TCN Management Contract: BPE Explains Why 3 Firms Emerged

ABUJA, Sept 07, (THEWILL) - Following media reports over the processes involved in the selection of three firms in the Management Contract for the Transmission Company of Nigeria (TCN), the Bureau of Public Enterprises (BPE) has said that due process was followed.

In a statement made available to THEWILL in Abuja, and signed by BPE’s spokesman Chukwuma Nwoko, the apex privatization agency said in the wake of the approval by the National Council on Privatization (NCP), the Power Grid of India, ESB International of Ireland and Manitoba Hydro of Canada were invited to re-submit technical and financial proposals in line with current system and industry information for the management contract for Transmission Company of Nigeria (TCN), saying "it is apt to explain the premise on which the decision was based.

"The decision was taken at the body’s third meeting for 2010 which was held on Thursday, August 19, 2010 at the Presidential Villa, Abuja. The meeting was chaired by Vice President Mohammed Namadi Sambo.

"It is important to explain that a major lesson learned in the last exercise at procuring a management contractor for TCN was the difficulty in attracting credible, experienced and world-class bidders. Two advertisements in local and international media plus direct invitation to bid were made before a total of eight Expressions of Interest (EOI) were received. This sends the clear signal that companies with the requisite experience were not in a hurry to partake in the project. This situation is made more uncertain with the non-conclusion of the last exercise despite the emergence of a winner," Nwoko said.

TCN is one of the eighteen successor companies carved out of Power Holding Company of Nigeria (PHCN.) It combines the functions of a transmission services provider, a system operator and a market operator, all of which are central to the sustainability and development of the electricity sector.

Following the unbundling, TCN emerged as one of the successor companies of PHCN and was scheduled for a Management Contract in order to transit the company into a financially sustainable, stable, self-sufficient and market-driven company.

For the purpose of procuring a management contractor for TCN, the Bureau of Public Enterprises (BPE) in 2006, retained the services of British Power International (BPI) who were initially engaged by PHCN to provide advice on the engagement of an Operation & Maintenance (OM) contractor and other issues like the development of Management Information Services and Corporate Governance procedures. BPI was procured by PHCN under World Bank supervision.

The spokesman said, "In February 2006, Expressions of Interest (EOIs) were placed in Daily Trust, Financial Times, The Guardian and Financial Standard newspapers. At the deadline in March 2006, only three responses were received. The World Bank thereafter requested for some amendments to be made in the advertisement. With these amendments effected, it was necessary to re-advertise and this was done in May 2006 in the following outlets: Dg Market, Daily Trust, Financial Standard, Business Day, Thisday and The Guardian.

"By the second deadline in June 2006, four additional EOIs were received bringing the total to seven. Upon further advice of the World Bank, and in order to make the bidding process more competitive, invitations to express interest were sent to select internationally renowned transmission companies like Red Eletrica of Spain, Electricite du France and Manitoba Hydro International of Canada. Consequently, Manitoba Hydro International responded to the invitation and sent an expression of interest to swell the total number to eight as follows:

1. Power Grid Corporation of India Ltd;

2. ESB International;

3. Terna Rete Elettrica Nazionale;

4. Alpha Consortium Ltd;

5. ABB ELS;

6. Gungor Elektrik;

7. Nsquare Intergrated Electric; and

8. Manitoba Hydro International.

"The EOIs were evaluated and a short-list was drawn for the next stage of the process. Following World Bank’s ‘No Objection’ to both the Requests for Proposal (RFP) and the short-list, RFPs were sent to the following short-listed firms in February 2007:

i. Power Grid Corporation of India Ltd;

ii. ESB International of Ireland;

iii. Terna Rete Elettrica Nazionale of Italy; and

iv. Manitoba Hydro International of Canada.

"Only Power Grid Corporation of India Ltd, ESB International of Ireland, and Manitoba Hydro International of Canada submitted their proposals (Technical and Financial) at the deadline for submission in April 2007, the statement added.

Technical evaluation, based on World Bank guidelines, to ascertain the technical competence of the technical proposals was performed. All three firms obtained the minimum score of 75% required to proceed to the next stage of the process.

The Financial proposals were publicly opened on September 12, 2007 in the presence of representatives of the media, both chambers of the National Assembly, NCP and the pre-qualified firms.

Using the weighting and formula specified in the RFP, Power Grid of India came first with a combined technical and financial score of 80.18% followed by ESB International of Ireland with a score of 77.18 %. Manitoba Hydro of Canada came third with 72.07%.

It would be recalled that the process was suspended at that point following the government decision to suspend all reforms and privatization activities in the electric power sector. Thus, the current process is just a continuation of the former process following President Goodluck Ebele Jonathan’s directive that electric power reforms and privatization should be re-started

However, considering that time has lapsed during which more industry data, information, massive investment and expansion had been undertaken, it has become necessary to ask the three pre-qualified firms to re-submit their technical and financial proposals.

The Technical Proposals will be evaluated based on their transmission-loss-reduction, network improvement and capacity transfer strategy. The intent is to have a transmission company that will be capable of containing the anticipated changes in the Nigerian Electricity Supply Industry and Market.