Total inherited liabilities by the Nigeria Electricity Liability Management Company (NELMCO) from the privatisation of the Nigeria electricity industry stood at N527.261 billion as February 2017. The liabilities cover about 23,154 invoices with about 9,694 verified and settled, leaving outstanding liabilities of 13,460 invoices for verification.
NELMCO, which made the disclosure in its liability management report obtained by The Guardian on Tuesday, listed the liabilities as: engineering N12.363 billion; successor companies N10.591 billion; legacy debts and tax liabilities N77.714 billion; bank loans N154.648 billion; Power Producers and Power Purchase Agreements (IPPs PPA) liabilities N322.198; and contingent liabilities N103.135 billion.
The latest liability figure is about 31 per cent less than the N760.774 billion originally inherited by NELMCO at the outset of privatisation in 2014. The agency said thereafter, it had been able to offset some of its liabilities. These include the Central Bank of Nigeria (CBN’s) Nigerian Electricity Market Stabilisation Facility (NEMSF) legacy gas debts of N14.291 billion; discount from creditors, N1.259 billion; savings from reconciled/negotiated amount, N32.537 billion; savings from verification exercise, N24.320 billion; creditors paid, N26.385 billion, and contingent liabilities N103.135 billion.
NELMCO was established in 2006, as a company limited by guarantee, to assume and manage the non-core assets, all liabilities and other obligations that would not be taken over by the successor companies.
This is to ensure that the successor companies are not encumbered by these liabilities at take-off.
NELMCO listed sources of funding the liabilities to include sale of non-core assets, proceeds from receivables, inflow from market operator, inflow from MDAs debt recoveries, rent of Power Holding Company of Nigeria (PHCN) properties, payment through NEMSF, budgetary appropriation, sale of PHCN scrap assets, sale of overtime cargoes and PHCN superannuation fund.
Furthermore, the Minister of Power had also approved the auctioning of overtime cargoes to distribution and generating companies, and the Transmission Company of Nigeria (TCN). NELMCO is also working on fishing out additional overtime cargoes at the Ports.
It also referenced recoveries from bank reconciliation as funds to be recovered through revenue remittance audit of various banks in respect of PHCN funds that were not remitted prior to the handover. “This initiative will further be intensified by NELMCO,” it added.
On inflow from MDAs debt recoveries, it stated: “NELMCO in collaboration with the Federal Ministry of Power engaged consultants to recover Government debts owed PHCN from electricity consumption. A Presidential approval to recover about N29 billion MDAs debts has already been obtained with necessary deductions started.
“Proceeds from receivables are old PHCN debtors from distribution companies as at the handover date. A deed of assignment of pre-completion receivables to NELMCO was entered into with the DISCOS. While discussions are on-going with the Disco on this, a detailed framework on the best way to accomplish this is being conceptualised.”
The Minister of Power, Works and Housing, Babatunde Fashola, restated the Federal Government’s commitment to pay debts owed distribution companies by the MDAs.
He however added such debts will be properly verified before payments can be made, saying: “one of the earliest statements I made was that we will pay all the debts once they are verified, and the process of verification is taking place. Right now, we are looking at over 250,000 invoices comprising of I think 4,000 accounts. I won’t make a recommendation to government to pay any kobo of tax payers’ money for a debt I cannot put my signature to.
“And so I have a team doing that, we are making good progress and raising questions. That is how debts are going to be settled, we will pay every debt that is owed and verified.”