Why Buhari cancelled Dangote’s concession deal
Power, Works and Housing Minister, Babatunde Fashola, in a letter to President Muhammadu Buhari, has disclosed the termination of the concession contracts for the management of Fiber Optic Network of the Transmission Company of Nigeria (TCN).
The contract was with Alheri Engineering Company Limited, largely owned by African richest man, Aliko Dangote; and, Phase3 Telecom Limited, linked to an in-law of former Minister of Communications, Cornelius Adebayo.
Fashola, in the letter dated October 31, 2017, with reference number FMP/OPS/05/1 obtained by THEWILL faulted the process of the concession insisting that there was breach of agreement, as well as conflict of interest in the entire transactions.
“I write to respectfully draw your Excellency’s attention to ongoing efforts by the management of the Transmission company of Nigeria (TCN) to enforce its termination of two failed Fiber Network concession Agreements, recover its outstanding concession fees in the sum of usd 75,500,000.00 million from the two concessionaires, and take position of and commercialize its critical fiber optic infrastructure, which are essential for the stability and optimization of the national grid,” Fashola wrote.
He informed the President that going ahead with the concession would affect the stability, optimization and continued expansion of the national grid, which, in turn, will affect communication in the country generally.
“The Concessionaires were to pay a concession fee of $40 million each for the use of TCN’s asset to service their customers,” he continued.
“The concession fee was not just for the right of way upon which the transmission lines are constructed, but also for the use of the fiber optic network which was built by TCN along with the transmission lines.
“The agreement also provided for shelter fees of 2.5 per cent on gross revenue. Since 2006, Phase3 and Alheri have paid only $2 million and $3.5 million concession fees respectively.”
Fashola also revealed that the concessionaires failed to build most of the enhancements their concession agreements required them to build, operate and transfer has failed adding that efforts by TCN management to ensure the concessionaires paid their outstanding debts faile.
“Due to the manifest breach of the Fiber Network Concession agreements by the Concessionaires, and the existence of conflicts of interest as shown by the foregoing paragraphs, I concur with the management of the TCN and that the agreements were voidable and that they stand terminated,” he declared.
The Minister traced the history of the concession and concluded that the concessionaires had done well in areas of breaching clauses of the agreements like misrepresentation to the Nigerian Communications Commission (NCC), non-payment of electricity bills for eleven years, non-adherence to the use of 50per cent of the network among others.
“In peer transmission networks in India, Brazil, and South Africa, the grid operators derive a significant paft of their revenue (in some cases higher than revenue derived from electricity transmission) from the commercialization of their fiber optic network,” he explained.
“However, in Nigeria, TCN’s ability to draw on this important income stream was frustrated by the current failed Concession Agreements.
“The entire revenue stream has been unfairly appropriated by the Concessionaires without commensurate benefit to TCN as provided for in the Concession Agreements.
“I humbly and respectfully bring this situation to your Excellenry,s attention and seek your Excellency’s directive to relevant Government agencies (DSS, EFCC, Ministry of Justice, Ministry of communications, NCC, ICRC) to support TCN as it takes deliberate and reasonable steps to recover its outstanding concession fees, and to fully recover these critical assets of Government, without avoidable disruption to the third parties who rely on
TCN’s fiber optic network.
“These steps are essential for the stability, optimization and continued expansion of the national grid,” he told the President.