Nigerian Telecommunications Ltd (Nitel) Management contract

cancelled

The Nigerian telecommunications Ltd (Nitel) was the state-owned company responsible for providing public telecommunications services in Nigeria. The monopoly of Nitel on telecommunications services was officially ended in October 1997, promoting the role of the private industry in the sector. The proposed sale of a 51% stake in Nitel fell through in early 2002. This led the Bureau of Public Enterprises (BPE) to temporarily transfer the management of Nitel to a Dutch firm, Pentascope Group, through a three year management contract license in March 2003. 14 firms initially expressed interest in the process but only five of them submitted the final bid. Under the contract, Pentascope would recieve an annual management fee of US$10 million for managing Nitel only if it met the agreed targets on call completion, increased revenue collection and network expansion. Pentascope committed to provide one million GSM lines and to add 600,000 new fixed lines to the existing 700,000 lines. By December 2004, the Nigerian House Committee on Communication had demanded a full public hearing on the NITEL Management Contract Awarded to Pentascope. It was being alledged that Pentascope was not meeting established targets and that the contract award in 2003 was flawed. In February of 2005, the Federal Government terminated the Management Contract with Pentascope for Nigeria Telecommunications Limited (NITEL), citing alleged incompetence and inability to meet targets. An alleged demand for the upward review of the annual management fee from US$10 million to US$16 million was reportedly another reason for the action. The partial divestiture of NITEL continued to be sought as at end 2005. A second auction held in December 2005 was canceled after the uncontested US$256.5 million bid from Orascom Telecom of Egypt was rejected by the government for being too low. None None