Reps probe bulk electricity trading loan, summon NBET MD

House of Representatives Committee on Public Accounts has summoned the Managing Director of Nigeria Bulk Electricity Trading (NBET) Plc over N4.014 trillion revenue/debt owed by some international electricity customers, namely; Republics of Togo, Benin and Niger.

The notice was contained in a letter titled: ‘Re-consideration of Auditor General for the Federation Annual Reports’, dated 30th November, 2022 with Ref. No: HR/PAC/SCOS/9NASS/QUE.64/48 signed by the Chairman of the Committee, Hon. Oluwole Oke (PDP-Osun).

He noted that the Committee did not allow representation and directed the NBET Managing Director to appear in person alongside Dr. Marilyn Amobi who served as MD/CEO from 2016 to 2020 to justify the reason for non-rendition of the Audited Accounts for the year 2014, 2015, 2016, 2017, 2018 and 2019, on Thursday, 8th December, 2022 at 11:00am; to defend your accounts laid before the Parliament by the oAuGF.

The letter reads: “The Committee is in receipt of your correspondence and has reviewed your 2017-2019 Audited Accounts and resolved to request for the following additional information/documents to enable the Committee carry-out its Legislative mandate: Indebtedness of International Customers (Republic of Benin, Togo and Niger to NBET and TCN from 2018 to 2022). External Auditor’s report showed that the Nigeria has international bilateral agreement on electricity energy delivery and sales with Republic of Benin, Togo and. Niger. Prior to electricity transitional arrangement, these agreements were administered by Transmission Company of Nigeria. However, the Ministry of Power on 15/03/2016 directed that the administration of these international customers should be transferred to NBET. Moreover, before this can take place, certain agreements and negotiation have to be made and this accounted for the reason why TCN and NBET came up with a sharing formula to be used to split payment from international customers since TCN issued a single invoice for both administrative charges and energy payments. Based on this, 24% of the payment received from international customers was deducted for administrative charges by TCN while the balance of 76% was passed to NBET for the payment of GENCO capacity and energy bill. The total invoices issued to international customers was 30.7 billion and 20.7 billion in the year 2018 and 2019 respectively. Note 17(i) of the account receivables disclosed that the International Customers owed NBET the sum of 17.3 billion while DISCO and GENCI owed 828 billion and 2.2 billion respectively as at 2019 while 7576 provision was made for impairment.”

Hon. Oke requested for a schedule showing total invoices issued to international customers from 2018 to 2022 showing the value of invoices issued, amount paid and outstanding balance for the three countries.

According to him, the “assessment of the External Auditor’s report for the year 2019 showed that the company has paid 3.03 trillion out of the total invoices of 4.014 trillion received from generating companies as at 31/12/2021, while the distribution Companies have paid 1.308trillion out of 3.773 trillion as at 31/12/2021. This situation has adversely affected the liquidity required of the companies to meet its obligations.

“The total outstanding invoices due from DISCO is 2.4 trillion and estimated interest receivable is 931b based on interest rate of NIBOR+4%. Produce a schedule showing the value of invoice raised by generating companies from 2016 to 2022, amount paid by NBET and the outstanding balance as at date. Provide a schedule showing the value of invoice issued to Distribution Companies from 2016 to 2022, amount paid by them and the outstanding balance,” he said.

The lawmaker unveiled plans to revisit the investigation into the oAGF’s audit report on the utilization of N1.3 trillion loan facility granted by Federal Government to NBET.

“External Auditor’s report revealed that the company was granted a loan facility to the tune of N701 billion in 2017 while additional N600 billion was granted in the year 2019 by Federal Government of Nigeria.

“The company’s ability to meet its obligation is dependent on continuous support from the FGN. This is not sustainable. This is the ground upon which the External Auditor reported in the Audited Accounts that its opinion was not modified on this matter. Page 26 of the submission reflected that the company’s borrowing stood at N772 billion as at 31/12/2019.”

The NBET Managing Director is to provide detailed utilization records of these two credit facilities, loan repayment schedule showing how much It has repaid and the unmatured principal and interest.

On the possible non-compliance with procedure of disposal of government asset, he observed that the “review of Statement of Cash Flow confirmed that the sum of 7.5 million represented proceeds realized from the disposal of Property Plant and Equipment in the year 2019. Also, the review of Fixed Asset Schedule revealed that the Motor Vehicles worth 69.9 million was disposed.”

The Committee requested for a schedule showing the original cost of the asset, date of acquisition, current value prior to disposal, disposal amount, date of disposal, name of beneficiaries; Provide evidence of advertisement for the auction is required and the detailed of auctioneers; Produce evidence of payment by beneficiaries; as well as all necessary approval prior to disposal as a disposing entity.

While noting that NBET engaged in outrageous expenses, Hon. Oke said: “Note 8 of the year 2019 Audited Accounts disclosed that the company spent 1181m on consultancy services while the sum of 79.1 million was expended on local and international travel. Meanwhile, the company failed to separate cost element of international travel from local one.”

In the bid to ascertain the infraction, the company is expected to “produce utilization records vis-a-vis the amount expended on international travel showing approval from SGF to travel, Air ticket “to and fro”, international passport, list and details of beneficiaries, purpose of travel, evidence of training among others and Provide utilization records of this consultancy services.”

While noting that there was possible breach of procurement law, Hon. Oke observed that “Fixed Asset Schedule disclosed that the company acquired various assets totaling 294 million comprising (F&F-N35m, Computer Equipment – N10.7m, Motor Vehicles – N182.1m, Office Equipment – N66m in the year 2019.”

Consequently, the Company is to provide all procurement records down to award letters, payment vouchers with respect to these non-current assets acquired, evidence of deduction and rendition of statutory deduction inclusive.”

Consequently, he requested for schedule showing the breakdown of the years 2019, 2020 and 2021 receivables such as name of debtors, amount owing, date service rendered, date due for payment.

“Statement of Financial Position revealed that the company’s payables as at 31/12/2019 was 1.2 trillion while that of 2018 was 9546 billion.”

The company is required to provide a schedule showing the breakdown of the years 2019,2020 and 2021 payables such as name of creditors, amount owing, date service rendered, date due for payment; and the reason for having these huge payables unsettled bearing in mind that late settlement of obligation could lead to litigation in court.