Members of the Ad hoc Committee of the House of Representatives investigating the governing lease of Federal Government-owned assets yesterday expressed shock that a federal government investment built with a loan of $490m was valued at $17m after the KPMG audit.
The investment, a security network of about 700 base stations called the National Public Securities Communications Systems (NPSCS) began in 2008 and was commissioned in 2012.
The objective was to provide advanced communications capabilities for the police and other security agencies. At the resumed hearing of the Committee on Wednesday, members were stunned by the revelation.
Director for Projects of MTS Technologies, Mathew Udanogh whose company was to run the project through a concession agreement however disclosed investigating Committee led by Hon Daniel Asuquo that they were to manage the network for 33 years.
He said the first three years was to set up the place before operating for profit. He said the concession agreement calls for a minimum investment of $100 million towards rehabilitation of the network.
“It is a security network, a telecommunications network that was built and commissioned approximately 2012. It was built with a technology called CDMA. The sponsoring Ministry is the Ministry of Police Affairs. It is a network of about 700 base stations and towers built around the country.”
According to the Director, the original intention was that the network would be operated with government subventions and budgets approvals by the National Assembly, but the government decided to concession it which started in 2014.
Asuquo added that the Federal Executive Council approved the concession in 2019. “Thereafter they appointed a committee to select one of the top four accounting companies, KPMG, to do a nationwide audit of all the assets associated with this NPSCS. They conducted that audit and the conclusion of that audit, which led us to a full business case using the ICIC process and all of that information was resubmitted to the FEC and gave its approval for it to be entered to. This was in December 2020. In January 2021, the concession agreement was signed. “Our job is to rehabilitate a network with this investment and make services available to the police and other security agencies so they can have advanced communications capabilities. We provide the services to the police but also provide it in a more limited way to commercial customers. “There would be a three year rehabilitation period to bring up the network. All the equipment have to be replaced as it is an older technology. Network technologies have advanced since that time. So, in fact, we want to implement the latest technologies available. We would be launching with advanced technology. After three years, we engage fully in commercial services. “An audit was performed on that network to bring up what is its current value today and it came to approximately $17 million. This network was not used so all the base stations have to be totally replaced and it cannot be used for any other thing. “The vendors that built the network operated for six months and then they were no funds to continue operating and they stopped operating. Since that time there has been an effort to find out how to fund operations because it is one thing to build a network and it is another thing to fund operations. No provision was made in the loan for how to operate the network. “The expectation was that the National Assembly would provide subvention funds for operating the network which probably is not too efficient because you know the budget process and you are running a business. Every year you are expecting the government to give you the money that you will use to operate the network. That was not going to be very efficient. Eventually, they realized that the best way to run it was to have the private sector operate it on a commercial basis so that they can be generating funds to operate it”, he said.