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Failed TCN contract: Question of renewal

By Kola Olugbenga
02 July 2015   |   3:04 am
A BATTLE for the soul of the Nigerian power sector is raging. In this battle, patriotic forces are arrayed on one side, fighting in the best interest of the country. And unpatriotic forces, motivated by self-interest, are lined up on the other side, against the patriots and the country.

Power Plant

A BATTLE for the soul of the Nigerian power sector is raging. In this battle, patriotic forces are arrayed on one side, fighting in the best interest of the country. And unpatriotic forces, motivated by self-interest, are lined up on the other side, against the patriots and the country.

For now, there is no clearer manifestation of this battle than the controversy over the renewal of the management contract of the Canadian firm, Manitoba Hydro International (MHI), in respect of the Transmission Company of Nigeria (TCN). As alleged in a story published in Business Day of June 22, 2015, “The battle over the control of TCN is traced to the average of N17.8 billion monthly funds.”

While the allegation gives an insight into the pecuniary motive of some of the gladiators, it is clear that the conflict is also being waged as a smear campaign against those who would rather defend Nigeria’s interest in the Manitoba contract. For instance, the story also alleges that a top official in the Ministry of Power, working through the leadership of TCN, has stalled the process of renewing the management contract “despite the documents having been signed internally.”    

The contract is valued at US$23 million and funded by Nigerian taxpayers. How many of those Nigerians calling for its renewal would do so if the millions of dollars spent so far on its failed execution were their personal funds and if the renewal were to be at their personal expense? Would they approve such waste if TCN were their private business? Should it not matter to them and the rest of us because it is government business and taxpayers’ money?  

Those knowledgeable about recent developments in the power sector, especially during the power sector reform, would recall that the origin of the MHI contract was once associated with serious irregularities by the Bureau of Public Procurement (BPP) and the office of the Attorney General of the Federation. This almost led to its cancellation by the immediate past government but for the intervention of some powerful individuals who the government probably believed to have meant well. Also, the government seemingly demurred to give MHI the opportunity to prove that it can successfully execute the contract as a condition for its possible renewal.

Unfortunately, despite MHI’s poor performance in executing the contract, Nigeria’s capacity to transmit power having remained very low compared to spent resources, some Nigerians, apparently for selfish reasons, continue to lobby for its renewal.

But how can the failure of a contractor be a justification for the renewal of the contract even without any sign that the renewal will bring about any improvement in the contractor’s performance?

Indeed, the Ministry of Power, its Permanent Secretary and the chairman of TCN may have pondered such questions and arrived at the proper answers. And if, having done so, they have decided to raise objections to the renewal of the non-performing contract, then they should be praised for acting in the best interest of the country rather than criticised.   

Besides, it smacks of lack of transparency to say that the documents for the renewal of the contract have been “signed internally” without stating between what parties. And it is unfortunate that rather than concentrate on delivering on its mandate as specified in the contract and thereby justify its renewal, MHI has seemingly become embroiled in the politics of controlling “the average of N17.8 billion monthly funds” said to accrue to TCN. Worse still, its desperation seems to have exposed it to the practice of signing contracts “internally” despite the implication of lack of transparency.

Should we encourage this type of unethical manoeuvering even after having ushered in a new era of change under a new government that has promised to eliminate all underhanded transactions from our system? Can’t we see that ignoring the signing of the TCN contract under questionable circumstances can worsen the moral health of our country and further jeopardise the functionality of our power transmission network, as the contract may have been signed “internally” to protect some vested interests, without terms that insist on service delivery and performance?

Some of the allegations in the conflict are simply lugubrious, like the charge that “Igali ….has made redundant Manitoba Hydro International.” The MHI group is working under a clearly defined contract with specified deliverables for which it is being paid. How can a supposed body of foreign experts even accept that it can be made redundant by a Permanent Secretary whose profession is different from that of its members without the members recognising that they are calling to question their understanding of what it means to be qualified professionals?

That said Section 14 of the Administrative Guidelines Regulating the Relationship Between Parastatals/Government-Owned Companies and the Government states: “The Board and Management of a parastatal shall not, without reference to the Minister, take any action involving a change of policy or one which is likely to lead to public controversy. The Permanent Secretary of the supervising Ministry shall be responsible for ensuring that effect is given to Government decisions with which a parastatal is concerned.”

Therefore, if he discovered a violation of the first part of the above provision, the Permanent Secretary of the Ministry of Power is right to act to restore order in TCN and its management. Nigeria may not have the best reputation among nations, but it should not worsen its image problem by portraying itself as a wasteful country that would not baulk at spending its taxpayers’ money in tens of millions of dollars to reward failure. This is what renewing the TCN contract, being executed by MHI, would amount to under the present circumstances.

Given the chronic non-performance of MHI in its execution of the TCN contract, it is apparent that Nigeria’s interest will be better served by its cultivation of indigenous expertise to manage its transmission network as most African countries including South Africa, which has one of the most efficient power systems in the world, have done through government management and control of their transmission networks.  

However, I think an honest answer to one simple question should guide the decision of the Nigerian authorities to renew the contract or not. Which is: Will any country interested in its own progress, including Canada where MHI comes from, renew a US$23 million contract awarded to expatriates who for three years have accepted to be paid with nothing concrete to show in terms performance? For me the answer is an emphatic no.

•Olugbenga wrote from Lagos.