NERC Suspends Board of Ibadan Disco over Virement of N6bn CBN Loan

We have instructed our bankers to pay April, May installments, says core investor
Chineme Okafor in Abuja
The Nigerian Electricity Regulatory Commission (NERC) yesterday announced the suspension of the entire management board of the Ibadan electricity distribution company (Discos) for failing to recover about N6 billion loan the Disco allegedly transferred to its core investor, the Integrated Energy Distribution and Marketing Group (IEDMG) Limited from a loan the Central Bank of Nigeria (CBN) gave to it to upgrade its operations.

But in a swift reaction, IEDMG said in a statement by its Vice Chairman, Mr. JO Ayeni that it had instructed its bankers to effect the payment of N300 million to cover the installments due in April and May, stressing that the letter of instruction to Stanbic IBTC Bank Plc, dated June 14, 2018, was acknowledged by the bank on the same date.

“Indeed, we had acted with the aim that the required repayments would be received by IBEDC on June 15, 2018 but for the public holidays of June 15 and June 18, 2018, which stalled the process. We have also effected the payment of the N20 million being the balance of the March installement. Right now, IBEDC is in receipt of the total sum of N320 million, which brings our total installment payments up to date,” the company said.
However, in a statement signed by NERC’s Head, Media Unit, Mrs. Vivian Mbonu and sent to THISDAY in Abuja, the regulator said it took the decision after Ibadan Disco failed to recover the N6 billion loan.

“The Nigerian Electricity Regulatory Commission (NERC) has, vide its Order No: NERC/181/2018 of June 19, 2018, suspended the Board of Directors and other key management staff of Ibadan Electricity Distribution Company (IBEDC) on account of the company’s default in the recovery of an inappropriate shareholder loan of N6 billion granted to Integrated Energy Distribution and Marketing Group (IEDMG) Ltd by the utility,” Mbonu said.

“IEDMG is the core investor in IEBDC following the privatisation of electricity distribution companies by the federal government. The loan was granted by IBEDC from funds released to all Discos by the CBN under the Nigeria Electricity Market Stabilisation Funds (NEMSF) for the purpose of improving the networks and reducing aggregate technical, commercial and collection losses. The commission had earlier fined IBEDC a sum of N50 million on the September 18, 2017 for non-compliance with Order No NERC/173/2017 directing the company to fully recover the outstanding sum of N5.7 billion being the balance of the loan granted by the utility to IEDMG,” Mbonu explained.

However, in a seperate reaction, the Company Secretary of IBEDC, Mr. Seye Alayande said in a statement that the company and the regulatory agency had agreed that the repayment of over N 5.7billion and the interest would be made from the refund of the sum due from the federal government on the stalled Yola Electricity Distribution Company transaction.

According to Alayande, this position was to the knowledge of the Bureau of Public Enterprises (BPE).
“The understanding from BPE, which was conveyed to NERC was that the refund which had been due to IEDMG as far back as 2015, could only be made after the 2018 Appropriation Bill is signed into law.To demonstrate commitment and good intention,IEDMG reached an understanding with NERC to pay 150 million monthly to IBEDC beginning from January 2018, while awaiting the refund from BPE in respect of Yola transaction. It is true, as NERC claimed, that as at April 20, 2018, the payment for January February and an additional 130 million had been effected. More importantly, however, is the fact that as at June 14, 2018, IEDMG had made all outstanding payment up till May 2018, in respect of the monthly 150 million commitment,” Alayande explained.

IBEDC said it was for this reason that the Board of IBEDC was at a loss over this seemingly hasty decision to suspend the directors, who had not only demonstrated willingness and commitment to fulfilling its financial obligations to IBEDC, but have collectively shown dedication to the cause of the company.
“It is our hope that NERC will take a second look at the issue in contention and reverse this decision in the interest of all the stakeholders and the nation,” the company added.