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Manitoba Contract: BPE Challenges Mis-procurement Charge by BPP

15 Nov 2012

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 President Goodluck Jonathan 

Chineme Okafor 
The Bureau of Public Enterprises (BPE) has refuted claims by the Bureau of Public Procurement (BPP) that it erred in its process of procuring a management contractor for the Transmission Company of Nigeria (TCN).

THISDAY exclusively reported Wednesday  that President Goodluck Jonathan had cancelled the three-year $23.7 million management contract for TCN through which Canadian firm, Manitoba Hydro International (MHI), was selected by BPE with the approval of the National Council on Privatisation (NCP).

The termination of the contractor has the potential of jeopardising the power reform and privatisation programme, as industry operators who spoke on the development yesterday said the government’s action could deter potential investors selected for the distribution and generation companies last month by NCP from going ahead with the transaction.

“It has cast a cloud of uncertainty on the entire process,” said one preferred bidder, who did not want to be named.

“If this could happen to Manitoba, which has been frustrated every step of the way, what’s to stop the government from taking similar action when we invest our hard earned money in these assets. This is certainly shocking,” he said.

He also wondered why any investor would be willing to invest in the power assets when the fate of the transmission company was in doubt.

BPE in response to the BPP, which had written to inform it that it mis-procured the management contractor for TCN, explained that such interpretation by BPP of its actions was wrong in view of provisions in the extant laws, which backed its action.
According to the response, which was obtained by THISDAY in Abuja, the BPE said: “The exclusive right of NCP to preside over the privatisation and sale of public assets was also recognised by the Public Procurement Act (2007) when it stated in Part X - Disposal of Public Property (Section 55) that ‘this section shall apply subject to the Public Enterprises (Privatisation and Commercialisation) Act 1999.’

“This implies that the powers that the BPP exercises do not extend to the BPE as the Act establishing the BPE’s processes had made it superior to that of BPP.”

The privatisation agency held further: “Our understanding of the above provision is that the powers of NCP to approve privatisation transactions have not been taken away by the BPP’s Act but rather constitutes an exception to the jurisdiction where BPP can exercise such power.”

It added: “We believe that the assertion in your letter that BPE should take its approval requests to Federal Executive Council (FEC) is wrong and not in accord with the extant laws of the land.

“It further means that BPP cannot confer or arrogate to itself any powers or authority not bestowed on it by the Act of parliament creating it even when it is approached by whatever means to do so, as it will be acting ultra vires on its powers and therefore null and void its action.

“For instance, the courts in Nigeria have on several occasions declined to entertain matters because the law creating them does not empower them to do so.
“The implication of your overreaching and interpretation of the BPP Act is that all approvals given by NCP since June 2007 without recourse to BPP are wrong, null and void as it is ultra vires their powers and not just the Manitoba privatisation, the subject of your letter.”

The privatisation agency also wondered why BPP, which has been operating without a governing council since inception, as provided under the Public Procurement Act establishing it, would accuse it of violating its own Public Enterprises (Privatisation and Commercialisation) Act.

It reminded the BPP that it undertook the management contract for NITEL through which Pentascope emerged and it got the NCP approval for the Dutch company’s selection in 2003.

BPE explained that a management contract is a form of privatisation, like liquidation, concessions and others, and wondered why the BPP did not demand that it took the sale of generation and distribution companies unbundled from the Power Holding Company of Nigeria (PHCN) to FEC for approval.

Jonathan had based his decision to cancel the contract on a memo sent by the BPP, which had pushed for its cancellation on the premise that it did not pass through due process as provided under the Public Procurement Act.

The management contract was signed between the BPE, on behalf of the Federal Government, and Manitoba in July, with a commencement date of September 1, 2012.
But owing to interference by officials in the Ministry of Power, the take off of the deal was stalled, while the Canadian firm was prevented from effectively taking over TCN.

The president gave the power ministry 30 days to procure a new contractor for TCN.
Meanwhile, the National Union of Electricity Employees (NUEE) has asked for a reversal of all transactions undertaken by the BPE under the privatisation programme.
In its reaction to the Federal Government’s cancellation of the three-year Manitoba contract, NUEE stated that the development was an indication of fraud used by the government in its bid to privatise PHCN successor companies.

National President of NUEE, Mr. Mansur Musa, told THISDAY Wednesday  in Abuja, that the Federal Government’s eagerness to hurriedly privatise PHCN has led it to commit mistakes in the process, adding that as long as that remains the case, the government may yet fail in its effort to reform the country’s power sector.

Musa said the cancellation of the management contract by the government would only make sense when it considers the resolution of the National Assembly on BPE which it asked the government to overhaul following its claims that the privatisation agency has largely mismanaged the country’s privatisation programme.

He also questioned the credibility of the Ministry of Power to conduct a thorough selection process for another management contractor within 30 days, saying that the ministry lacked the wherewithal to even attempt the process.

He said: “That is what we have asked for all this while because the whole process lacks integrity. Government has gone on with the privatisation process haphazardly, selling off power assest without the interest of Nigerians in view.”

Tags: News, Featured, Nigeria, BPE, BPP, NCP

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