Abuja — For allegedly giving out a loan worth N6 billion from the N11.367 billion it received from the Nigeria Electricity Market Stabilisation Fund (NEMSF) granted by the Central Bank of Nigeria (CBN) to its core investor group, the Nigerian Electricity Regulatory Commission (NERC) has levied a fine of N50 million on the Ibadan electricity distribution company (Disco).
The NERC has also launched a full investigation on the remaining 10 Discos in Nigeria’s privatised electricity market to determine how they applied the NEMSF in their operations in addition to pursuing the full recovery of the misused funds from Ibadan Disco including the accrued interest at Nigerian Inter-bank Offered Rate (NIBOR) + 10 per cent.
A statement from NERC Head of Public Affairs, Dr. Usman Abba Arabi, yesterday in Abuja, disclosed that the decision of the commission to fine Ibadan Disco was a fallout of an open book review it did on the Disco’s financial records.
NERC’s financial penalty on Ibadan Disco also came on a day a former Minister of National Planning, Dr. Shamsuddeen Usman, disclosed how politicians and officials in the last government of President Goodluck Jonathan jostled for shares in the power generation and distribution companies that were privatised by the government in 2013.
Usman’s claims in his remarks at the October 26 lecture of the Nigerian Society of Engineers (NSE) indicated that government officials who ordinarily should have been neutral in the privatisation exercise were however guilty of foul plays and used their positions to leverage their interests in the exercise albeit secretly.
But in its statement, NERC said the board of Ibadan Disco approved a loan of N6 billion to its core investor – Integrated Energy Distribution and Marketing Limited (IEDMG) – from the CBN facility instead of using the facility to improve its distribution network.
It stated: “Following the outcome of an open book review conducted on the financial records of Ibadan Electricity Distribution Company plc (IEDC), the Nigerian Electricity Regulatory Commission found the company wanting on two grounds of inappropriate financial transactions and was subsequently fined a sum of N50 million.”
“The fine was (on) account of its failure to secure a refund of an interest-free loan the board of IEDC granted to its core investor group. The commission had, vide its Order 173, directed IEDC to recover the sum of N5.7 billion being the balance of the inappropriate loan of N6 billion granted by the utility to IEDMG, the core investor in Ibadan Electricity Distribution Company Plc.
“The loan was sourced from a total sum of N11.367 billion disbursed to IEDC under the Nigeria Electricity Market Stabilisation Fund granted by the CBN towards the improvement of infrastructure in the company including metering.
“The commission has reaffirmed that it will pursue the full recovery of the misused funds from IEDC including the accrued interest at NIBOR + 10 per cent,” the statement stated, adding that the repayment of the loan to CBN by the 11 Discos has continued to be made as a first charge on the revenues of the companies, and that it was reviewing the utilisation of the NEMSF in all other Discos.
Meanwhile, Usman stated at the NSE lecture which was delivered by its former President, Mustafa Shehu, that most of the transaction principles often included and followed in the privatisation of government’s assets were sidestepped during the sale of the power assets to private investors.
He said the outcome of the power privatisation was heavily influenced by political considerations against economic or technical capacities of the eventual preferred bidders, and thus linked parts of the current challenges of the sector to his claims.
“I was part of the power privatisation, and I am not going to extricate myself, it is a collective responsibility and I am not comfortable with the speed at which we rushed that exercise.
“I was the first Director General of Technical Committee of Privatisation and Commercialisation (TCPC) which is the agency that started privatisation in this country in 1988. We had our office in Lagos, and we did the first privatisation in this country. As at that time, we had the code of conduct that ensured that no member of the management or the board actually could buy any of the assets that we were selling.
“The electricity privatisation unfortunately was not handled that way. If you look at all these Discos and Gencos, unfortunately, some of us saw it that time but there wasn’t much we could do because of the rush and political thing it had become, there is in each and every one of them at least one or two ‘big masquerades.’
“That is not how to do privatisation; you don’t sell because of some people who are in the government, you sell because they have demonstrated the expertise, and a lot of people rushed into it because they think electricity is like telecoms without even understanding the industry,” Shamsuddeen explained.