Kigali, 21 July - Libyan government-owned firm Rwandatel could be on the path to be recovered by the Rwanda government following a court ruling that has given a go ahead to the authorities to decide the fate of the troubled company.
The Commercial Court ruled Monday behind closed doors that government can proceed with a plan to engage Rwandatel's creditors as part of efforts to enable them recover their money. Among the creditors, is a Chinese supplier demanding more than 40m dollars, and still counting.
In April, the government launched insolvency proceedings in the Commercial Court against the highly indebted telecoms operator, which is 80 per cent owned by Libyan government investment vehicle LAP Green Networks. Kigali got some 100m dollars and remained with a 20 per cent stake. The Libyans bought the firm in a fanfare deal in late 2007 billed at the time as indicative of how lucrative Rwanda's economy had become.
Trouble begun when it emerged just a year later that the company was living on massive losses. Sources say things were so bad at the time that its flamboyant and youthful CEO Patrick Kariningufu fled the country in 2009.
The situation did not improve even with the arrival of the Libyan appointed executives. In 2010 alone, Rwandatel ended the year with about 9bn Rwandan francs in losses.
But even as plans were getting underway to rescue the company with an expected capital injection from Tripoli, the Libyan strongman Col Mu'ammar al-Qadhafi got into trouble with his people in February this year. A western-aided rebellion has now left the former African godfather playing hide-and-seek against daily bombardment - and a possible assassination.
In April, telecoms regulator Rwanda Utilities Regulatory Agency (RURA) revoked Rwandatel's mobile concession due to its failure to meet licence obligations, though the operator's fixed telephony and ISP permits remain operational.
Following the imposition of UN sanctions on Libya, it was clear to Rwandan authorities that the deal had completely fallen apart, and they had to take responsibility for all the debts. Some estimates suggest creditors want millions of dollars.
For example, Chinese company; Huawei which supplied unspecified materials is demanding over 40m dollars. Sources say it is the Chinese that have been a major force behind demanding the firm's assets are sold off so they can get their money.
As a result of the insolvency proceedings launched in April by government, the Commercial Court on Monday ruled that Rwandatel assets can be put on the market as a package, not in pieces. This essentially means Rwandatel could be sold out to another investor.
The Court also ordered all the creditors, including even Rwandatel's local telecom sector competitors, to submit all their invoices not later than July 31. The government, creditors and Rwandatel caretaker managers must meet at an extra-ordinary meeting not later than August 04 to settle all outstanding issues, said the Court.
It is not the first time foreign investors have taken over Rwandatel only to leave the company in tatters for government to again pick up the pieces. In 2003, government gave Rwandatel to controversial American businessman Greg Wyler who promised to deliver state-of-the-art internet technology in months.
Mr Wyler was granted a contract to connect 300 schools to the Internet. Later, his Terracom Communications would buy 99 per cent of the shares in Rwandatel, the country's national telecommunications company at the time, for $20 million. The company became Terracom.
More than five years later, the then line-minister Albert Butare (now no longer in cabinet) could only count the losses. The best government could get back was 400,000 dollars in fines on Greg for failing to implement his contractual obligations. Government bought back its firm at 12m dollars in July 2007 and it was again renamed Rwandatel. (End)
Source: RNA news agency, Kigali, in English 21 Jul 11