Controversy Trails the Sale of
SAHCOL
The Managing Director of Pan
Express Services Limited, Chief Peter Okezie, has expressed dissatisfaction
over the sale of what is now known as Skyway Aviation Handling Company Limited
(SAHCOL), and has protested to the National Assembly on the matter.
Okezie has submitted a memo to the House of Representatives Committee on
Privatisation and Commercialisation, protesting the sale.
It
will be recalled that Pan Express was one of the companies that bided for the
acquisition of former Skypower Aviation Handling Company Limited (SAHCOL), but
lost out when it failed to pay for the company after it was acknowledged as
second bidder by the Bureau of Public Enterprises (BPE).
In
his petition which he submitted recently to the Chairman of the Committee,
Okezie alleged that there was under-hand cutting of his company during the
process, and described the process as a big sham.
House
of Representatives Committee on Privatization and Commercialization is
currently probing the sale of government's equity in some privatized
enterprises in the country.
Although
the former management of SAHCOL and BPE have described the sale as transparent
and challenged any one that might have contrary opinion to make his position
public, the Pan Express Boss who participated in the process said in his memo
that the company paid a non-refundable bid fee of USD 10,000, and executed a
bid bond of N50 million, “which, in the midst of their (BPE) self-inflicted
confusion, they reduced to N5.6 million.”
“We
made these commitments on the understanding that the Bureau of Public
Enterprises (BPE), and the National Council on Privatisation (NCP) would adhere
strictly to due process, and be fair and transparent in implementing the entire
process of bidding and sale of SAHCOL and that they would give Pan Express
Services Limited, as much opportunity as anyone else to buy SAHCOL.
Okezie
lamented in the memo that Pan Express was irked and disappointed that secrecy
and favoritism “were introduced at some point, which led to SAHCOL being sold
at ridiculous price far lower than what every bidder bided, and to some
bidders, including our company, being excluded from the competition.”
Although
the thinking of the public was that when Eraskorp Consortium failed to pay N13,
458, 000, 000 it bided for the company, it automatically reverted to the
reserved bidder, Pan Express, which final bidding was N10, 400, 000, 000, to
buy SAHCOL.
This
did not happen because the time it was supposed to pay for the company elapsed,
and BPE had to take the next step for the sale of the company, which
finally was bought by Skyway. Okezie alleged that due process was not really
followed because of prior design to sell the company to a particular
organization.
At
the second round of bidding on June 30, 2009, Eraskorp Consortium came tops
with N13.4billion, Pan Express Services Limited N10. 4 billion, Skyway Aviation
N9.1 billion, TAK Continental N7.7 billion, Moore Associates N6.2 billion and
Aviation Handling Partners N5.5 billion and following this result Pan Express
was confirmed reserved bidder.
But
according to the Pan Express boss, on August 31, 2009, BPE 'upgraded us
to prefered bidder and asked us to pay N10.4 billion”.
“We
were given only ten working days to pay the first installment of 30 per cent.
Unfortunately, this demand came during the turbulent period of sudden financial
reforms in the banking industry. As a result of new rules for credit and
personnel changes, our bankers, which had all along arranged credit for us to
buy SAHCOL, wrote to us asking for 30 working days to provide the money”.
“We
promptly wrote to BPE to request for 30 working days, instead of ten, to make
payment. We attached the Bank's letter, surprisingly, BPE turned down our
request”.
In
other words, BPE taking cognizance of the reform process that was going on in
the banking industry should have given Pan Express more time, so that it would
secure the necessary funds to acquire the company.
Spokesman
of BPE, Chigbo Anachebe told THISDAY then that the Bureau was not
expecting Pan express to bring cash to BPE, because in other parts of the
world, the company that was acquiring another company would partner with banks
to source for funds to pay for the purchase.
But
in that memo, Chief Okezie said, “Towards the end of September, we heard that
BPE had secretly conducted another bidding exercise for four of the six
contestants whom they have selected. This time, it introduced a benchmark
minimum of N5.5 billion, an amount which is far below all the bids in the table
above. There was no publicity and no live coverage of this exercise, which they
tagged “willing Buyer, Willing Seller Option.”
According
to him, the last bid exercise lacked merit, fairness and transparency, further
describing it as totally contrary to due process.
He
argued that “All six contestants should have been invited to compete since a
new element of threshold benchmark was being introduced. Otherwise, the third
placed bidder should have been invited to pay their bid amount N9, 160,621,
000.00.”
He
noted that BPE's resort to a new process where they introduced a new element,
smacks of a plan, conceived from the beginning to sell SAHCOL to a particular
contestant at a predetermined price known only to BPE and that contestant.”
Okezie
alleged that his company had it on good authority that BPE sought NCP's
approval to organize a secret bid exercise even before the expiration of the
ten working days which he said they gave them to pay the first installment of
30 per cent.
“In
actual fact, while our ten working days was to expire on September 15, 2009,
BPE had on September 14, 2009 written to NCP and sought for approval to
organize a secret bid”.
He
also said, BPE's preference to commence a new process that would yield N5.5
billion for SAHCOL, rather than wait another twenty working days and collect
N10.4 billion was self serving and in line with the script to sell SAHCOL for
personal gain rather than realize the maximum possible proceeds for government.”
Okezie
therefore alleged that the entire bidding process, which was widely advertised
and publicized in the media, according to him, was a bogus smokescreen to
give the impression of adherence to due process and the principle of fairness
and equity, regretting that they were misled into committing huge resources to
a grand deception.
He
also said that prior to the privatization of SAHCOL, “our understanding of
government's purpose for privatising its enterprises was to get private sector
experts to run these businesses to deliver quality services and sustain the
development of indigenous professionalism in those sectors as well as to return
to government, as much as possible, good price for its investment”.
Director-General
of BPE, Dr. Chris Anyanwu had defended the agency's sale of Skypower
Aviation Handling Company (SAHCOL) privatization transactions, saying that the
bureau did not breach any process.
Testifying
at the sitting of the House of Representatives Committee on Privatization and
Commercialization probing the sale of government's equity in some privatized
enterprises in the country, defended his role of the privatization agency in
the sale of SAHCOL, insisting that it was transparently done.
He
noted that the sale of SAHCOL was the first enterprise BPE had to superintend
during his tenure, “I had to put in my best and in line with my guiding
principle of transparency and accountability, ensured that the best practices
were adopted and followed. It is absurd and unfortunate that someone could
fault the entire process and cause a petition to the effect”.
He
said apart from following due process and in accordance with the rules, “the
entire process was under the watchful eyes of the Technical Committee (TC) of
the National Council on Privatization (NCP) and NCP.”
The
DG stated that after the mandatory period, the petitioner was given a grace
period to pay the required 30 percent of the total sum but he
failed, necessitating BPE to knock off the first and preferred bidder,
and adopted the willing buyer-willing- seller approach.
Chairman
of the committee, Abbas Braimoh said the members would deliberate on their
findings and table their recommendations before plenary for action to be taken
in the best interest of the nation.
Braimoh
who gave the order on behalf of other members, reiterated that as
parliamentarians, “We will not fold our hands and watch any government agency
frustrated in the discharge of its mandate.
In
a speech he made at the handover of SAHCOL to Skyway, Anyanwu said that
BPE sold the company to an organization that has the competence to effectively
manage it and stressed that the Bureau expected the best from Skyway.
“Nothing
short of excellence will be expected from them because this will be a signal of
what is to come in the privatization process superintended by us. So I expect
that they will bring in new equipment and run it up to the highest possible
standard... I am an apostle of...revocation or reversal; so that will happen if
you don't do your best because the purpose of privatisation is to get
infrastructure, to be the best.
He
also said, “We want businessmen who know their onions to come and take over
businesses formerly run by government and run them well. That is what we expect
Skyway to do in this case and also all Nigerian investors are challenged to
take their destiny into their hands,” he declared.
According
to BPE before it finally sold SAHCOL to Skyway, it went through another process
that was outlined below.
The
National Council on Privatisation (NCP) has approved that Skypower Aviation
Handling Company (SAHCOL) be offered to the four remaining bidders on the basis
of 'willing-buyer, willing-seller', following the failure of both the preferred
bidder, Eraskorp Consortium and the reserve bidder, Pan Express Services, to
make payment at the deadline as stipulated in the terms of sale made to them.
The
four bidders are: Skyway Aviation Handling Company; AK Continental Limited;
Moore Associates Limited; and Aviation Handling Partners Limited.
The
bidders were invited to re-validate their earlier bids or make a fresh bid
based on the new reserve price of N5.522billion. Following an all-party
meeting with the four prospective bidders on 29th September 2009, the following
bids were submitted as follows:
Skyway
Aviation Handling Company N5.5221 billion
TAK
Continental Limited
N5.5230 billion
Moore
Associates Limited; and N5.5230 billion
Aviation
Handling Partners Limited N5.5220 billion
The
Chairman of the occasion, Mr. Babington Ashaye, told the bidders that “whoever
pays first will be the winner and the preferred bidder,” adding that the total
acceptable amount for the enterprise must be fully paid within 30 days from the
date of offer. However, 30% of the bid amount must be paid within 15 days of
the offer.
“It
would be recalled that Eraskorp Consortium emerged the preferred bidder while
Pan Express Services Limited emerged the reserve bidder at the opening of
financial bids submitted by six pre-qualified prospective core investors for
100% government's equity in Skypower Aviation Handling Company (SAHCOL). The
event took place on June 30, 2009 at Transcorp Hilton Hotel. Both
companies have since failed to meet the payment deadline.
The
Federal Government of Nigeria (FGN) is divesting 100% of its controlling shares
with the intention that after a few years from take-over, 49% interest will be
divested to the Nigerian public under the supervision of BPE at a time that
will be mutually agreed upon in the Share Sales Purchase Agreement (SSPA).” On
the face value every part of the process was transparent as BPE argues, but why
did it not extend the time for Pan Express in cognizance of the crises that
befell the banking industry at the time Pan Express was expected to pay for the
handling company.
Although
SAHCOL management then agreed that the company was valued at N2 billion, which
meant that selling it for N5. 5221 billion was still a good price for the
Federal Government, but observers strongly believe that selling it at
over N10 billion would have been a better bargain for government.
(Source:ThisDay)
