THE REVIVAL OF SIERRATEL

REVIVAL OF SIERRATEL

 The National Commission for Privatisation (NCP) came into being through an Act of Parliament in 2002, Act No.12 2002. Among its varied functions, NCP is expected to act as a prudent shareholder of State Owned Enterprises (SOEs) listed in the Act with the mandate to supervise, monitor, and increase private sector investment in State Owned Enterprises with the following aims:

- Efficiency in service delivery

- Reducing fiscal burden on Government

- creating  jobs and 

- Reduction of poverty especially within the rural areas

Over the years, the Commission has assessed the performance of SOEs especially SIERRATEL which is the current subject matter and has realized a systematic failure in its performance. It is evident that since 2016 to date, their financial and technical performances exhibit a frightening picture, viz:

• regularly applying to the Ministry of Finance for bail outs

• massive reduction in revenue generated since 2016

• increase in liability 

• nonpayment of staff emolument*(Salaries, leave allowances, NASSIT, PAYE, Medical, End of Service Benefits etc.) 

• inefficient service delivery 

• obsolete technological infrastructure to meet current demand in the telecommunications industry 

• nonpayment of audit fees 

• no submission of Financial Statements

• nonpayment of dividend to government 

• contraction in operations 

• unaudited financial statement since 2017

• SIERRATEL staff demanding for a change of management 

• Poor liquidity and going concern risk

• Perennial strike

• Management refusal to evolve

The current liability of SIERRATEL is to the tune of Four Hundred and Eleven Billion Leones (Le 411 Billion) made up of the following:

                                                       Leones

- Long term loan          197.8 Billion

- Staff Liability                18.4 Billion

- Short-term loan            1.7 Billion

- Accrued taxes              18.3 Billion

- Other Payables         174.8 Billion

Based on the above findings, the Commission presented its findings in a report to the appropriate authorities and received approval for the privatisation of SIERRATEL. In March 2020, the Commission commenced the privatisation process in collaboration with relevant stakeholders including the management of SIERRATEL as they were part of the evaluation of the Expression of Interest (EOI) and the development of the Request for Proposal (RFP) including others.

The process and content were vetted and approved by the National Public Procurement Authority (NPPA), the Office of the Attorney General and Minister of Justice and the Ministry of Finance. Upon completion of the process SENTINEL TELECOMMUNICATIONS COMPNAY LIMITED emerged as the most responsive company with the requisite financial and technical capacity. The outcome is in the process of being forwarded to Cabinet for approval thereafter Parliamentary ratification.

The type of privatisation is a Concession Agreement, not a sale, wherein the Concessionaire SENTINEL TELECOMMUNICATIONS COMPNAY LIMITED will build, operate and transfer SIERRATEL assets to government in a viable condition. 

The mode of privatisation chosen for SIERRATEL is within the realm of Public Private Partnership (PPP), not only with a human face but to ensure that Sierra Leoneans are given the opportunity to compete in the process.

SENTINEL TELECOMMUNICATIONS COMPNAY LIMITED is a Sierra Leonean led company in partnership with world renowned companies with extreme experience in Telecommunications. 

 As you may be aware, certain SOEs which had been fiscal burden on the Government by receiving frequent bailouts from the Ministry of Finance to undertake their mandate, but through privatisation have now become profit making entities, giving dividend to Government, delivering service efficiently and creating jobs.  A typical example is Sierra Leone Ports Authority (SLPA).

Prior to privatisation of certain core functions, SLPA was an economic burden on the Government without paying any dividend to Government over the years. On privatisation of certain core functions, one of the concessionaires Freetown Terminal Limited (FTL) – Bollore, has been constantly paying Five Million, Two Hundred United States Dollars ($5.2 Million) annually. As recently as 2021, FTL paid $5.2 Million as concession fees and $1.4 Million as dividend including other taxes paid.

Another case in point is the Sierra Leone State Lottery Company Limited (SLSLC) which has been in a moribund state for over fifteen years as a loss making entity and a fiscal burden on the Government.

NCP has been able to revive SLSLC through PPP via Joint Venture Agreement. Although there are teething problems, staff salaries which have been accruing for four to five months at a time, are now paid on time. Also, a total of One Hundred and Sixty Million Leones (Le 160 Million) was paid to Government as a share of Government revenue within three (3) months following signing of the Joint Agreement. Again of note is jobs and more outlets are created and there is serious discussion to improve the lot of the employees. Needless to say salaries and other emoluments as backlogs have been cleared.

It is very important to note that the Commission through its activities in 2020, was able to generate for government about One Hundred and Forty-Four Billion Leones (144 Billion Leones) through concession fees, license fees, dividends, and other taxes. This figure is expected to increase to One Hundred and Eighty Billion Leones (180 billion Leones) in 2022.    

Based on the above outcome it is generally expected that the concession agreement with SENTINEL TELECOMMUNICATIONS COMPANY LIMITED will improve and position SIERRATEL to have competitive advantage in the telecommunications industry, improve staff condition, efficient management, and effective service delivery, increase employment opportunities, and generate more revenue for the government through concession fees, dividends, and other taxes.

Finally other loss making entities are being seriously considered for privatisation. It is however unfortunate that the word “Privatisation” in the NCP context has been misconstrued by certain sections of the society.

Privatisation in the context of the New Direction is to reform the governance of State Owned Enterprises for efficient delivery of service, creation of jobs, reduction of poverty and to make money for the Government to be used to meet its socio-economic challenges.

The duty of NCP is to ensure that its mandate as enshrined in the Act is achieved. In this regard, the NCP Act itself is under review in partnership with stakeholders including the World Bank.

END