Senate Probes Alleged Mismanagement of N50bn by NBET

Deji Elumoye in Abuja

The Senate has alleged that the Nigeria Bulk Electricity Trading Plc (NBET) mismanaged N50 billion realised from the sale of Egbin, Omotosho and Olorunsogo power plants in 2013.
It has, therefore, mandated its committee on Public Accounts to investigate the matter.

Chairman of the committee, Senator Matthew Urhoghide, said the decision to probe the transaction was based on the 2015 report of the office of the Auditor-General of the Federation (AuGF), which exposed the reported mismanagement of N50 billion public funds in the Escrow Account said to have been realised from the sale of Egbin, Omotosho and Olorunsogo power stations.

A query by the AuGF to the NBET over the transaction reads: “Funds in form of escrow in the possession of Egbin Escrow agreement FCMB Escrow Account BPE/NBET 2435507018-N30,000,000.000, UBA Escrow Account BPE/NBET 1017699148 – N10,000,000,000.00, FBN Escrow Account BPE/NBET 2024063360 – N10,000,000,000.00

“The following observations were made: there was no execution date, as the agreement only stated 2013.
“This has been left out deliberately and arouses suspicion of malpractices. This is evidenced by a mail sent by the Legal Counsel to the Bureau of Public Enterprises (BPE) asking for this information, which was never replied to.

“As stated in the original draft agreement, the rate of interest generated on escrow funds shall be agreed between BPE, NBET and the escrow agents (banks) but subsequent manipulated agreement sighted states that ‘the interest shall be concessionary taking into account a reasonable compensation of the escrow agents in the consideration for their obligation under the agreement.”

The query also demanded that the minutes of the meeting that decided the concessionary rate and the obligation of the escrow agents necessitating any form of consideration as well as the identities of the attendants and parties to the proposed and implemented 0.025 per cent interest on the escrow fund should be produced.

The Senate noted the financial mismanagement of over
N5,000,000,000, which would have been realised on the investment of the funds in Nigeria Treasury Bills at an interest rate of 10 per cent.

“Olorunsogo power plant, OLORUNSOGO escrow agreement FCMB, IBANG B555CBL60910412544458, N10,110,000.00, Omotosho power plant OMOTOSHO escrow agreement Diamond Bank PLC IBAN 021000089, N10,110,000.00.”
The query said examined documents revealed a meagre interest rate on this escrow at 0.5 per cent.
“I have requested to know the interest of the parties to this agreement and the reasons for negotiating such ridiculously low-interest rate,” said the AuGF.

According to the query, there is uncertainty surrounding the status of the account.
The query also noted that documents revealed that the account was to be re-denominated but confirmation of this was not presented during the audit exercise.

“The Managing Director/CEO was requested to produce the following documents and evidence:
“Detailed schedule of the five accounts showing all interests accrued in the period, a detailed document declaring the status of the alleged re-denominated accounts and reasons for this action. Detailed financial and economic analysis defending all decisions regarding interest rates, all minutes of meetings and deliberations on decisions for fixing the interest rates and parties involved,” AuGF explained.

But NBET, in its written response said: “It was never stated that the fund will be invested in the treasury bill. However, with the reduction in Cash Reserve Ratio (CRR), the rates on sitting balance for the Egbin was renegotiated to two per cent from 0.02 per cent per annum effective July 01, 2015.”
It was, however, observed that the renegotiation was done after two years from 0.02 to two per cent per annum.