Manipulation alleged in bid process of Eleme Petrochem

10-Nov-05

Transcorp/Dangote Group, one of the two firms seeking a controlling stake in Eleme Petrochemical Company Limited (EPCL) has alleged irregularities in the bid process, even as the Bureau of Public Enteprises (BPE), which conducted the transaction last week has said that the National Council on Privatisation (NCP) was to conclude the sale shortly. Both Transcorp/Dangote Group and Indorama were bidding for 75% of equities of Eleme Petrochemicals. The sale of EPCL was suspended last week as BPE could not name the preferred bidder after both Transcorp/Dangote Group and the second bidder, Indorama, were adjudged to have tied in the bids submitted both in the first and second round sessions. However, as per two separate petitions last week by Transcorp/Dangote Group, Indorama should have been disqualified by the bid process for an alleged breach of the ground rules guiding the sale of EPCL as established by BPE. Transcorp has alleged that Indorama revised its bid with liabilities to $220 million after the rule on second round of bidding "which violated BPE stated biding rule on conditional bids and thus constitute ground for disqualification of a bidder." This two-part conditional bid with liabilities of $240 million by Indorama was not explained before the second round of bidding, leading all to believe that Indorama's first bid with liabilities was actually $240 million. The clarification of the two-part bid came after the submission of the second and final bid, thus denying Transcorp/Dangote consortium the opportunity of understanding Indorama's bid and responding accordingly. Transcorp/Dangote group has also stated that the total liabilities of EPCL are in excess of $421 million as stated in the management accounts (of the company) of June 30 and contained in the information memorandum given to the bidders by BPE. It said given the above facts, an accurate analysis of the bids (with liabilities) put in by the two groups would translate to $21 million cash payment for liabilities and total commitment of $241 million by Indorama, while Transcorp/Dangote's total commitment was over $431 million with $10 million cash for liabilities, indicating that Transcorp/Dangote bid provides more value to the Federal Government and won the financial bids in both categories (with liabilities as well as without liabilities.