Falsehood Over TCN’s Fibre Optic Concession Contract
BY YAKUBU HASSAN
There are stories being fabricated in media outlets that that the Federal Government has lost a whooping sum of N18. 8 billion over the fibre optics concession agreement in 13 years. This is not only a misleading information but is aimed at beclouding issues and deceiving unsuspecting members of the Nigerian public. According to the story, the Federal Government has lost about N18. 8 billion, which is equivalent to $52 million, over the fibre optic network project that was purportedly cancelled but still being challenged in court. The story which is based on some non-existent documents is nothing less than a creative fable.
For those not conversant with the matter, a little summary may suffice here. Worried by the incessant collapse of the national grid, the signing of $100 million Concession Agreement between the Transmission Company of Nigeria (TCN) and the Concessionaires, Alheri Engineering Services and Phase3 Telecom Ltd, was facilitated by the Federal Government and signed on March 20, 2006. The concessionaires were expected to design, build, finance and operate the fibre optic network infrastructure for a period of 15 years, with a renewal for another 5 years.
Besides allowing the concessionaires exclusive use of TCN’s existing facilities, the terms of contracts also provided that the rights granted the Concessionaire shall be $40 million each and Royalty of two-and-half percent of revenue payable in instalments to be agreed by parties (per articles 13:2 (a) and (b) of the Agreement. In line with unforeseen exigencies that may come into place that could affect revenue generation during the period under consideration, the contract agreement notes that “…if as a result of any subsequent change or law or Regulations of any agency or body under the control of government of Nigeria relied upon by the Concessionaire upon entering into the Agreement affects Concessionaire’s reasonable expectation of economic returns on its investments, materially reduce, prejudiced or adversely affect same, then parties shall meet to agree on amendments to the Agreement, with a view to easing the burden of the change in circumstances on Concessionaire…”.
However, it must be stated here that on commencement of the project, TCN’s facilities were found to be moribund and unfit for use by the concessionaires, thus prompting Phase3 and Alheri to invest additional $50 million $25 million respectively in rolling out fibre optic infrastructure covering a distance of no less than 3,000 kilometres. Following the liberalization of the National long-distance Fibre Optic landscape and construction of data transmission terrestrial FOC networks by mobile network operators (MTN, Airtel, Glo and Etisalat), market prices crashed, and it became obvious that a review of the contract terms must take place.
In their determined bid to ensure that Nigeria’s hope of increased productivity in the power sector remains unthreatened, as at 2015, Phase3 had spent N9.6 billion in operating and maintaining the FOC network, while Alheri had expended N1.19 billion. Additionally, the concessionaires had supplied fibre optic cores for use by TCN for its SCADA monitoring valued in excess of $15 million that was supposed to be paid for by TCN.
Following the unexpected downturn in revenue expectations, the concessionaires approached TCN to review terms of the contract, especially as it relates to the concession fees payable to TCN as agreed in the contract terms. When the concessionaires called for the review of the project as envisaged by the terms of contracts, the TCN invited the Infrastructure Concession Regulatory Commission (ICRC) to adjudicate over the matter. Both TCN and the concessionaires, under the watch of the commission, engaged an independent audit firm to determine if there was need for a review. The audit firm – SIAO – recommended for a review in view of prevailing circumstances that have rendered terms of the agreement impossible to implement.
The Attorney General of the Federation and Minister of Justice, Malam Abubakar Malami, SAN, has also described “The purported termination of the Agreement was arbitrary, premature, illegal, null and void, having been issued in violation of the terms of Agreement which mandates under Article 31:1 that Parties shall go to arbitration panel where disputes cannot be resolved amicably.”
One wonders how the Federal Government had lost a ‘whopping sum of N18.8bn for over 13 years’ as falsely being claimed when it had been clearly established following the review carried out by the regulators of the concession, ICRC alongside TCN and concessionaires that expectation of economic returns on its investments has materially reduced and has adversely affected the commercial terms of the concession following the crash in market prices by over 90 percent. The liberalization of the National long-distance Fibre Optic landscape in Nigeria has made it impossible to sustain such revenue expectations as critical stakeholders and the regulatory commission have described such financial earnings as contained in the agreement untenable.
It is unreasonable to expect the concessionaires to have gone far in the project after the TCN shut down their power stations and denied them access to their facilities for over 2 years to commence the second phase of laying another 3,000-kilometre fibre optic cable in 2017. This act of denial to access of their facilities by TCN, as notes by the Office of the National Security Adviser (ONSA), constitutes a breach of national security. After covering a distance of 3,000 kilometres that has provided the telecommunication backbone for an effective Supervisory Control and Data Acquisition (SCADA), an Electricity Management System (EMS) network, for monitoring real time the national grid. One would have just imagined how far the nation would have gone if TCN had allowed the companies to continue its second phase of laying another 3,000-kilometre fibre for enhanced EMS network for real time monitoring of critical power infrastructure. TCN has deliberately foisted deliberate efforts in disobedience to a subsisting order of court by shutting down the companies’ facilities with the sole purpose of truncating the contract that is aimed at providing Nigeria’s power sector with a telecommunications backbone to build an effective EMS for enhanced efficiency.
It is curious that the TCN who had in various press statements attributed the incessant collapse of the national grid to lack of investments in the grid network, spinning reserves, etc. is now looking for yet another lie to cover up the inefficiencies in their system even when the Concessionaires have been shut out by TCN since 2017. Thorough investigations have been independently carried out by the security agencies and EFCC based on various spurious claims by the TCN MD and making the findings public will show who indeed is sabotaging the efforts of the Federal Government in the Power Sector.
The MD of TCN’s attempt to criminalize a purely commercial transaction, runs contrary to the Federal Government’s Ease of Doing Business Policy and negates efforts aimed at attracting investments into the country, more so considering that the Concessionaires are indigenous companies, creating value for the economic advancement of the country.
Hassan, a public commentator wrote this piece from Kawo-Kaduna
