The liquidator of the Nigeria Tele-communications Plc (NITEL) and its mobile arm, Nigerian Mobile Telecommunication (MTEL), Otunba Olutola Senbore and NATCOM Consortium the preferred bidder for the assets, may be heading for a faceoff over the exchange rate differential occasioned by the devaluation of the naira.
It was gathered that the disagreement over the rates is already threatening the handover of the assets which is waiting to be approved by the National Council of Privatization (NCP) at its next meeting as NATCOM recently completed the balance payment for the assets.
NATCOM Consortium emerged the new owners of the beleaguered national carrier on Wednesday, December 3, 2014 by offering to pay the bid price of $252.5 million which then was about N42.4 billion when the US dollar traded at N168.
The consortium had on January 6, 2015 paid $75.7 million which is about N12.7 billion, being 30 percent of the bid price at the then prevailing exchange rate of N168 to the US dollar.
With subsequent devaluations of the naira which saw the currency slide to about N198 to the US dollar as at April, when NATCOM paid the 70 per cent balance on April 2, it paid $176.5 million (about N29.6 billion) at N168/US dollar which was still the previous rate contrary to the provisions of the asset sale agreement signed by the parties which stipulates the use of the prevailing rate at the time of payment, usually at the interbank rate.
With the dollar trading at N198 at the interbank rate as at April 2nd, NATCOM was thus expected to balance about N35.1 billion but the BPE said the consortium paid N29.6 billion (at N168/US dollar), which is about N5.4 billion short of the outstanding 70 percent of the $252.5 bid price which it ought to pay for the assets.
But the Bureau of Public Enterprises (BPE) said the liquidator may not have used its conventional prevailing exchange rate payment system for the NITEL, MTEL transaction.
According to the spokesman for the Bureau Chigbo Anichebe said, “I will find out from him (the liquidator) because I am not actually sure how they paid: if they paid with the old rate or the new rate but the usual thing on the SPA (Share Purchase Agreement) is that they should pay with the prevailing rate at the time of payment. That is what our SPA usually says, it says the prevailing rate, which means interbank rate which should be around N198 or something but I will call to find out what they paid, at that rate, the old rate or whatever”
Asked if it was not its conventional payment method that was used for the privatization, Anichebe said “You know this one is usually court appointment. So, as much as possible we tried to adopt our own processes and that’s why we say it’s a guided liquidation. I will also confirm from them if they adopted that style”
Following a competitive bidding process, the NCP, on 11th November, 2013, approved the appointment of Otunba Olutola Senbore as the Liquidator of NITEL and MTEL.
After a review of the procurement process, the Certificate of No Objection of the Bureau of Public Procurement was granted on December 17, 2013.
An application was then made to the Federal High Court in Abuja for the voluntary winding-up order of NITEL and MTEL and sanctioning of the appointment of Otunba O. Senbore as the Liquidator of the two companies.
The Federal High Court, Abuja granted the application on 14th March, 2014.