Nigeria: Federal Government Abandons $200 Million Rural Telephony Project

Telecoms

The federal government is planning to abandon the $200 million National Rural Telephony Project (NRTP) it conceived in 2001 to take telephony services to the rural areas. The exit follows the full liberalisation of the telecommunications sector and government's poor execution of the project from inception.

A top official of the Ministry of Communications Technology said the government was about to finalise the handing over to the indigenous operators that won the bid. "We are about finalizing the handover of the authority to the private operators to manage the project. We will soon make the announcement," the official said.

The project, inaugurated under former President Olusegun Obasanjo's first term in office, was to cover 218 local government areas in the first phase and provide over 636,256 CDMA lines in the 774 local government areas and the Federal Capital Territory (FCT) in the second phase to bridge the digital divide between the urban and rural areas.

The federal government had borrowed $200 million from the China Export Import (EXIM) Bank and provided 15 per cent counterpart funding of N5 billion to execute the project, but its design and execution was faulty from the beginning. Three Chinese companies - ZTE Corporation, Huawei and Shangai Bell - were awarded the NRTP contract to take telephony services to the rural areas but ended up building only exchanges.

Minister of Communications Mrs Omobola Johnson said the exchange centres that were built in six geopolitical zones were being concessioned to the private sector. "The telecom industry is fully liberalised, there is very little government involvement and, therefore, we believe that the National Rural Telephony Project is better implemented and managed outside of government.

"So these six rural telephony exchanges are being concessioned to companies that have paid for them and our role is to monitor the implementation and delivery of services to rural areas. In a sense, we are getting out of the rural telephony," she stated.

The government had, in 2009, transferred the second phase to G-cell Wireless Limited, Hezomic Limited, Key Communications Limited, Suburban Broadband Limited and Voicewares Network Limited to manage the rural telephony project. Under the new arrangement, Suburban Broadband won the bid to manage the FCT and Kaduna zones with $140.5 million.

Key Communications won the Ibadan zone with a $38million bid. Voiceware Networks won the Enugu zone bid with $30 million; Hezonic won its bid for $30million. G-Cell Wireless won the Bauchi zone bid with $20 million. They were to build, operate and maintain the project in the different zones.

Lanre Ajayi, president, Association of Telecommunications Companies of Nigeria (ATCON), said, "If the project was done today, it would have been done differently." He noted: "At the time it was started, nobody knew that GSM operators would cover ground very fast. Today, GSM service has covered 80 per cent of the populace."