EFCC urged to investigate N12.4b non-competitive contracts in DisCos
The committee headed by Bashir Gwnadu, a member of the NCP, also had in its memberships, top government officials drawn from the Presidency, the Federal Ministry of Finance as well as the Bureau for Public Enterprises ( BPE) that midwives the Privatization process
They include Itua Ighodalo, Akinbolahan Adeniran and Paul Ogbu as members, while Jide Adesanya, Consultant &Tech. Asst. to DG, BPE and Oluwaseun Umar, Anti-corruption Unit, BPE, served as Secretary 1 and 2 respectively.
But in a swift reaction, the DISCOs have dismissed the report as “ a non- issue” , adding that they have done nothing wrong.
A top player in the industry who do not want his name in the print, dismissed the report as “ handiwork of evil and envious people who do not like the progress of other people”
The top industry player dared EFCC to do its investigation on the issue as they had done nothing against the laws of the land.
The report had noted that the distribution segment of the Nigerian electricity market, has cases of suspicious transactions involving purchases from, or payments to, or award of contracts to companies co-owned by the owners and promoters of these DISCOs in breach of procurement procedures
The report also alleged that there is collusion with the purchasers of the Discos, i.e, the 60% equity holders in making those payments or award of contracts.
“ The Open Book Report of the Nigeria Electricity Regulatory Commissar (NERC) suggests massive cases of corporate larceny whereby purchases are made by the managers of the Disco without competition or simply in suspicious manner to aid transfer of funds out of the companies without requisite approvals of the BPE.”
The report noted 60% share-holders won’t have to totally rely on dividends for their investment return, a situation that may not only affect their operations, but likely to create inefficiency
“In essence, those in control of the companies are reported to be involved in practices akin to transfer pricing or mis-invoicing for lack of a better word, whereby the Discos are not necessarily dodging taxes but simply over-paying contracts so as to take money out as a way of recouping their investments well before any profits are made”
The NCP Adhoc Committee’s report shows many examples of such “ shady and non- competitive dealings totaling over N12.4billion in suspicious transactions engaged upon by 10 Discos.
Those of Ikeja DISCO was not included according to the report seen by BusinessDay, even as the report noted the possibly that more may have escaped scrutiny.
According to the report “ All this is done at the expense of the BPE, the 40% equity holder in the Discos. We do not have any data for Ikeja Disco, which is easily among the top three or four in the league. The BPE needs to call their equity partners to account, as this is partly public money going into private pockets. It should also be of interest to the EFCC.”
A further analysis of the payments show that Benin DISCO made payment of N590,538,038.75 to Global Utilities Management Company Limited and Messrs VIPL Global Services Limited, while Enugu made what it saw as “ unclear transactions” worth over N208 million. N4,141,106,555.62 for unclear contracts, as well as N86,966,674.00 donations to groups related to Chairman.
Kano DISCO on the other hand also made Payment of N670,000,000.00 to Northwest Power from the Disco’s Central Collection Account with Fidelity Bank Plc on 5th February 2014, Non-competitive procurement transactions worth over N778million, Payments to KCETAS Africa Power Limited worth over, N453 million, N161,338,750.00 in favour of Jewel Global Services Limited and N281,842,105.29 in favour of Motion Dynamic Concepts Limited for Technical Service Agreement (TSA).
Abuja DISCO was alleged to have expended N402,081,858.35 on insurance premium “with no evidence of competitive procurement.”, even as the report said it engaged in another 33 non-competitive procurement process transactions worth over N1.1 Billion.
The NCP report showed that Ibadan and Yola Discos have the same core investor ownership and management team, “IBED Plc which granted an inter-company loan of six billion Naira (N6,000,000,000.00) to Integrated Energy Distribution and Marketing (IEDM) Limited from the balance of the Nigerian Electricity Market Stabilization Facility (NEMSF) intervention fund without meeting in-full its due obligations to the electricity market and commitments to customer metering and network rehabilitation.”
The NCP committee therefore recommended that “ since there is no evidence of reimbursement, this amount should be considered in computing the sub 50% optionally payable to IEDM in relation to its Force Majeure claims since the FGN holds 40% of IBED.”
Kaduna DISCO was also alleged to have paid the sum of N1,026,775,130.39 to Messrs United Northern Utilities Multilink Limited for various services during the period under review, N1,839,995,263.16 in favour of Messrs Nevada Energy Limited for the supply of 3 phase meters, N325,550,123.58 in favour of Messrs Joules Power Limited for Baseline Studies, N138,814,161.32 in favour of Messrs Urban Technologies for AS-IS & take-off study,
Other such non- competitive payments made by the Kaduna DISCO which the EFCC is being called to investigate include the sum of N230,618,166.96 made in favour of Messrs Tamidan Nigeria Limited for the supply of distribution transformers, N3,208,075,775.39 in favour of Messrs Ideal Pacific Synergy Energy Limited, Joules Power Limited, Nevada Energy Limited and United Northern Utilities Multilinks Limited whose directors/ shareholders are Mr Okafor Lawrence, Bogo Patrick and Wambai Bogo.
Reacting to the NCP report however, a top player in the industry who preferred to remain anonymous described the allegations as “ a non- issue” .
Speaking specifically on the allegations of Corporate Larceny as it affects Yola DISCO, he noted that “ it is a dead issue” as according to him, Integrated Energy Distribution and Marketing (IEDM) Limited left Yola since April, 2016 when the Ministry of Power sent an Assistant Director to take over.
“ look , this is a dead issue, what ever you write now cannot change what the President and Vice President had already signed. Our payment is already on the table of the Minister of Finance and no one can stop it” he boasted.
“When you wrote your first story, did heaven fall? “ We were at the BPE yesterday, (Monday, 16th July, 2018), when we discussed your story, they were just laughing. So, you can go ahead and write whatever you like. Do you think it is easy to do business in Nigeria. The money is not coming to us but it is going to the banks we are owing”