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Nigeria: The curse of Nitel strikes again – NGN fails to meet US$750 million payment deadline

The approval for the payment of 30 per cent security sum of the $2.5 billion given to the buyers of Nitel expired yesterday, as fear lingers over the ability of the New Generation consortium to raise money. The curse of Nitel which seems to have dogged every stage of this transaction has struck again.

The transaction was based on the payment of a 30 percent security sum within 10 days of a letter of notification. The Bureau of Public Enterprises (BPE) said the consortium had received the letter on October 25.

The payment of $750 million security will validate the consortium's bid to buy Nitel.
Spokesman of BPE Mr. Chukwuma Nwokoh told Daily Trust yesterday that the consortium was yet to effect the payment but that it has till today to do so.

Asked what happens if the consortium defaults in the payment, Nwokoh said: "We would cross the bridge when we get there. We can't be speculating." Representative of the New Generation consortium in Nigeria Usman Gumi did not pick up his phone after several calls by this reporter. But in an interview last month, Gumi had told this paper that his group was satisfied with President Jonathan's approval and that, all things being equal, it would strive to meet the requirement.

The New Generation consortium includes: China Unicom, Dubai company Minerva and local firm GiCell, headed by Gumi. "The bid security sum is to be paid within ten calendar days from the date of receipt of notification letter. The balance of the bid amount of $1.75 billion should be paid within 60 days from the date of issue of an offer letter," the BPE said in a statement.

President Jonathan had set up a panel in March, led by the attorney general, to investigate the top two bidders. The privatisation agency, Bureau of Public Enterprises (BPE), said three weeks ago the committee had found the planned transaction complied with due process.

The BPE had invited expressions of interest more than a year ago for a minimum of a 75 percent stake in the Nitel conglomerate or a stake in one or several of its components, including mobile arm MTel, the South Atlantic Terminal underwater cable (SAT-3) and its domestic fixed line network.

It would be recalled that New Generation Consortium had emerged the preferred bidder with an offer price of $2.5 billion during the opening of financial bids for the privatisation of Nitel and M-Tel which was held on February 16, 2010 in Abuja. The reserve bidder is Omen International with an offer price of $956,996,091.

NITEL's fixed lines have dropped to less than 100,000 from five times that number in 2001 and subscribers to its MTel mobile unit have dropped to hundreds, a source said.

Source: Daily Trust

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