred bidder for the Kaduna Disco, had till August 6 (last week Wednesday) as deadline to make the 75 per cent balance payment of N19 billion ($123,750 million) for the Kaduna Electricity Distribution Company (DISCO) or risk losing N19 billion ($39,250 million) being the mandatory 25 per cent initial deposit for the acquisition of the asset. Prior to the August 6, 2014 deadline, the company had until June 23, 2014 to make the 75 per cent balance payment having signed the Share Purchase Agreement (SPA) with BPE in December last year. Speaking to Daily Sun yesterday, a source close to the deal who pleaded anonymity argued that since Northwest Power, the preferred bidder of Kano Disco, has been unable to meet the statutory payment timelines repeatedly, BPE should, as a matter of duty, invite the reserved bidder to take over the Disco and pay up without delay. “BPE that should be the custodian of the rules regulating the privatisation process should not be flouting these same rules with impunity. That Northwest Power is being backed by powerful forces is not in doubt. BPE should rise above these crude and medieval considerations and do what is right,” the source said. The Deputy Director, Public Communications Department, BPE, Mr. Alex Okoh, when contacted, said the Director General of BPE, Mr. Benjamin Dikki, was not around to provide details of the transaction. Efforts to reach Dikki proved abortive as text messages and phone calls made to his telephone line were not responded to. Kaduna Disco and Afam Genco are the remaining two successor companies out of 17 carved out of the defunct Power Holding Company of Nigeria (PHCN) whose sale had suffered deferments owing to technical hitches as none of the previous bidders met the technical requirement of the privatisation regulating agency. The privatisation guidelines demand that failure by the preferred bidder to discharge its payment obligation before the stipulated deadline, amounts to automatic forfeiture of its 25 per cent initial payment and the right to buy the asset of the reserve bidder. Section 15 (138) of the Request for Proposals (RFP) for the privatisation of PHCN successor companies states: “The designated preferred bidder will be invited for negotiations with BPE. Failure to enter into negotiation will result in the forfeiture of the preferred bidder’s bank guarantee of the bidder and BPE will invite the first reserve bidder for negotiation.” The source hinted further that Northwest had written BPE about four weeks ago requesting for additional two months extension to enable the company raise the money. The additional extension contravenes privatisation guidelines,” the source said. According to the source, the letter requesting for the additional extension was submitted to the National Council on Privatisation (NCP) on August 6. “This means that the integrity of the entire privatisation process has been undermined by this illegality and deliberate inconsistencies. This is nothing but grand deceit on the part of BPE who misled both local and foreign investors into believing that the process is real,” the source added. Some industry analysts have, however, faulted the process whereby the BPE had unlawfully sustained the status of Northwest Power as the preferred bidder of Kaduna Disco until now, alleging that the BPE by doing so had demonstrated a flagrant and reckless breach of the provisions of the privatisation guidelines and violated provisions of the RFP, particularly Section 14, paragraph 139, which stipulates that the bid bond and post-qualification security of the reserved bidder, in this case Leda Consortium, shall not be held beyond the extended validity period, which terminated by April 2014. Furthermore, Section 15 (140) stipulates that, “within six months after signing of the Share Sale Agreement, or at a mutually agreed upon time, the bidder will be required to pay the outstanding 75 per cent 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 SSA.” Another impeccable source told Daily Sun that the BPE had confiscated the reserved bidder’s bid bond and post-qualification security beyond April 2014, until it was compelled to release it in July 2014, three months later. It should be noted that the BPE bid document states clearly that the mutually agreed time should not exceed the stipulated six months period. Consequently, it means that Northwest Power, which is the preferred bidder for Kaduna Disco had until June 23, 2014, to pay the balance of 75 per cent share purchase price owing to the inability of the firm to meet the target. Stakeholders insist that such development is contrary to BPE’s much publicised claim of transparency because it unilaterally and surreptitiously extended the mutually agreed time to August 6, 2014. Original link Read More goo.gl/nv2cpW (y) ✍comment ☏share
Posted on: Mon, 11 Aug 2014 23:39:26 +0000