The Nigerian Bulk Electricity Trading (NBET) Plc has been urged to exert its energies on how to recover the N701 billion power subsidy granted to Generation Companies (GenCos).
NBET’s Managing Director Dr. Marylin Amobi got a memo from the Power Ministry give priority to the recovery of the facility instead of hounding her workers.
According to the ministry, it was sad that Distribution Companies (DisCos) had been receiving electricity supply from GenCos without much payment despite the fact that the end-users never defaulted.
The ministry claimed that the payment performance of the DisCos has dropped since August 2017 from a little over 30 per cent to below 25 per cent.
It urged the NBET chief to pull the brake on the suspension and sack of two management staff, Mr. Abdullahi Sambo and Waziri Bintube, who had cautioned the agency against leading the initiative for the N701 billion credit facilities for GenCos which sells electricity to the agency.
According to investigation, the N701 billion was a “bridging facility to enable NBET provide minimum level of payment to generation companies to meet their obligations to gas suppliers and increase their levels of generation.”
The loan is expected to be paid back through the following sources: retail electricity tariff where arrangements have been fully agreed upon and finalised at the time of repayment; budgetary appropriation; external borrowings by the Federal Ministry of Finance and any other payment arrangements to be agreed upon by the Central Bank of Nigeria and the Finance ministry, including auto debit into the Consolidated Revenue Fund (CRF).
But, the DisCos, which ought to be sources of repayment through electricity tariff, had been defaulting even as the DisCos, which do not spare consumers, had gets supply without payment to NBET which sells to them.
There were fears that the Federal Government may not be able to recoup the loan from sales of electricity to DisCos, prompting the Power ministry to issue the strong-worded memo to the NBET managing director to shape up.
Signed by the Permanent Secretary (Power), Mr. Louis O.N. Edozien, the memo reads in part: “In the meantime, I urge the MD/CEO to apply your creativity, energy and considerable knowledge you clearly possess to the real threats to NBET and the electricity industry, rather than wasting them on imaginary challenges to your authority (which is not in doubt), and fictional interference in the daily operations of NBET by the permanent secretary.
“The following real threats are noteworthy: Viability and sustainability of the 2017-2018 N701.9 billion payment assurance program is premised on raising the payment performance of the distribution companies who buy electricity from NBET under Vesting Contracts from 24 per cent (as at January 2017) to 80 per cent and above by end 2018.
“After steady improvement from January 2017 through August 2017 to above 30 per cent, a drop has been observed since September 2017 to below 25 per cent. Why is the payment performance dropping? What strategy does NBET propose to reverse the trend and attain 80 per cent or above by end of 2018.
“The current payment performance of the distribution companies is too discretionary. It is necessary to agree a realistic ‘contractual’ payment threshold with the distribution companies that give NBET a remedy in the event of non-payment.
“The contractual remedy is calling payment security provided for in the vesting contracts. NBET’s strategy to achieve this is long overdue. I am aware that NERC has proposed a pathway to a ‘contractual’ payment threshold by recognising ‘regulatory assets/entitlements’ based on the difference between the recently concluded tariff review and the actual tariffs chargeable .
“NBET’s enforcement of the settlement calendar captured in e-market rules is unsatisfactory. Admittedly, the market rules did not anticipate the current persistent payment defaults, or the documentation required to implement the payment assurance program.
“Nevertheless, it is necessary to agree, document and enforce a workable settlement calendar, with executed Power Purchase Agreement (PPA) Vesting Contract addenda as necessary. This work is outstanding.
“In a related vein, whilst the payment assurance programme has brought confidence into the gas and generation end of the industry, that confidence will quickly dissipate if the current delays in disbursement of the monthly payment assurance persist. The last payment supplement disbursed to generation companies was for July 2017.
“I only received the request for August, September and October 2017 after several reminders which I have forwarded to the governor of Central Bank. As we discussed, you are expected to submit for the minister’s consideration a payment calendar that excludes for a given any generating company that does not meet the documentation requirements by stated deadlines in the settlement calendar.
“Several structural elements of the contracting process for the Power Purchase Agreement (PPA) and Put Call Option Agreement (PCOA) need to be streamlined, especially those related to waiver of sovereign immunity, the application of procurement regulations, and the timing of attorney-general’s clearance. NBET’s strategy for streamlining these processes is long outstanding.
“NBET was conceived as a transitional institution to leverage the financial strength of the sovereign to establish a bankable buyer of electricity on PPA agreement while the industry transition from a vertically integrated Government monopoly to a financial viable industry based on NBET, transition plan and timeline is still expected.
“You are advised to refocus your considerable talents, which recognise and value on resolving these substantial threats recognise.”
The ministry also urged Dr. Amobi to halt action on either the suspension or sack of two NBET officials.
The memo said: “I repeat my instruction (copy attached) that NBET management, which you lead, refrain from taking any action that gives effect to your report that Waziri Bintube and Sambo Abdullahi, have ceased to be a staff of NBET, until appropriate authority has determined that they have in fact ceased to be staff of NBET, after considering their petitions contesting the veracity of the report.
“For the avoidance of any doubt, the activity NBET management should refrain from taking includes suspension of their salaries and emoluments.
“Contrary to your assertion, I did not convey this instruction overall to the Director Finance & Accounts or any other officer of NBET. I conveyed it to the MD/CEO of NBET in writing by the letter I had attached.
“I intended the letter to be a lawful instruction from a superior officer in the context of Public Service Rule 030301 (m), so long appropriate authority of NBET, in the absence of the NBET Board, rests with the Minister of Power, Works & Housing, who is the head of the supervising ministry and representative of Mr. President, where the authority ultimately rests.
“As stated in my earlier letter, I regret that the series of petitions and counter-petitions emanating from NBET have not been determined by appropriate authority.
“The mistaken expectation was that the effusion of time and the team spirit that is usually built in the course of collective work by a management team would resolve the issues.
“Since that has clearly not happened, the ministry is taking steps to review the cases and advise the minister on the steps to take to determine the cases.”
However, in a counter-memo to the Vice Chairman of the Nigerian Electricity Regulatory Commission (NERC), the NBET managing director accused the Power ministry of undue interference.
The ministry said the NBET chief got it wrong by reporting it to NERC, “a regulator in the power sector and an agency under the ministry”.
Dr. Amobi said in her memo to the NERC that NBET’s continued existence was under threat by undue interference in its operations by the ministry through its permanent secretary.
She said: “l refer to the captioned subject matter, and respectfully write to inform the Commission that the long-term survival of NBET is currently under threat.
“In submitting this notification to the Commission, NBET relies on two of the terms and conditions of its licence; specifically: Condition 2, paragraph 5, which prescribes that always, the organisation should have sufficient capabilities to allow it to fully discharge its obligations; and Condition 8, paragraph 2 that requires NBET to provide a detailed report of the Commission if the organisation experiences a notable change in its circumstances that may inhibit it from achieving its licence conditions. This includes the occurrence of any act or omission by others that may materially affect NBET’s business operations.
“Today, NBETs business operations as a provider of timeous, transparent and credible system settlement administration to the Nigerian Electricity Supply Industry (NESI), is under threat and requires the urgent intervention from the Commission.
“Background: On the 15th day of November, 2011, in accordance with the Electricity Power Sector Reform (EPSR) Act of 2005, the Commission licensed NBET, an agency of the Federal Government of Nigeria, to carry out the business of bulk electricity trading the shareholding of the Company, which was incorporated at the Corporate Affairs Commission on the 29th day of July 2010, was divided between the Bureau of Public Enterprises (BPE) and the ministry of Finance.
“Whilst the BPE holds 80 per cent of the shares of the company, the ministry of Finance holds 20 per cent on behalf of the Federal Government.
“As the Commission is aware, on the 23rd day of August, 2011, Mr. President appointed its pioneer Board of Directors that had nine members. Mr. President dissolved the Board on the 16th day of July, 2015 vide a circular from the Secretary to the Government of the Federation with reference number: SGF.19/S.81/XlX/964.
“The circular directed the chief executive officers of government-owned companies (which includes NBET) to refer matters that require the attention of their boards to Mr. President through the permanent secretaries of their respective supervising ministries.
“It is to be noted that by the circular, whilst the ministry used to have one slot out of nine on the NBET Board of Directors, it became the de facto sole governing authority in absence of a properly constituted board.
“In compliance with the presidential directive, NBET has referred several matters that required the attention of the Board to the Ministry of Power, Works and Housing (‘the Ministry’).
“NBETs continued existence in the sector is now threatened by the undue interference in its daily operations by the ministry, through the permanent secretary (Power). Some of these include but are not limited to the following:
“Promoting deviant behaviours and gross insubordination by all cadres of staff against the Managing Director and Chief Executive Officer; thereby enabling anarchy to thrive in the organization.
“Refusing to deal with disciplinary matters that relate to management staff on which the organisation followed the process, recommended in its human resources policy manual to refer to the ministry.
“Dealing directly and in some Cases, issuing counter directives to subordinates of the managing director / chief executive officer, and;
“Unduly withholding, or not approving the requests the organisation makes to the ministry for its efficient and effective operation.
“l attach for your guidance, the recent letter that the permanent secretary (Power) sent to NBET dated Monday the 22nd day of January, 2018. This letter seems to be is response to two letters the organisation wrote to the ministry and respectively dated the 22nd day of December, 2017 and the 9th day of January, 2018. The copies of these letters are also attached for your ease of referencing.”
On the disciplinary action against two management staff, the NBET memo said: “It is to be noted that last week, the permanent secretary (Power) sent an oral message to the Director of Finance and Accounts (DFA) who acted in the MD’s absence, to reinstate Mr. Bintube and include him in the payment of salary for the month of January.
“The permanent secretary (Power) is aware that on the 22nd day of December, 2017, having been absent from work for over one week without authorisation, that management followed due process to enter Mr. Bintube as having resigned and no longer in good standing. Mr. Bintube was duly informed of the decision and copies of the communication were sent to the ministry for its information.
“Furthermore, the permanent secretary (Power) directed the DFA to include Abdullahi in the payment of salary for the month of January, 2018.
“The permanent secretary (Power) is aware that on the 22nd day of December, 2017, the management suspended further payment of salaries and emoluments to Abdullahi and informed the ministry of the action it took, which will remain pending its determination of Abdullahis petition against his redeployment.
“The permanent secretary (Power) knows that on the 20th day of June, 2017, Abdullahi wrote a joint petition to the ministry with Bintube. The permanent secretary is aware that the managing director refined the structure of the company to accommodate the treasury accountants the Head of Service of the Federation approved that the Accountant-General of the Federation deployed to NBET in pursuance to its ‘self-accounting’ status designation.”
“The refined structure introduced critical lines of businesses that are required to enhance the efficiency and effectiveness of the organization.
“The permanent secretary is aware that since the managing director refined the organisation in June and until today that Abdullahi locked up the security safe of the organisation whilst he sized its two audit stamps, as a result, inhibited the company from carrying out its statutory responsibilities.
“Indeed, against the requirements in the civil service and the laws of the Federal Republic of Nigeria, Abdullahi sent the audit stamps of the organisation to the permanent secretary purportedly for ‘safe keeping’; and the permanent secretary held onto them without deeming it fit to return them to the managing director.
“Finally, in consultation with the permanent secretary Bintube turned up to ’work’ and created an office for himself in the conference room of the organisation, purportedly on the advice of the permanent secretary that he resumes work ‘after his vacation’, which he, the permanent secretary approved for him.
“The situation that the permanent secretary has created for this office with is oral directive to reinstate Bintube without due regard to the fact that that since the 22nd day of December, 2017, Bintube ceased to be a staff of the company.
“In NBETs opinion, it further strengthens the message the ministry continues to provide to staff and stakeholders that the managing director is not in charge of the organisation.
“It is to be noted that when disciplinary matters remain unresolved, as has happened at NBET, or the permanent secretary continues to communicate oral and formal directives on disciplinary matters, which are clearly unsupportable by law, it fosters a culture of indiscipline, impunity and insubordination.
The permanent secretary is aware that his persistent directives that undermine the authority of the managing director emboldened some staff to continue to behave most inappropriately.
“Prayer: The Commission is, respectfully, invited to urgently review the potential threat NBET is currently facing to its continued survival, due to the undue and persistent interference in its daily operations from the permanent secretary.
“Honourable Vice Chairman sir, on behalf of the management team at NBET, I wish to reaffirm my resolute commitment to leading the organisation to successfully deliver in its corporate goals and ensure that Nigerians enjoy the benefits of the reforms currently being implemented in the sector.
“Kindly accept, sir, the renewed assurance of my highest respect and regards.”
-The Nation
