Power: Cancellation of $100m concession agreement Illegal – AGF, Malami

Attorney General of the Federation and Minister of Justice, Mr.
Abubakar Malami, has described the cancellation of the $100 million
concession agreement by Transmission Company of Nigeria (TCN) with
Phase3 Telecom Ltd and Alheri Engineering Services as illegal ad a
nullity.

The Federal Government had on March 20, 2006 facilitated the
signing of $100 million Concession Agreement that mandated the
concessionaire to Design, Build, Finance and Operate (DBFO) fibre
optic network infrastructure in the country.

Arising from the need to review the concession terms as
envisaged in the agreement following the liberalisation of the
national long-distance fibre optic landscape in Nigeria, TCN
reneged reports by an audit firm and recommendation of the
Infrastructure Concession Regulatory Commission (ICRC).

In a letter addressed to the then Minister of Power, Works and
Housing, dated January 10, 2018, with reference number:
LE14/TCN/02, the Minister of Justice condemned the purported
termination of the concession agreement by TCN and advised that
based on reports of ICRC and audit report by a firm – SIAO the
terms of contracts be reviewed.

The termination, according to the AGF, “was arbitrary,
premature, illegal, null and void, having been issued in violation
of the terms of agreement which mandates under Article 31:1 that
parties shall go to arbitration panel where disputes cannot be
resolved amicably.”

When contacted, the General Manager, Public Affairs, Mrs. Ndidi
Mbah, said the matter is in court and as such, she would not be
able to comment on it.

According to the AGF: “Several meetings were held at the
instance of ICRC, with concessionaires and TCN in attendance. When
the dispute could not be amicably resolved, it was agreed by (ICRC,
TCN, and Concessionaire) to jointly engage an auditor to review the
issues in dispute and make recommendations to bind and guide the
parties going forward. Consequently, an audit firm –SIAO- was
appointed to carry out financial and technical audits of the
situation. In summary, SIAO found that the agreement and financial
obligations therein were not sustainable in line with present
realities in the industry.”

Findings by SIAO, in Malami’s opinion, on the report submitted
by ICRC read: “TCN failed to give effect to the findings of SIAO
and every attempt by the concessionaires to meet with TCN towards
resolving the dispute was to no avail. It is important to note that
a dispute resolution meeting was held on August 18, 2017 where TCN,
inter alia, requested for concessionaire’s proposal for
restructuring, which was submitted by the concessionaires on August
24, 2017.

“Unfortunately, however, rather than respond to the
restructuring proposal one way or the other for further engagement
with a view to resolving the dispute or refer same for arbitration
as agreed by the Parties under the Agreement, TCN via a letter
dated August 30,. 2017 terminated the Agreement.”

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