Power Privatisation: President Cancels Manitoba Contract

President Goodluck Jonathan

In a move aimed at ensuring that due process is followed, President Goodluck Jonathan Tuesday  cancelled the $23.72 million management contract for the Transmission Company of Nigeria (TCN), a critical component of the power reform and privatisation programme.

The president, THISDAY learnt last night, cancelled the contract that was awarded to Canadian firm, Manitoba Hydro International, which had been selected by the National Council on Privatisation (NCP) to run TCN for three years, with the option to extend for another two years.

Manitoba had signed the $23.7 million management contract with the Bureau of Public Enterprises (BPE) last July, following a long drawn out process that lasted more than five years, in which the Canadian firm and Power Grid of India had their technical and financial proposals evaluated to determine which of the companies would be selected as management contractor.

The selection process for a management contractor was started under the administration of former President Olusegun Obasanjo in 2007, but was stalled by his successor, the late President Umaru Yar’Adua, who rolled back the power sector reform and privatisation programme.

However, when Jonathan took over in 2010 and launched the Power Sector Road Map that same year, the Federal Government directed the BPE to continue with the process from where it had been stopped, rather than re-advertising for prospective companies to express interest all over.

The decision was based on the fact that the government was eager to jump-start the power privatisation process without the bureaucratic red tape.

But presidency sources said the president based his decision to cancel the contract on a memo sent by the Bureau of Public Procurement (BPP), which for several weeks, had been pushing for its cancellation on the premise that did it not pass through due process as provided under the Public Procurement Act.

The Director General of the BPP, Emeka Eze, THISDAY learnt, was said to have kicked against the appointment of Manitoba because a few material irregularities had been noticed in the process that led to the company's selection.

“It is better to correct these irregularities now to save the future of the management contract, than to have one that could run into hitches. Moreover, a stitch in time, saves nine,” said one official with the presidency.

He said Eze, in his memo, had informed the president that a management contract was distinct from a privatisation transaction or concession, and since the procurement of all Federal Government contracts, including those covering professional services are covered by the Public Procurement Act, the BPP should not have superintended the selection process.

The source said the BPP DG picked holes in the contract, querying why the designated managing director was 57 years old, which he felt was too old, insisting that the contract be cancelled because the BPE had misled the NCP by procuring the management contractor.

Eze was also said to have insisted that if the BPP had overseen the procurement of the contractor, it is the Federal Executive Council (FEC) that should have approved the selection of Manitoba based on the BPP’s recommendation.

Eze’s position, THISDAY learnt, was backed by the Minister of Justice and Attorney General of the Federation, Mohammed Adoke (SAN), who declared the contract null and void when his opinion was sought.

Efforts to get Eze to speak on the cancellation of the management contract proved abortive, as he was not available for comment. But THISDAY learnt that in his memo to the president, he had recommended that the BPE should furnish BPP with five names of companies so that a new contractor could be selected in 30 days.

The president, however, was said to have ignored his recommendation and directed that the Ministry of Power handle the selection of a new contractor for TCN in 30 days.

But power sector experts said last night that the president’s directive might be a tall order, as a transparent selection process cannot be concluded in 30 days.

They also doubted if the power ministry possessed the technical expertise to handle it, as even the BPE had to draw on the expertise of British Power International as their consultants to assist them during the selection process.

Since the execution of the contract, Manitoba has been prevented from effectively taking over at TCN by bureaucrats in the power ministry. The appointment of a supervisory board for TCN by the Minister of Power was also delayed for inexplicable reasons.