House of Representatives Committee on Public Accounts is set to probe the Nigeria Bulk Electricity Trading (NBET) Plc over N4.014 trillion revenue debt owed by some external electricity customers.
The countries said to be owing the electricity debts included the neighbouring Republic of Togo, the Republic of Benin and the Republic of Niger.
The notice of summon was contained in a letter titled: ‘Re-consideration of Auditor General for the Federation Annual Reports’, dated 30 November, 2022 with Ref. No: HR/PAC/SCOS/9NASS/QUE.64/48, and signed by chairman of the House Committee, Honourable Oluwole Oke.
He said the committee does 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.
The duo were asked to appear before the committee on Thursday to justify the reason for non-rendition of the audited accounts for the years 2014, 2015, 2016, 2017, 2018 and 2019.
The letter reads: “The Committee is in receipt of your correspondence and has reviewed your 2017-2019 Audited Accounts.
“It has 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 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 the Transmission Company of Nigeria (TCN).
“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 per cent of the payment received from international customers was deducted for administrative charges by TCN, while the balance of 76 per cent 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 N828 billion and N2.2 billion respectively as at 2019, while 7576 provision was made for impairment.”
To this end, the House Committee chairman quested 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.
Honourable Oke said: “Assessment of the External Auditor’s report for the year 2019 showed that the company has paid N3.03 trillion out of the total invoices of N4.014 trillion received from generating companies as at 31/12/2021.
“The distribution companies have paid N1.308trillion out of N3.773 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 N2.4 trillion and estimated interest receivable is N931billion, based on interest rate of NIBOR+4 per cent.
“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.”
In a related development, the chairman, House Committee on Public Accounts, Honourable Oluwole Oke, had unveiled plans to revisit the investigation into the AGF’s audit report on the utilisation 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 Federal Government of Nigeria. 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.”
To this end, the NBET Managing Director is required to provide detailed utilisation records of these two credit facilities and the 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, Honourable Oke said the “review of Statement of Cash Flow confirmed that the sum of N7.5 million represented proceeds realised 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.”
Consequently, the House 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.
It asked for evidence of advertisement for the auction and the detailed of auctioneers; evidence of payment by beneficiaries; as well as all necessary approval prior to disposal as a disposing entity.
Oke note that NBET engaged in outrageous expenses, adding: “Note 8 of the year 2019 Audited Accounts disclosed that the company spent N118.1m on consultancy services while the sum of N79.1 million was expended on local and international travel.
“Meanwhile, the company failed to separate cost element of international travel from local one.”
To ascertain the infraction, the company is expected to “produce utiliation 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 utilisation records of this consultancy services.”
While noting that there was possible breach of the procurement law, Honourable Oke observed that “Fixed Asset Schedule disclosed that the company acquired various assets totaling N294 million comprising (F&F=N35m, computer equipment=N10.7m, motor vehicles=N182.1m, office equipment=N66m in the year 2019.
“Consequently, NBET is to provide all procurement records, including award letters, payment vouchers with respect to these non-current assets acquired, evidence of deduction and rendition of statutory deduction inclusive.”
On the issue bothering on possible supply of energy by NBET to DISCO without valid bank guarantees, he observed that: “Under the vesting agreements signed by the Distribution Companies, the Distribution Companies provided bank guarantees covering three months of energy supply in case of default.
“Further analysis showed that the bank guarantee provided by Abuja Electricity Distribution Company to the tune of 8.1 billion through United Bank for Africa expired on 01/07/2022 while the guarantee provided by Kaduna Electricity Distribution Companies provided through Fidelity Bank to the tune of 6.3 billion has expired too.”
To this end, the company is expected to provide a written submission, backed up with evidence to show that these two companies have renewed the bank guarantee as well as copies of the bank guarantee.
On the causes of consistent net loss declaration for years by NBET, the lawmaker said: “Further review of the Statement of Comprehensive Income revealed that the company has been consistently reporting loss for years despite huge capital injection by FGN, loss of N109 billion, N241 billion, N155 billion, N334 million in 2019, 2018, 2017 and 2016, respectively.”
The House Committee chairman on Public Accounts therefore requested for a brief as to why the company made loss within the referenced years as well as the net profit or loss for 2020 and 2021.
On the status of trade and other receivables from 2019 to 2021, he noted: “Further assessment of statement of financial position showed that the company’s receivables, as at 31/12/2019, was N1.5trillion while that of 2018 was N1.06 trillion.
“Trade receivables are amounts due from customers for services rendered in the ordinary course of business.”
Consequently, the committe requested for the schedule showing the breakdown of receivables in 2019, 2020 and 202, including name of debtors, amount being owed, date service was rendered, date due for payment.
“Statement of Financial Position revealed that the company’s payables, as at 31/12/2019, was N1.2 trillion, while that of 2018 was N954.6 billion,” Oke added.
On the possible cause of late rendition/non-rendition of audited accounts, the House Committee stated: “Our review of the submission confirmed that the Audited Accounts for the year 2014, 2015 and 2016 were submitted to the Office of the Auditor General for the Federation on 13/10/2021.
“This is contrary to the Financial Regulation which states that the audited accounts should be rendered on or before 31/05 of the succeeding years. Similarly, the audited accounts for the year 2017,2018 and 2019 were submitted to the Auditor General on 23/11/2022,” it’s said.
To this end, the committee mandated the NBET Managing Director “to come along with 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.
“You are to provide NBET Audited Accounts for the years 2020 and 2021 and evidence of rendition of same to the Office of the Auditor General for the Federation.
“You are to come along with your external auditors, Aminu Ibrahim & Co of City Plaza, Plot 596, Ahmadu Bello Way, Garki 2, Abuja to explain its involvement or otherwise in the late rendition of audited accounts to the Auditor General for the Federation,” the letter concluded.
