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Afam: Privatisation Or Cronyism? By Godwin Joshua

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The procurement circle for the divestiture of the 100% FGN ownership of Afam Power Generating Company was initiated by the Bureau for Public Enterprise (BPE) sometime in August, 2018 with a call for Expression of Interest (EoI) from any Core investor. By the 15th of March 2019, a total of 19 firms had expressed interest to acquire Afam Power Generation Company and Afam 3 Fast Power Limited.

After harvesting the bids received, the BPE evaluated the EoIs in which 11 firms pre-qualified for the next stage of the bidding process i.e. submission of Technical/Financial Proposals.

After the completion of this stage evaluation, only five (5) out of the 11 firms technically qualified. However, in the final analysis, three (3) firms namely, Diamond Stripes Consortium; Transcorp Power Consortium and Unicorn Consortium emerged as the best in technical presentation.

Accordingly, in October 2019, the National Council on privatisation (NCP) chaired by the Vice President, Professor Yemi Osinbajo gave approval for the BPE to proceed with the financial bid opening of the technically qualified firms mentioned above. In compliance with the NCP approval, the BPE went ahead to open the financials bid as follows: Transcorp Power Consortium declared the preferred bidder for the acquisition of Afam Electricity Generation Company and Afam 3 Fast Power Limited with a bid price of (N105.3 Billion Naira) and Diamond Stripes Consortium declared as the Reserve Bidder with a price of (N102.3 Billion Naira).

By virtue of the provisions of the Request for Proposal (RFP) issued by the BPE, the preferred bidder in this case, Transcorp Power Consortium having fulfilled the requirements of the tender should have signed the Share Sale and Purchase Agreement before the Nov. 5th 2020 (one clear year after NCP approval). The question is, what has delayed the execution of the instrument of acquisition of Afam Electricity Generating Company by the Preferred Bidder?

Note that our inquisition into the delayed execution of the Share Sale and Purchase Agreement by Transcorp Power Consortium, had prompted the Reserved Bidder to repeatedly call upon BPE to invite them to sign the share sale Agreement since Transcorp Power Consortium had seemingly declined the award. In the same vein, BPE had repeatedly denied the Reserved Bidder (Diamond Stripes Consortium) to sign the share sale Agreement in order to close the transaction.

In a twist of event, by a letter to the Director General of BPE dated July 16, 2020, Transcorp Power Consortium had amongst other things contained in the their letter proposed debt to equity conversion thus:

“As part of the resolution of the highlighted issues, we are proposing the conversion of the current debt owed Transcorp Power Limited by Nigeria Bulk Electricity Trader (NBET) which stood at N111 Billion (N83 Billion principal and N28 Billion interest) as at 30th June 30th, 2020 into equity, by applying and treating same as full payment of the combined acquisition price of the state companies”.

To say the least, the above excerpt in a typical procurement procedure is a COUNTER OFFER and a complete departure from the procurement guidelines as contained in the RFP. The implication of which is outright disqualification and inviting the Reserved Bidder to close the transaction.

Secondly, the Counter Offer is not in line with the submission of the DG BPE to the FGN in February 2020 that the Bureau would raise N266.8 Billion Naira privatization proceeds to fund Year 2020 budget across twenty transactions to partly fund N10.5 Trillion Naira 2020 national budget signed into law in December 2019 by President Muhammadu Buhari. Therefore, by necessary implication, the National Assembly and the Federal Ministry of Finance have taken note and factored those figures into the cash flow projection that would fund the 2020 budget. For the benefit of doubt, any deviation must be approved by the Federal Executive Council and ratified by the National Assembly because a case of virement has been established.

Thirdly, the Counter offer would have negative effect on the completion of Afam 3 Fast Power Plant of 240MW which the FGN has agreed to complete and commission before handing over. We understood that about $200 million (Two Hundred Million USD) shall be required to take the project to completion.

Fourthly, the Counter offer has undoubtedly questioned the integrity or otherwise of the procurement process adopted in arriving at the preferred bidder.

In the circumstances, we are appealing to the National Assembly and EFCC to assemble some Procurement Specialists that would investigate the entire procurement process of the enterprise called Afam Genco.

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