NigComsat Budgets $500 Million for New Satellites

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Nigerian Communications Satellite (NigComsat) Managing Director, Ahmed Rufai, disclosed on Monday that the country would have to shell out $500 million to launch two satellites to replace NigComSat 1 that disintegrated less than two years after launch.

Rufai told the Senate Public Accounts Committee that China Great Wall Industrial Company (CGWIC), the same company that built NigComSat 1 at a cost of $251 million, would also build and launch the new ones. He said NigComSat 1 was not initially built for commercial purposes but deployed in this way after mobile services took off.

Regardless, he noted, it generated N98 million and another $456,000 as revenue, out of which N45 million was remitted to the Federation Account. The Committee wondered why the same company would be awarded another contract for NigComSat 2 and 3.

Committee Chairman, Ahmad Lawan, expressed dissatisfaction with the explanation given by the Nigeria Satellite Commission over the missing NigComSat, which cost N40 billion.

Rufai disclosed that out of the $251 million spent to launch NigComSat 1, $200 million was borrowed from the Export-Import (EXIM) Bank of China and the balance $51 million was paid from Nigeria through appropriation.

"The initial plan for NigComSat 1 was to use it for experimental purposes but the plan was changed because of the need to exploit the market provided by the telecommunications industry in Nigeria. "The quest to launch and operate the satellite on commercial basis led to the failure to seek to launch another satellite as back-up," he added.

According to him, the lost satellite would be replaced by the Chinese company, based on the original contract. "But the relaunch would not take place until late 2010 or early in 2011 when all arrangements would have been put in place to that effect."

Explanations on the insurance for NigComSat 1 were, however, not satisfactory to the Committee as it lamented the non-inclusion of the business and financial benefits to Nigeria.Rufai confirmed that only the asset was insured. He said three options were considered before the decision was taken to award the $500 million NigComSat 2 and 3 contract to the CGWIC.

The first, the government could fund it alone; second, a consortium of Nigerian banks could guarantee loan from China; or third, NigComSat could be fully privatised and source funds from anywhere.

Daily Independent