Chairman, Technical Committee of the National Council on Privatisation, Mr. Atedo Peterside
Explains double bid submission
BPE insists on breach
The Southern Electricity Distribution Company (SEDC), one of the contenders for the Benin Electricity Distribution Company (BEDC) (Disco), has denied allegations that it breached the investment schedule guidelines for the Request for Proposals (RFPs) provided by the Bureau of Public Enterprises (BPE) to all bidders.
The company explained that it submitted one technical and commercial bid, but with two scenarios laying out different capital investment schedules, in compliance with the RFP.
Chairman, Technical Committee of the National Council on Privatisation (NCP), Mr. Atedo Peterside, had at a press briefing in Lagos on Monday revealed that SEDC submitted multiple commercial bids for the same Disco, in clear violation of the RFPs.
Peterside who was responding to allegations by Governors of Ekiti, Edo and Delta States that the bidding for the Discos, which was organised by the BPE was “highly fraudulent, not transparent and representing some racketeering interest.”
He had also noted that close to 90 per cent of the seven members of the Southern consortium is owned by private sector companies that are not owned directly or indirectly by the governments of Delta, Edo, Ekiti and Ondo States.
But reacting to these allegations in a statement signed by the General Manager, IMS Ltd, Mr. Sayo Akintola, Southern Consortium said at no time did the consortium submit two different bids. According to him, in compliance with the investment schedule guidelines from the RFPs, BPE and the NERC directive on metering rollout, the SEDC submitted one technical and commercial bid, but with two scenarios laying out different capital investment schedules.
He explained that the scenarios were clearly laid out in the executive summary, with additional details on pages 52 and 53 of its technical bid (business plan), adding that the technical bid, which was carefully studied and evaluated by the BPE was adjudged first, with a score of 898, without any complaints.
Akintola further clarified that scenario one, was considered the CAPEX to be the same as in the NERC MYTO, which is uniform year-on-year for the five years, while Scenario two, dubbed FAST TRACK, was proposed as an alternative.
“In this model the total CAPEX is still the same as in MYTO, but we offered to inject more capital in the first two years, keeping the total five year CAPEX the same as allowed by MYTO,” he said.
The company, while insisting that it complied with the laid down regulations in the privatisation process, added that the second scenario, as stated in its proposal, would allow it to invest more on strengthening the core network in the first two years and thus enable us reduce the ATC&C losses in the third year, while still keeping the total five year CAPEX the same as MYTO as well as adhering to the NERC metering rollout plan.
“This alternative model, which injected more capital in the initial years, we believed, was in line with the objectives of BPE and NERC to provide optimal services and benefits to the nation, BEDC and consumers.
“We proposed this alternative as it would allow more effective utilisation of funds, reduce losses faster and give more benefit to the consumer as the total injected capital in five years would be less than what MYTO had anticipated. This again reduces the need to request an increase in tariff from the regulators. The alternative proposal was subject to the approval of the regulator.
“We are not aware of any restriction or rule in the RFP that precluded an alternative scenario and thus state unequivocally that we did not cheat or contravene the RFP rules. Instead, we proposed what we believed was a superior scenario that ultimately benefits the consumers, the company and the country, but subjective to the regulator’s approval,” SEDC clarified.
On Peterside’s statement that the consortium is about 90 per cent privately owned, SEDC said: “This is in line with the belief of the state governments, who each own two per cent shares in SEDC, that the business will be better run by the private sector. It is also in adherence with the privatisation laws which stipulate that the government cannot hold more than 49 per cent of the privatised entities.
“Their decision to participate in the consortium was borne out of their desire to support the post acquisition success of the utility by collaborating actively in planning with the new managers and supporting the utility through provision of right of way, legislation against electricity theft, policing for vigilante and improvement of collections. The states and other investors, choice of the technical partners, was based on rigorous assessment of their ability to transform BEDC, as seen by continued success with similar profile of utilities and operating environment and specific experience with building and maintaining network infrastructure in the difficult terrain of BEDC territories,” it said.
SEDC also explained that it had been in touch with BPE and NERC and had had several discussions with them on numerous issues and even specifically on the issue of an alternative investment schedule.
“We do commend their commitment to ensuring that the most effective approach to assessing the viability of the proposals submitted by bidders and believe that we share their values and objectives, which are to provide quality power at affordable prices to the people of our great country”, it added.
But the BPE in a statement by it Head of Media, Mr. Chukwuma Nwoko, noted that SEDC admitted the charge of submitting two bids and that going by the provisions of the RFPs, that is a contravention of the bidding rules.
“The BPE is at a loss as to what they have refuted in their statement,” Nwoko said.
The governors had also accused the BPE of rigging the process in favour of Vigeo Consortium, which emerged as the preferred bidder for the Benin Disco and even threatened not to allow the later to operate in their domain.