Justice Nicholas Oweibo of the Federal High Court in Lagos has restrained the Nigerian Electricity Regulatory Commission (NERC), the Bureau of Public Enterprises, and Sahelian Power SPV Limited from naming Powercom or any other investor as a new core shareholder in Kano Electricity Distribution Company.
Justice Oweibo also barred the respondents from conducting or recognising any other bidding process for selling Sahelian’s 60 per cent shares in the Kano Electricity Distribution Company.
Other respondents affected by the orders are Fidelity Bank, the receiver manager, Patrick Ikwueto SAN, Kano Electricity Distribution Company Plc, and Powercom Smart Grid Nigeria Limited.
The applicant, Future Energies Africa (FEA) Limited, had told the court that the process that produced Powercom Smart Grid Nigeria (PSGN) as the preferred company to take over the Kano Electricity Distribution Plc (KEDCO) is flawed.
The applicant had also claimed that NERC and Powercom failed to comply with the guidelines and requirements of the federal government, as laid down by the Bureau of Public Enterprises (BPE) and NERC itself.
BPE is the agency in the custody of the government’s 40 per cent stake in the electricity distribution asset, leaving Fidelity Bank with the temporary ownership stake in the remaining 60 per cent.
Through a receiver manager, in collaboration with the BPE, Fidelity Bank initiated a bidding process to get a technically sound and financially competent preform buyer user to acquire the bank’s stake in KEDCO.
Recall that a few days ago, Powercom had, via a statement, announced its acquisition of KEDCO.
Engr. Adam Ibrahim (an investor and consortium member of FEA) faulted the premise of Powercom’s acquisition announcement with the revelation that the company cannot claim to have acquired KEDCO when FEA Future Energies had already completed the execution of contracts and agreements through a Share Sale and Purchase Agreement to acquire the shares that both BPE and NERC are aware of.
Engr. Ibrahim stated that FEA had “no recourse than to seek legal action, having filed a complaint to BPE and NERC that fell on deaf ears. FEA is further surprised that the Nigerian Electricity Regulatory Commission (NERC), despite the pending complaint and its knowledge of a signed Share Sale and Purchase Agreement and agreed transaction terms as forwarded to them by BPE and Fidelity’s representative, and a subsequent complaint by Future Energies regarding Fidelity Bank’s attempt to scuttle the completed process, still issued a ‘No Objection’ for PowerCom.”
Future Energies Africa had won the earlier bid after a rigorous review and screening process that lasted almost a year, alongside other bidders, and was given a ‘No Objection’ approval by the BPE after meeting the requirements for acquisition as laid down in guidelines set by BPE and NERC.
However, FEA revealed that for some undisclosed reasons, Fidelity Bank, which is the interim owner of the 60 per cent stake in the entity, decided to halt the process and approve another bidder after having already signed a valid and binding contract to sell the shares to Future Energies Africa.
Engr. Ibrahim said, “My consortium – Future Energies Africa Limited (FEA), was interested in the Kano distribution company, and we put in a bid through Fidelity (and its Receiver Manager) and BPE – which is the entity responsible for approving the guidelines and overseeing the bid process. The procedures were communicated to us by BPE through Fidelity Bank. Shockingly, there is an attempt to destroy the investment and time we spent putting together a competent bid without explanation.
“We went through the process, sent in an expression of interest alongside other parties bidders that were interested in the asset. After a long process and comparing the evaluation of us to other parties’ bidders, we emerged as the new investors. I got approval from Fidelity Bank through the Receiver Manager to take over the asset. We also eventually got a ‘No Objection’ from BPE.
“We negotiated the core contract that guides the sale of a company, which is the Sale and Purchase Agreement (SPA). We negotiated the document, signed it, and Fidelity Bank sent it over to BPE for the Bureau BPE to sign the Shareholders’ Agreement, which is the document that guides all the shareholders in an entity.
“In negotiating the shareholder’s agreement, we understood that a call was placed by Fidelity Bank, telling BPE to halt the process of signing the Shareholders’ Agreement, even though we had signed the Sale and Purchase Agreement to acquire the asset.
“They (Fidelity Bank) decided to reopen the bid secretly, and they hired PwC to begin a fresh bid process. They also secretly introduced other new companies in the process. We were told to resubmit a bid as a formality of our document, and we had no idea there was a new competitive process after concluding our transaction. We assumed this submission of documents was just for internal purposes. Nonetheless, we reserved all of our rights under the binding contract. They also secretly introduced other new companies in the process.”
He added, “The second bidding process doesn’t conform to all of the government’s guidelines and requirements. The risk is that we may end up in the same situation whereby you are selling assets to entities that do not have the technical or financial capabilities to turn around the business.
“This situation is miserable for the Nigerian electricity market. We all recall that one of the reasons for the failure of the initial privatisation process is the failure to adhere to contractual terms. This transaction starts by selling parties and a regulator failing to recognise the sanctity of a legally binding contract. Fidelity Bank and NERC need to explain why a valid process is being scuttled and a binding contract is not being adhered to.”
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