FG puts up NITEL for liquidation

9 Views Comment Off
NITEL up for liquidation

NITEL up for liquidation

The Federal Government is to liquidate the moribund telecommunications company NITEL after series of failed efforts to sell it with its debts over the past 11 years.

Liquidation involves bringing a business to a formal end because of insolvency or other reason.

When a company is liquidated, its assets are sold and creditors are paid from the proceeds while whatever remains is shared among the shareholders.

NITEL and its mobile arm M-Tel would be sold through “guided liquidation” in view of the company’s huge liabilities, the Bureau of Public Enterprises said in a statement yesterday.

Spokesman for BPE, Chukwumah Nwokoh, said the process was approved by the National Council on Privatisation, headed by Vice President Namadi Sambo, at a meeting on Monday.

He said technical and legal committees of the NCP would determine the modalities for the liquidation.

NITEL used to be a monopoly but lost its relevance over the past decade with the growth of GSM companies, whose combined 90 million active subscribers dwarf NITEL’s 500,000 fixed lines.

But NITEL has a lot of fixed assets, valued at about $2.5 billion during the latest botched efforts to privatise the company.

Up for grabs in the NITEL liquidation process are the SAT-3 submarine cable, exchanges, transmission stations, cabling network and landed property.

But the company is also neck-deep in debt, owing workers 18 months salaries, and a lot of its assets have been vandalised.

NITEL privatisation process started in 2001, when the Investors International London Limited (ILL) bid to acquire the company but defaulted in paying the bid price of $1.317 billion.

In 2003, Pentascope of Netherlands was appointed as management contractors to revamp the company for another privatisation process.

But this was marred by scandalous revelations that led to cancellation of the contract.

In 2006, Transcorp won a bid to acquire the company for $500 million but they also failed to pay.

The latest attempt in February 2010 saw New Generation emerging the preferred bidder with an offer price of $2.5 billion which they failed to pay even after they got deadline extensions.

The BPE yesterday said the council approved the liquidation after considering a report by one of its committees.

“The TC recommended that ‘guided liquidation’ should be adopted as the strategy for the privatisation of NITEL/M-Tel in view of the huge liabilities of both companies and that there was no viable financial alternative presented by the management of NITEL/M-Tel.

“The NCP supported the recommendation of the Technical Committee that opted for ‘guided liquidation.’

“The NCP also observed from the NITEL/M-Tel presentation that they were receiving some revenues from SAT-3 which were not fully accounted for and in respect of which there had been no audit for several years.

“In spite of the revenues, the management of NITEL/M-Tel had been obtaining their salaries from the Federal Government of Nigeria. Consequently, the NCP directed the Sub-Committee of the Technical Committee on Information, Communication, National Facilities and Agric Resources to immediately carry out investigations and ensure that all revenues received were accounted for.”

Nwokoh said all liquidators having unresolved disputes with the BPE would be excluded from the process for the appointment of a liquidator for NITEL/M-Tel.

Yesterday, president of the postal and telecoms workers’ union Sunday Alhassan told Daily Trust: “We are still studying the situation and we are going to respond to it (liquidation) tomorrow.”

At present, NITEL has 385 staff while M-Tel has about 30 workers.

Speaking to Daily Trust, the president of the Senior Staff Association of Communications, Transport and Corporations, Elias Kazza, said privatisation efforts on NITEL failed due to the selfish interest of some Nigerians.

He said the decision by government to liquidate the company was no surprise.