Emeka Eze’s Misadventure

19 Nov 2012

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BEHIND THE FIGURES by Ijeoma Nwogwugwu;

For over a month, Emeka Eze, the Director General of the Bureau of Public Procurement (BPP), has been riding roughshod over the power sector reform and privatisation programme. Driven by his ego and a debilitating turf war, he almost single handedly dismantled the entire programme, and is absurdly unrepentant for his actions.

Mind you, Mr. Eze could not have gotten as far as he did without the explicit and implicit support of some individuals and interested parties inside and outside government. He was egged on the by the Indian High Commission, Power Grid of India, officials in the power ministry who would rather preserve the status quo, and most distressingly, the Attorney General and Minister of Justice, Mohammed Adoke.

It was Mr. Eze, who though a memo to President Goodluck Jonathan, that got the president to almost terminate the management contract executed between the Bureau of Public Enterprises (BPE), on behalf of the Federal Government, the Transmission Company of Nigeria (TCN), and Manitoba Hydro International, a Canadian electric power and gas utility with footprints in sub-Saharan Africa, Saudi Arabia, China, Afghanistan and several other countries.

In fact, he had succeeded by Sunday, November 11, when the president signed off on his request that the Manitoba contract be cancelled. The only modification that the president made to Mr. Eze’s demand was that the power ministry, within 30 days, handled the selection of a new contractor under a new contract to run TCN. Mr. Eze had ambitiously offered to do the job himself in 30 days. Had common sense not prevailed by Thursday last week, when the president and Vice President Namadi Sambo were properly advised by well meaning Nigerians and members of the private sector of the incalculable damage this would have done to the power reform programme, Nigeria would have been plunged once again into the dark ages.

In my conversations with Mr. Eze last week when I tried to pry information from him for his side of the story, which he stubbornly refused to provide at the outset, he accused me of bias having worked for the BPE. I reminded him that I wear two caps – the first being that of the editor, which requires me to present the story from all sides, an opportunity he thoughtlessly blew. The other cap is that of a columnist, where in expressing my personal opinion, I am usually incapable of perching on the fence and can be unapologetically biased.

My bias, in case Mr. Eze does not know, stemmed not only from working in the BPE as a consultant contracted to the agency, it arose from the incandescent anger I felt over his attempt to meddle with the power reform programme and the impressive progress, acknowledged at home and abroad, that the Jonathan administration had made in driving it through since 2010. It arose from the fact that I consider it unfair when those opposed to change and for selfish reasons, ceaselessly kick the BPE, one of the foremost reform agencies in the country, in the teeth. This does not in any way suggest that the BPE has not taken a few missteps, but overall, its programmes have been well intentioned, are aimed at reforming public enterprises, and targeted at elevating Nigeria to the lofty economic heights that have eluded the country for decades.

The BPE aside, my bias was galvanised by the fact that like millions of Nigerians, I am sick and tired of subsisting without regular electricity and will take on anyone who attempts to dismantle the most important programme of this administration, be it for self-serving or political reasons. The power sector reform and privatisation programme is the only programme of note being implemented by the Jonathan administration. All others are peripheral and its significance cannot be overemphasised.

If this government can fix the power sector, it will reduce the cost of output and manufacturing and create several thousands of jobs; it will lead to a reduction in interest rates charged by the banks as a significant portion of their cost is passed on to retail and corporate customers in need of credit; it will make construction and infrastructure development cheaper; it will lead to the resuscitation of micro, small and medium enterprises; it will reduce the number of deaths on operating tables in private and public hospitals; it will enhance education and research; it will reduce telecoms charges as operators would no longer have to run thousands of base stations and their networks on generators; it will put more disposable income in the hands of households as they would spend less on generating their own electricity; it will enhance agriculture and agro-allied businesses; it will open up rural areas; it will help Nigeria speedily overtake South Africa as the largest economy on the African continent; it will catapult Nigeria to one of the 20 largest economies by 2020. The impact of regular electricity supply on this country cuts across the entire social, cultural and economic value chain. 

But let us get into the micro issues that prompted Mr. Eze into embarking on his misadventure. He started by informing the BPE that it was not its responsibility to have selected a management contractor for TCN as all forms of procurement, including for professional or consultancy services must be passed through the BPP for a “No Objection” and must be approved by the Federal Executive Council (FEC).

With the support of Mr. Adoke, Mr. Eze threw the book at BPE. Drawing from the Public Procurement Act, which provides the legal framework for the establishment of BPP and its activities, Mr. Eze reminded the BPE that Part X, Section 55 of the Act that deals with the disposal of public assets does not apply to management contracts. The relevant clause states: “This section shall apply subject to the Public Enterprises (Privatisation and Commercialisation) Act, 1999.” This means that the National Council on Privatisation (NCP) and its secretariat, the BPE, in the disposal of public assets shall not have to go to the BPP for a “No Objection” in so far as its processes are carried out competitively. This clause was inserted in recognition of the fact that the NCP is a high organ of the state and is for the same reason chaired by the Vice President of the Federal Republic of Nigeria.

The attorney general, on the other hand, argued that the clause was only applicable to the disposal or outright sale of public assets, not for the procurement of management services under the privatisation programme. Yet Privatisation 101 teaches us that the term privatisation is an all-encompassing word that entails the transfer of a public held asset to private sector hands in one form or the other. It includes outright sale through a core investor sale of public offer, liquidation, a concession in its variant forms (BOT, BOOT, ROT, etc) and management contracts.

But even if we had to look through the narrow prism of the attorney general’s legal opinion and agreed with him as the Chief Law Officer of the Federation, was it not the responsibility of Mr. Adoke to serve the best interest of his client, in this case, the Federal Government of Nigeria? Knowing that the power reform programme is pivotal to the transformation agenda of this administration, could he not have slapped the BPE on the wrist, asked the agency to terminate the contract and resubmit the draft contract for a “No Objection” by the BPP and subsequent approval by FEC?

Did he have to declare it null and void and almost cost the nation dearly? Was Mr. Adoke not a part and parcel of this government in 2010 when the president gave the go ahead to the NPC and BPE to conclude the selection process for a management contractor for the TCN from where it had been stopped by the Umaru Yar’Adua administration? Why did Messrs Adoke and Eze not speak up then? In my own “unlearned” opinion, a well meaning legal adviser who wants to see his client succeed, would have looked at the big picture and served the interest of his client and country first.

In addition to the legal spanners they tried to throw at the Manitoba contract, Mr. Eze, was also prodded by the Indian High Commission and Power Grid of India, not necessarily for personal monetary gains but just to prove that he was the “Big Boy” in charge. In 2007, when former President Olusegun Obasanjo kick-started the power reform programme, the BPE had received expressions of interest from four foreign electric power utilities. Two had fallen by the way side by the time Obasanjo left office, leaving Manitoba and Power Grid of India to compete for the job. At the time, Manitoba had offered to manage TCN for $8 million, while Power Grid of India was willing to undertake the same job for $5.4 million.

Unfortunately, the late President Yar’Adua stopped the reform programme, which was not restarted till 2010. But this time, NCP and BPE, and on the basis of the advise of British Power International, a power utility consultancy based in the UK, felt that if they must appoint a management contractor to turn around the operations of the transmission grid, it would have to expand the scope of work to be undertaken by the manager appointed to do the job.

The BPE therefore altered its request for proposals and asked Power Grid of India and Manitoba to submit new technical and financial proposals on the basis of the expanded work they would have to undertake. During the technical evaluation of the proposals, Power Grid of India failed to make the cut and was not prequalified to have its financial proposal opened for negotiations. As such, no one knows how much Power Grid of India had asked for the expanded scope of work. 

However, Manitoba, which passed and had its financial proposal opened, settled for a $23.7 million fee at the conclusion of negotiations. This process, mind you, followed the usual procedures for tenders of the BPE, was transparent and competitive and was approved by the NCP, of which Mr. Adoke is a member.

But Power Grid of India, and one of its partners, Skipper Nigeria Limited, which was fingered in the botched sale of the Afam power station and Kaduna Disco, would have none of it. It lobbied hard and with the assistance of the Indian High Commission and Mr. Eze, cast aspersions on the management of the BPE and made them look like they had committed a crime.

Despite all the entreaties and explanations to Mr. Eze that the expanded scope of work had resulted in a contract variation, he dug deep and went out on a limb to ambush the BPE after a meeting of the warring parties with the president on October 31, to resolve the problem. What was so intriguing about Mr. Eze’s misadventure was that his agency has sat over and procured several contracts, which the BPP was expected to monitor, but have gone belly up. It is for this reason the country is littered with abandoned projects.

Even more worrisome is that Mr. Eze has run the BPP as a sole administrator since 2007, even though the Public Procurement Act provides for the establishment of the National Council on Public Procurement, a governing council that is meant to approve all public procurements. It is perhaps the absence of a supervisory council that beclouded Mr. Eze’s sense of judgment and fair play. It would do the country, BPP and Mr. Eze, a world of good if President Jonathan institutes and inaugurates a governing council for the BPP before its head inflicts more harm than good.

The lesson to be learnt from the entire saga is that the president and his deputy, who have laudably pushed through the power reform programme, must remain steadfast. There are several interested parties, especially in this administration, not keen on the success of the programme. They should be told in no uncertain terms to fall in line or shown the way out.

More important, the president should personally, and as a matter of urgency, appoint a supervisory board, compromising individuals of impeccable character for the TCN. Had a supervisory board been in place, perhaps Mr. Eze would have been stopped in his tracks sooner rather than later.

Pix – Emeka Eze, DG BPP

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