Nigeria: Update (25 Jul 2016) - Nigeria To Cut Power Transmission Deal With Manitoba Soon?

Who:

Canadian firm, Manitoba Hydro International, focused on transmitting electricity and natural gas to utilities companies and governments; Nigerian government.

What & When

The Nigerian government's contract with Canadian firm Manitoba will expire next week on 31 July 2016, and there are indications that the contract won't be renewed.

Manitoba signed a three-year contract with the government in 2012 to manage the Transmission Company of Nigeria. TCN is the sole power transmission firm in the country and is owned by government, though managed by Manitoba over the past three years.

A local paper ThisDay has now reported that the government could take back management of TCN when its contract with Manitoba ends shortly. ¹

Why

There's been no official statement about why the government may cut its deal with Manitoba, but in June the House of Representatives intended to probe the firm over reports of poor performance and reports that the firm's expatriate management was taking outrageous sums of money for salaries by inflating the exchange rate. However, the probe has not materialised.

Outlook

It is uncertain who will  be running the TCN next month when the Manitoba contract ends. But we note that the contract initially expired last July and the government hurriedly extended it by a year in order to buy itself more time to decide what to do next. So another last-ditch renewal isn't ruled out here.

The government may also consider running the firm for some time as a stopgap and then concession it to private investors later. One report says the State Grid Corporation of China has shown interest. It should be noted that Nigeria may lose a USD300 million World Bank grant if TCN falls back to government management. A permanent government takeover is unlikely.

Footnotes

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