Nigeria: As President Jonathan Quits, Emeka Offor's Firm Remains Locked in a U.S.$470 Million Controversial Telecom Deal


President Goodluck Jonathan will be leaving office this week unable to resolve what has become a major telecommunication controversy: the 2012 sale, by the Nigerian Communication Commission (NCC), of the National Public Security Communications System (NPSCS) network to OpenSkys Services Limited, owned by billionaire businessman, Chief Emeka Offor.

The indication last week was that the outgoing President was yet to assent to the transaction, which a government advisory panel had declared a compromise of national security.

The contentious deal had already claimed a victim: in November 2012, Dr Bashir Gwandu, an Executive Commissioner at the Nigerian Communications Commission (NCC) who once acted as the Commission's Chief Executive Officer was relieved of his job for opposing the sale to OpenSkys. Gwandu described it as illegal, a rape of public funds and a danger to national security. Dr Gwandu, however, challenged his dismissal in court. In a case of Dr.Bashir Gwandu v President of the Federal Republic of Nigeria (Jonathan), a court ruled on January 21, 2014, that Gwandu had been illegally removed from office and awarded him N100 million in damages. Speaking with Sunday Trust last week, Gwandu maintained his opposition to the sale and dared President Jonathan to go ahead with the approval of the sale and hand-over of the network to OpenSkys.

From another end, a United Kingdom-based rights group, the Nigerian Integrated Security System Watch, (NISSW), in a release it issued early this month, queried the wisdom in transferring ownership and management of what it described "a national security resource" to a private company. NISSW spokesperson, Mallam Garba Shehu, therefore, urged the Muhammadu Buhari administration, which will assume office this week, to probe the transaction.

The NPSCS is a $470 million three-component highly sophisticated communications system conceived by the federal government, and designed and built by a Chinese firm, ZTE Corporation on FG's behalf, to boost the capacity of the Nigerian police and other security agencies to battle crimes, especially terrorist acts. The components comprise about 2,000 pre-installed security cameras with capacity for video surveillance and videoconferencing vital to combating crime, which had been installed all over the Federal Capital Territory; the voice spectrum operating on a 450 megahertz frequency, which comes with about 1.5mn telephones lines and is the network's cash cow; and the microwave frequency used for data transmission.

The project was funded with a $399.5 million loan obtained from the China Exim (Export-Import) Bank, and a $70.5 million counterpart investment by the Federal Ministry of Finance. An NCC engineer confided in Sunday Trust that the cost estimate of the project was actually not more than $370 million and not the $470 million that was the official signature. "That, on its own, is a story for another day," he quipped.

Of the three legs of the network, the NCC had issued, Sunday Trust gathered, a licence for only the 450 megahertz frequency (voice component) to OpenSkys, while the remaining two licences for the cameras and microwave frequency are still hanging.

That lone licence has been the contentious bone. As learnt, the premium spectrum is highly sought-after not only because of its expansive commercial potential, but also because it can be easily maintained. The equipment to run and maintain it, the NCC engineer disclosed, can be easily got even off-the-shelf.

Apart from the security implication being raised about its sale to a private outfit, the cost element has been generating a lot of furore. In, 2007, it was gathered, a consultant had estimated the frequency alone, without the NPSCS on it, to be worth $50mn, but it was eventually sold to OpenSkys for $6 million in a deal begun by the immediate past Executive Vice-Chairman (EVC) of the NCC, Engineer Ernest Ndukwe and concluded by his successor, the incumbent EVC, Dr Eugene Juwah.

The protracted battle for ownership and operation of the 450mhz spectrum underlines its strategic significance. Until 2004, it was used by corporate bodies like the Nigeria Police and multinational oil firms. But in November 2004, the National Frequency Management Council (NFMC), realizing the unique advantages of the frequency, ordered that its users be relocated.

The frequency was vacant until 2007 when the Umar Yar'Adua administration directed that it be handed over to the Nigerian Communication Satellite (NigComSat), a government agency under the Federal Ministry of Communication Technology. But the administration advised that NigComSat seek a private partner in operating the frequency. Here came in OpenSkys, owned by Offor, who has been a major financier of the ruling party, the Peoples Democratic Party.

In 2009, the partnership assumed a new twist when OpenSkys suddenly assumed a controlling interest in the frequency. That move would turn out to be what has degenerated into the mess that has held the frequency down for six years and deprived the federal government of huge revenues that could have accrued from its operations.

In a statement issued online on May 11, 2015, Openskys Services, through its spokesman, Dr. Edwin Ndukwe, strove to absolve itself of any illegality, as alleged by those opposed to its acquisition of the frequency. As claimed by Ndukwe, OpenSkys Services acquired the frequency through a transparent and legally guided process and in compliance with all applicable rules and regulations."

Under terms of the agreement with the NCC, "OpenSkys Services was required to pay for the re-tuning of old transceivers of the Nigeria Police (NP) supported by the frequency and also purchase new communications equipment for the NP. This enabled full migration to the new frequency assigned to the Police in 2009. In 2012, OpenSkys Services paid the sum of N350 million to the NP to satisfy this requirement. Further, OpenSkys Services paid spectrum fees totalling N892 million to NCC."

As admitted by Ndukwe, "Early in the process, experts determined that the GoTa (Global Open Trunking Architecture) technology supporting the Nigerian National Public Security Communications System (NPSCS) network was hurting law enforcement communications efforts, and therefore, hurting Nigeria." The company then proposed to build nationwide a 4G LTE network, which is expected to provide a more efficient and viable platform for broadband services. The 4G LTE technology, the latest high-speed communication platform for data, is said to be 10 times faster than the 3G currently used for Internet by some Nigerian telephone operators.

According to Ndukwe, "once its financial commitments to NCC were satisfied, OpenSkys Services, in conjunction with its technical partners, immediately presented plans to achieve efficiency and greater effectiveness in the fight against terror through a robust frontline security network for the government."

But the superior matter of national security once again came to the fore. While the OpenSkys management was effecting payment for the frequency to the NCC, the federal government, in 2010, launched the security communication programme, the NPSCS, in response to Boko Haram's increasing violence, and the police was given permission to install the project on the 450mhz, given the urgency of the security situation in the country. The security system was administered for the police by NigComSat.

Openskys later completed its payment and has been angling to assume full control of the frequency, in partnership with the Ministry of Police Affairs ministry. It proposed to, in effect, take over the management and operation of the NPSCS, and while doing that, deploy part of the frequency for commercial purposes, including high speed Internet and communication.

Some concerned officers of the Nigeria Police and some external activists have resisted the OpenSkys offer, arguing it endangers national security. Last year, the federal government constituted an inter-ministerial committee, named by Vice President Namadi Sambo to review the proposal and make recommendations. The panel met on April 9, 2014.

The panel, which included Police Affairs Minister Abdul Adesiyan; his counterpart in Communication, Omobolaji Johnson of Communication and a permanent secretary, recommended that the deal be reversed, calling it a "compromise" of national security.

Delivering its 11-page report on April 15, 2015, the panel warned that national security would be jeopardised if the deal was allowed to go through and urged, instead, that NigComSat be allowed to run the programme for the police alone. "In the light of the foregoing, and in consideration of the technical and strategic intelligence nature of the NPSCS project, the adoption of a commercial entity for the commercialization of the network would compromise the confidentiality of communications operations," the committee said.
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Source: The Daily Trust 24 May 2015