Nigeria: the sorry story of the failure of the government in the privatisation of NITEL

[daily champion] The sorry story of the process of privatisation of the Nigerian Telecommunications Limited (NITEL) is a study in the failure of government.

This sad saga started several years ago when, as a profit making company, government, as part of its privatisation programme, advertised the national telecommunications carrier for sale.

What has turned out to be a weird bazaar of all manner of fraudulent and dubious individuals and companies ripping off Nigerians through the looting of their prized possession started from that process and has continued, almost seven years after it started.

As company after company came and ravaged NITEL and its subsidiary, MTEL, the fortunes of the once flourishing company continued to nose-dive till it got to a point where suggestions were being made for it to be sold off as scrap.

The cocktail of mostly sordid deals, all of which have failed, included companies like France Telecom and International Investor Limited London (IILL). The IILL deal claimed the position of a first generation bank Managing Director at the time.

Through a process that has been widely acknowledged as questionable, the Chief Olusegun Obasanjo government engaged a company called Pentascope of Netherlands to manage NITEL. It was later alleged that the company had no knowledge of telecommunications and had its office in an abandoned church building.

By the time the Pentascope deal went burst in 2005 after about 18 months, NITEL had been plunged into debts of millions of dollars and had become worse than it was before the coming of Pentascope which was foisted on NITEL by the then Director General of the Bureau of Public Enterprises (BPE), Malam Nasir El Rufai.

After the sacking of Pentascope for non-performance, a hurriedly assembled special vehicle with official backing called Transnational Corporation (TRANSCORP) came into the picture and NITEL was literally handed over to this company which also had no knowledge of telecommunications operations.

In a process that is still very controversial, it secured 51 percent of NITEL with questionable assets and bank loans that have remained unpaid. Indeed, at one point, a consortium of banks that put together the loans for the purchase of the NITEL shares made an attempt to take over NITEL arguing that since TRANSCORP could not repay the loans within a year as agreed, they had technically become the owners of NITEL. The banks include United Bank for Africa (UBA), Union Bank of Nigeria (UBN), Intercontinental Bank Plc and Wema Bank Plc.

While the wobbling and fumbling was going on, the fortunes of NITEL continued to nose dive to the extent that from about 400,000 lines, the company can now boast of little or nothing of importance, except its strategic South Atlantic-3 (SAT-3) submarine cable, which is now the company's prime asset as it is the country's major gateway to the outside world.

To worsen matters, there were allegations of asset stripping and other forms of looting of the company which should, otherwise be a shinning star in the country's economic sector. The real tragedy is that till date government has not brought any of its officials or operatives of the companies that had fraudulently dealt with NITEL to book.

Rather, to the consternation of many, BNP Paribas, a company with known links to Pentascope was brought back as winner of the consulting bid for NITEL's new core investor last year.

A new chapter, however, seems to have opened for NITEL with the recent revocation, by the Federal Government, of the sale of the company to TRANSCORP. Government based the action on the failure of TRANSCORP to abide by the terms and conditions of the Shares Sales Purchase Agreement (SSPA).

Some of the breaches include the exit of British Telecommunications as the technical operator for NITEL, which was part of the agreement, the failure of TRANSCORP to inject N8.9 billion cash into NITEL within 100 days of taking it over to address the immediate liquidity problems facing the company, failure to pay staff salaries in the past 11 months and failure to maintain NITEL/MTEL as a going concern.

We support government's action on these grounds but insist that taking over NITEL cannot be enough punishment for any confirmed assets stripping and looting of the company by officials of TRANSCORP or those that operated before them. Unless a far-reaching probe of the widely acknowledged looting of NITEL is carried out and all those implicated severely sanctioned, there would be little or nothing to deter those who would, even now, be lurking around, from again participating in a new round of devastation of this erstwhile pride of the nation.

NITEL has over the years been made unattractive to potential buyers, but notwithstanding, government should prove that it can still be trusted to conduct a transparent and credible privatization of the company. That way, respectable and genuine companies would show interest in what is left of the nation's first carrier.

Towards making such a process successful, we propose that government, through the National Council on Privatisation (NCP) and the BPE should invite operating telecommunications companies that have demonstrated commitment and capacity to deliver to come forward and take over NITEL. Once this is done, the confidence of the people can be restored, NITEL and its mobile subsidiary MTEL can return to profitability and the longstanding shame of a nation can be erased.

Nitel - the Failure of Government