The manufacturers under the auspices of the Meter
Manufacturers and Assemblers Association of Nigeria (MMAAN) stated this is due
to the call for tender by the Transmission Company of Nigeria (TCN) requesting
contractors to provide at least $340,000 (N264.3m) as security bid to qualify
for the bid.
The World Bank, was to help improve service quality as well
as the financial and technical performance of the DisCos by providing financing
based on performance and reduction of losses.
The tender, which was made by the Project Management Unit of
the TCN, wants the bidders to have an annual turnover of at least $26m
(N20.2bn) in the last three years.
But the local manufacturers viewed the financial quotations
in dollars as a deliberate effort to sideline its members who do not have the
financial buoyancy to meet up with the requirement.
They added that the sector is already in the woods due to
the failure of the Central Bank of Nigeria (CBN) to honour an earlier contract
to provide meters in the Phase 1 of the National Mass Metering Programme
(NMMP).
Their agitation is further compounded by the tender making
provision of import duty exemption to foreign companies that participate in the
bidding.
A move they stated would affect local manufacturing and
export jobs that could be done in the country.
An expert who commented on the issue stated that the meters
being funded by the World Bank do not give the financial institution the
absolute right to control the terms of participation on the project.
When contacted the TCN said it is not the beneficiary of the
project so could not comment on it.
The bone of contention
The tender which was published on March 30, classified the
11 DisCos into five lots, stated that the bidders would supply and install
smart meters to the discos in 18 months once approved under phase 2 of under Phase 2 of the NMMP.
It said Lot 1 is for Kano Electricity Distribution Company
and Kaduna Electricity Distribution Company, Lot 2 included Ikeja Electricity
Distribution Company and Enugu Electricity Distribution Company; while Lot 3
has Port Harcourt Electricity Distribution Company and Benin Electricity
Distribution Company.
Lot 4 has Abuja Electricity Distribution Company, Jos
Electricity Distribution Company and Yola Electricity Distribution Company and
Lot 5 includes Eko Electricity Distribution Company and Ibadan Electricity
Distribution Company.
It added that the meters which would be in 4G Cellular &
Head End System Software (HES) would require bidders to produce bid security to
the tune of $340,000 for Lot 1, $396,000 for Lot 2, $407,000 Lot 3, $450,000
for Lot 4 and $385,000 for Lot 5.
It also sought an annual turnover of the bidders, which is
an average in the past three years, to be; Lot 1; $26.7m, Lot 2 $30.6m, Lot 3
$31.7m, Lot 4, $35.3m and Lot 5 $29.6m.
It went on to state that bidders would show they have
engaged in at least two similar projects in the last five years with each of
the project valued at least for Lot $16m Lot 2 $18.3, Lot 3, $19m, Lot 4: $21.1
and Lot 5 $17.8m.
Why local manufacturers can’t qualify for bid
The dollarization of the bidders application, according to
the Acting President of MMAAN, Ademola Agoro, an engineer, showed the World
Bank wanted to outrightly exclude local manufacturers from participating in the
meters supply.
Agoro, when contacted by Daily Trust, said, the project,
allowing the option of fully built meters and giving Import Duty Exemption
Certification (IDEC) to foreign companies to partake in the bidding process
confirm their fears that the bank wants to take Nigerian jobs to other
countries.
He explained that such a move is against the Backward
Integration Programme that exists in the sector, which is aimed to protect
local manufacturers and provide job opportunities for Nigerians.
While expressing regret that the sector is already
undergoing pain due to the CBN backing out from the Phase 1 of the National
Mass Metering Programme (NMMP), which it should fund to provide 4m meters to
Nigerians, as they yet to recoup investments made to qualify for the contracts,
he said its last evaluation of the sector showed it is worth just N5bn.
“For you to be able to qualify for the bid, you must have up
to $26m as turnover, how many Nigerian companies can boast of that. Coming up
with a procurement qualification that stressed on the need for you to have
dollars indicated a sinister motive to kill the local industry.”
“The investment we have made in the sector since the
government came up with the idea of mass metering is a lot. Based on the
independent analysis that was done for phase 1, our capacity was over N5bn for
all the companies and 35 companies signed the contract to provide the meters
which the CBN refused to pay for. Our argument is that if we can provide the
4m, why should the government want to do 1.2m meters now and give it to
outsiders.
He added that by the time the government allowed phase 2 to
happen, it is finally snuffing the life out of a sector that is having
difficulty breathing.
He stressed the recent uproar on the matter was not to fight
the government but for it to tell its agencies to look at the policies
critically before implementation.
He, however, said it is engaging the agency involved and
urged the president to reverse the tender to avoid the total collapse of the
sector.
The Secretary of MMAAN, Duro Omogbenigun, said the tender,
which closed on July 11, 2023, if left to continue, would amount to a
constructive breach of the award of contract(s) for the phase which 34 of its
members signed.
He also called for a direct consultation among local
stakeholders during the suspension of Phase 2, to create viable options and
strategies to restructure the evaluation criteria and guidelines of the World
Bank Bid to prioritise local meter manufacturers.
Non reversal portends danger for power sector – MAN
Speaking with Daily Trust, the Director General of the
Manufacturers Association of Nigeria (MAN), Segun Kunle Kadir said if the
government continues with the bidding, it portends grave danger for the power
sector and could be a repeat of the ugly scenario in 2012.
“This was when local manufacturers were sidelined in the
meter supply and the nation was greeted with substandard meters by the foreign
companies awarded the contract and they were later removed from the network.”
He said the financial requirements and the technical
specifications by the tender is skewed against local manufacturers as they are
outrageously stringent and negate the CBN guidelines for the implementation of
NMMP.
While stating that the conditions set in the tender is not
in sync with the country’s overall national economic development objectives, he
said the sector’s potential to provide employment opportunities to Nigerians
will completely pale into insignificance.
“It should be recalled that, in keeping with the Federal
Government’s backward integration policy and the advent of the NMMP
intervention, manufacturers have made huge investments in the expansion of
manufacturing capacities, trained and promoted highly skilled workforce to meet
the demands of the power sector as envisaged in the NESI.”
It’s ploy to make Nigeria dependent on World Bank – Expert
On his part, the Executive Director of PowerUp Nigeria, an
energy consumer advocacy group, Adetayo Adegbemle, said the harsh conditions
given to qualify for the loan was to make the country dependent on the bank
with the aim of getting debt servicing.
He stated that while the bank has the right to tell Nigeria
what to do with the loan, it can’t tell the country how to use it.
“This is like the Chinese loan for the railway sector where
they came to implement it and brought their people in to work on it, but the
difference here is that we have the capacity to execute the project. What would
be the benefit of the loan to us when they still expect us to pay back the
money? What the World bank wants to achieve is for Nigeria to take the loan,
spend it and continue to service it whereby we will remain dependent on them.”
He admitted that the loan would deepen the capacity of the
local industry, as a company given the contract to provide 100,000 meters in
three months would have to increase its workforce to meet up the workload and
deliver on time.
“With the current condition, maybe only or two local
manufacturers can meet up with it, some people are saying why can’t they form a
group to apply, what will happen is that when they are given the money, they
will go and buy from China, or Complete Knocked Down (CKD) to come and assembly
here, at the end of the day, China keeps their own industry alive while in
another 15 years, we will go back to China when the meters are no longer
working.”
He however said when they are provided by local
manufacturers, there would be a lot of ripple where the money would circulate
within the Nigerian economy, resulting in manufacturers sourcing for loans to
get raw materials to produce more meters and meet up with an 8m meter deficit
in the country.
When contacted on the issue, TCN’s General Manager, Public
Affairs, Ndidi Mbah, said the company is not the beneficiary of the project, as
such, she has no comment to make on it.