Nigeria 
Nigerian telecom privatisation fails

afrol News, 1 April - The privatisation of Nigeria's national phone company Nitel seemed close to completed last week. But the winning bidder failed to come up with the agreed sum of US$ 1.3 billions for a bid to acquire a 51 percent stake by the deadline on Tuesday. A six-week extension had already been given them last month, and the sale is therefore called off.

The winning bidder, Investors International London Ltd (IIL), is a consortium dominated by Nigerian banks and traditional chiefs based in the English capital. According to the BBC, reporting from London, observers believed IIL had "overpaid for the contract." The runner-ups in the bidding race further were not interested in taking over Nitel anymore, referring to the privatisation process. 

Also in Nigeria, reports say the bid for the mismanaged state giant had been too high. It is estimated that an investment of US$ 1.5 billion would be needed to modernise Nitel's facilities over the next three years. Further, the company was in need of heavy restructuring, employing a staff of 11,000 and managing a badly maintained and incomplete network.

The announced privatisation of Nitel was generally welcomed by Nigerians. With only one in 250 Nigerians having a telephone, Nitel had not been observed as accomplishing its aims as a state company. A basic idea behind Nitel's privatisation and the deregulation in the Nigerian telecommunications sector was the provision of cheap and efficient phone services to the generality of the Nigerian people.

The privatisation of Nitel has been the prestigious corner-stone in the privatising efforts of the government of President Olusegun Obasanjo. With the failure of the sale of Nitel, the entire operations of the privatisation agency, the Bureau of Public Enterprises (BPE), are endangered. The privatisation of the Nigerian airliner last year also failed. 

In Nigeria, Nitel's failed privatisation has sparked a discussion of the competence of the BPE. The Lagos-based newspaper 'This Day' yesterday questioned the commitment of the BPE "to the guiding principles of transparency and accountability" in the handling of its national assignments. Following the businesses of BPE, the newspaper concludes "the processes of privatising and deregulating the telecoms sector have been turned into a huge mess."

Also the independent regulator of the telecom sector - Nigeria Communications Commission (NCC), established by the government in November 1992 - is generally seen as a failure. 

Nitel will now instead be floated on the stock market to an "accelerated" timetable, BPE has stated. The Nigerian telecom also will have to pay back the US$ 130 million deposit made by IIL as the deal was signed. Major investments in the company to enable it to embark on structural reforms and to modernise will not be available for some time.

Sources: Based on Nigerian press and govt. and afrol archives

 

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