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A Major Setback in the PHCN Privatisation Process: Presidency Scraps Contract to Canadian Power Transmission Company

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Just when Nigerians are still in a mood of celebration over the recent announcement of the completion of the privatisation process of the Power Holding Company of Nigeria, a major setback has occured. On Wednesday, 14th November 2012, the Presidency said it had terminated a $24 million electricity contract with Canada’s state-owned Manitoba Hydro which had previously been hired to manage the national power transmission network.

According to Reuters, President Goodluck Jonathan said he annulled the deal because “due process was not followed in the award of the contract”.

Manitoba was supposed to start work at the beginning of September but transmission is still in control of the government. The head of the Manitoba-run Transmission Company of Nigeria, Don Priestman told Reuters  that they had a clear contract and were meant to be given delegation of authority but “there are forces working against reform.

In an attempt to explain the cause of the canellation of the contract, the Special Adviser to the President on Media and Publicity, Dr. Reuben Abati told Punch that the contract was awarded by the the Bureau of Public Enterprise (BPE) who did not follow due process.

The BPE has no power to approve a management contract, according to the provision of Section 16 sub section 4 of the 2007 Public Procurement Act. That section says that the BPE must obtain a certificate of no objection from the Bureau of Public Procurement.

“Another section of the Act says that certain contracts must be approved by the Federal Executive Council. The management contract in question is $23.6m, which is above the approved threshold of BPE. The vice-president is a member of FEC. For the BPE to go ahead and approve that contract simply means that due process was not followed. It is a matter of due process, a matter of best practice; it is not a personality matter. The infraction was committed by the BPE.”

It is sad that the Presidency is just realizing the BPE did not follow due process several months after the contract was awarded. When BN first reported news of the contract in April {click here to read it}, many had doubts about the contract. Now, instead of moving forward on the privatisation process, we have taken a major step backwards while our organisations and industries continue to groan under the implications of epileptic power supply. This move also puts Nigeria in a bad light as international companies might no longer take us serious since we have shown we cannot honor  an established contract. It is indeed a big blow to the power reform.

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Adeola Adeyemo is a graduate of Industrial Relations and Personnel Management from University of Lagos. However, her passion is writing and she worked as a reporter with NEXT Newspaper. She believes that anything can be written about; anything can be a story depending on the angle it is seen from and the writer's imagination. When she is not writing news or feature articles, she slips into her fantasies and creates interesting fiction pieces. She blogs at www.deolascope.blogspot.com

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