• Introduction
• Selection Process
• Success Fees

Introduction

To provide assistance in the preparation and conduct of divestiture transactions, BPE routinely engages firms and individuals as advisers to help in various activities which include: policy advice; institutional and public enterprise reforms; sale preparation, transaction and implementation; management/engineering services; procurement services; and social and environmental studies. BPE's objective in this regard is to ensure that selected advisers provide professional, objective, impartial advice at all times and hold the interests of the Federal Government of Nigeria paramount. Further, the NCP is keen to ensure that fraud and corruption is eliminated in the process, requiring that the NCP as well as the consultants involved in the implementation of the privatization programme, should observe the highest standard of ethics during the selection and execution of all contracts.

The NCP policy on the selection process is guided by six main considerations which include the:

• Need for high quality services to ensure the successful conclusion of the eventual divestiture.
• Need for economy and efficiency in the process selection.
• Importance of transparency and accountability in the selection process.
• NCP interest in encouraging the development and use of Nigerian consultants and domestic capacity building.
• Opportunity for value-added through the training or transfer of knowledge to BPE staff and/or Nigerian consultants.

Selection Process

In July 2000, the NCP approved new guidelines for the selection and employment of consultants by BPE for the implementation of the Privatization programme. In most cases, the process to be applied is the Quality and Cost Based Selection (QCBS) scheme that follows closely the methodology applied by the World Bank and recognised as international best practice. QCBS is a competitive process that takes into account the quality of proposal submitted by the short–listed firms and the cost of services to be provided, in the selection of the successful consultant.

Critical to the effective implementation of the privatization programme is the appointment of consultants for all facets of the advisory services required. In many cases, where the World Bank funds the process of selecting consultants, the process follows the World Bank’s published procurement guidelines — World Bank Guidelines. In other cases, consultants are required to follow the process below, which effectively mirrors the World Bank’s procurement guidelines.

The process of selecting a Privatization Adviser, normally based on Quality and Cost Based Selection (QCBS) method, entails the following sequential steps:

• Drafting and publishing the advert for the Expressions of Interest (EOI).
• The harvesting of the EOIs, containing responses on the basis of published pre–qualification requirements after a minimum of 30 days.
• Evaluation of applicants’ CVs and other submissions listed in the EOI.
• A shortlist of not less than three firms, consortium or individuals is drawn from the list of applicants (that is, respondents to the General Procurement Notice who must be on the list of Consultants).
• The shortlist is subsequently sent to the Technical Committee of NCP for approval and the World Bank, for no objection comments, where World Bank financing is involved.
• Following the acceptance of the shortlist, a Request for Proposal (RFP) is sent out to the short listed firms requiring them to submit their proposals. Specified in the RFPs is the requirement that both the Technical and Financial proposals must be submitted at the same time, in separate sealed envelopes. To expedite negotiations with the winning bidder, a draft contract is included in the RFP package. A period of between 45 days to 60 days is allowed for the preparation and submission of the proposals, depending on the nature of the enterprises involved.
• A pre–proposal workshop is held, not later than two weeks to deadline on submission of proposals, to enable the prospective Advisers express their concerns and obtain clarifications on the RFPs issued to them.
• On receiving the Technical Proposals and upon the expiration of the due date, the Technical Proposals are opened before a selected evaluation team of five or seven people consisting of professionals.
• These proposals are subsequently evaluated using the criteria enunciated in the RFP.
• Subsequent to the approval of the evaluation results by Technical Committee and receipt of the „no–objection” from World Bank (World Bank funded transactions), the qualified firms are invited to attend a public financial bid opening.
• Public opening of the financial proposals. The quoted prices (and all relevant details such as tax elements, success fees, minimum time of completion — where the RFP so specify) are announced publicly. A printed copy of the bid prices, as announced and so endorsed by representatives of the firms present is sent to firms whose financial bids were opened.
• Based on the evaluation/scoring criteria stated in the RFPs, the weighted scores of the financial bid prices are equalized with that of the technical scores to arrive at the final weighted scores and ranking of the firms for the purpose of the final selection.
• Equalisation Report presented for Management Committee’s/ NCP Technical Committee’s approval and World Bank „no–objection”.
• Negotiations with the selected firms in order of ranking by NCP Technical Committee/BPE. If there is a breakdown in the negotiations, the next most qualified firm will be negotiated with until an agreement is eventually reached and signed with a selected firm.
• Award of the Privatization Advisory Contract with the contract documents perfected by BPE Legal Department.

Success Fees

As a general policy, NCP may pay a success fee to the privatization adviser. Such fee payable should implicitly reflect the advisers’ intellectual output (the transaction structure), project management, and the ability to attract a field of investors to bid for the privatized entity and thus generate competition. The success fee shall only be payable to the privatization advisers upon final receipt of proceeds from the successful bidder. The objective of the success fee is to serve as incentive to the adviser to ‘go the extra mile’ in ensuring that the transaction is successful. In addition, in the negotiation of advisory fees, due regard is taken of the need to ensure that advisers also take a share of the risk in the event that a transaction does not succeed.

NCP may also pay a „finders fee” of no more than 0.5% of the eventual purchase consideration to any agent that successfully attracts and advises the winning bidder. In such a case, all prospective bidders shall be asked ab initio to state the name of such agent/adviser. The criteria for payment shall be stated up front and publicly disclosed, and upon success with its bid, the agent/adviser shall be paid accordingly.