Nigeria Cancels Transmission Management Contract with Manitoba Hydro

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Nigerian President Goodluck Jonathan has cancelled a $23 million contract with Manitoba Hydro International (MHI) (Winnipeg, Manitoba) for the reorganization of the Transmission Company of Nigeria (TCN), which has been seen as a crucial element in the potential success of the country's power reform and privatization program.

The contract was awarded in July by the Bureau of Public Enterprise (BPE) and offered an initial term to run TCN for three years, with the option to extend another two years. The deal was signed after a process lasting more than five years; during that time, MHI and Power Grid of India (Gurgaon, India) had their technical and financial proposals evaluated prior to final selection as management contractor.

When Jonathan took over as president in 2010 and launched the Power Sector Road Map, the federal government directed BPE to continue with the process, which was suspended by Jonathan's predecessor, rather than re-start the processing and tendering all over again. It also was hoped that a quick move would escape entanglement of bureaucratic red tape.

It now appears that the cancellation of the contract was based on a memo sent by the Bureau of Public Procurement (BPP), which stated that it did not pass through due process. The memo informed the president that a management contract was distinct from a privatization transaction or concession, and that the BPP should not have superintended the selection process. Other negative points were introduced concerning the contract.

The director general of the BPP recommended that the BPE should furnish BPP with five names of companies so that a new contractor could be selected in 30 days, reported This Day.

The president ignored the recommendation and directed that the Ministry of Power should handle the selection of a new contractor for TCN in 30 days. There is concern and skepticism in the power sector that a transparent process can be conducted in a 30-day period and that the power ministry does not have the technical expertise to handle the process. BPE had previously drawn on the expertise of British Power International (Colchester, England) as consultants during the selection process.

This Day reports that since the execution of the contract, MHI had been prevented from effectively taking over at TCN by bureaucrats in the Ministry of Power. The appointment of a supervisory board for TCN by the power minister also was delayed for inexplicable reasons.

Those reasons could be revealed when the new list of candidates is put forward. Will it contain MHI's name, and what are the connections of the other selected companies? For related information, see August 14, 2012, article - Manitoba Hydro to Reorganize Nigeria's Transmission Company.

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