N1bn con­sul­tancy fee, other ex­penses raise dust at Abuja Disco

Daily Trust - - BUSI­NESS - By Si­mon Echewo­fun Sun­day

At the Abuja Elec­tric­ity Dis­tri­bu­tion Com­pany (AEDC or Abuja Disco) Plc, seven di­rec­tors, in­clud­ing the Chair­man, earned over N183m as salaries and got an­other N33.3 mil­lion as board ex­pense in 2014, a re­port has re­vealed.

The Abuja Disco was among the 10 power dis­tri­bu­tion com­pa­nies pri­va­tized in Novem­ber, 2013. It is now owned by KANN Util­ity Com­pany Limited (60 per cent), BPE (32 per cent) and Min­istry of Fi­nance In­cor­po­rated (8 per cent).

The AEDC Chair­man is Amb. Shehu Malami while the di­rec­tors are Ben­jamin Ezra Dikki (Di­rec­tor-Gen­eral at the Bureau of Pub­lic En­ter­prise, BPE), Felix Ohi­w­erei, John Al­bert Jones, Michael Tar­ney (Bri­tish), Siyanga Malumo (Zam­bian) and Neil Croucher, a South African who is the Man­ag­ing Di­rec­tor.

AEDC gen­er­ated N36bn in 2013, N48bn in 2014 yet de­clared losses

A KPMG Pro­fes­sional Ser­vices au­dit re­port ob­tained ex­clu­sively by the Daily Trust re­veals that the Disco raked in N36.025 bil­lion in 2013, a 42 per cent in­crease from the N25.345bn re­al­ized in 2012, the pre-pri­vati­sa­tion year.

De­spite the in­crease in rev­enue, the Disco de­clared a loss of N13.789m in 2013, a 32 per cent de­crease from the N20.216m loss in 2012 after the firm took over the Disco for two months be­fore declar­ing the fi­nan­cial sta­tus for De­cem­ber 31, 2013.

The rev­enue rose to N48.097bn by De­cem­ber 2014 and about 34 per cent higher than that of the first year. Still no profit was de­clared as its loss rose to N25.971m, sig­ni­fy­ing an 88 per cent loss in­crease.

Board meet­ings gulped N33.3m in 2014

Be­tween Novem­ber and De­cem­ber 2013, the Disco board mem­bers (the chair­man and six di­rec­tors) had meet­ings four times. While the fed­eral govern­ment (BPE) rep­re­sen­ta­tive, Mr. Dikki was rep­re­sented by his al­ter­nate Di­rec­tor, Mr Audu Mo­hammed Uba all through, Malumo at­tended only the last meet­ing held on Novem­ber 29. An­other Di­rec­tor, Ohi­w­erei was not present but only at­tended the last two meet­ings by proxy.

The ab­sence of di­rec­tors syn­drome sur­faced again in the 2014 re­port. Out of the six meet­ings, two di­rec­tors de­faulted sig­nif­i­cantly. While Mr Malumo at­tended that of May by proxy and was ab­sent in Novem­ber, Jones at­tended both Oc­to­ber and De­cem­ber meet­ings by proxy.

In 2014, de­spite the loss sta­tus of AEDC, a new ex­pense sheet sur­faced for the di­rec­tors, as ‘board ex­penses’ amount­ing to N33.323m spent in the year. There was no such ex­pense in the 2013 re­port when the board sat four times in two months.

How ad­min­is­tra­tive ex­penses rose by N11m in 1 year

Abuja Disco’s ad­min­is­tra­tive ex­penses stood at N12.933m in 2012 but rose slightly to N13.668m in 2013 after pri­vati­sa­tion. The fed­eral govern­ment had funded the Disco with N1.662bn in 2012 be­fore pri­va­tiz­ing it. The pre­vi­ous ad­min­is­tra­tive cost al­most dou­bled in 2014 as it shot up to N24.927m.

In 2014, the Disco paid N42.158bn to pur­chase and dis­trib­ute en­ergy across Kogi, Abuja, Nasarawa and Niger states. It had spent N31.511bn for the same en­ergy cost in 2013.

KPMG, con­sul­tants col­lect N1bn in 2 years

The Abuja Disco has spent hugely on con­sul­tancy ser­vices after takeover. While it paid N355.450m as con­sul­tancy fees in 2013, it spent an­other N52m as au­di­tor’s re­mu­ner­a­tion. The au­di­tor’s (KPMG) fee in 2012 be­fore the PHCN handed over was about N8m.

The con­sul­tancy fees fur­ther rose to N560.602m in the sec­ond year, while the au­dit­ing firm got N46.607m.

Work­force down­sized, 1,358 on con­tract

Staff and re­lated spend­ing re­duced from N9.389b from the 2012 fig­ure to N8.573bn in 2013 after the firm ex­cised ex-PHCN staff and en­gaged 3,601 em­ploy­ees as con­tract staff. These work­ers got N8.2bn as salaries and N371.8m as pen­sion re­mit­tance.

The spend­ing was fur­ther re­duced to N7.128bn in 2014 from the N8bn spent in 2013. This is be­cause it re­tained 2,243 em­ploy­ees as full staff whose per­for­mance it deemed sat­is­fac­tory after the six months con­tract elapsed in April 2014. They got N6.849bn as salaries and N279.808mn pen­sions.

Sta­tis­tics show that in 2014, 779 em­ploy­ees (the low­est cadre) re­ceived be­tween N200,000 and N1.2m an­nual salary each, an­other 609 work­ers got N2.2m to N3.2m, while the two high­est paid em­ploy­ees re­ceived N17.2m to 20.2m. Only 15 em­ploy­ees among the over 2,000 work­ers each got above N8.2m for the year.

Chair­man, 6 Di­rec­tors got over N183m in 2014

The Chair­man and other di­rec­tors re­ceived N24.556m for the two months of Novem­ber and De­cem­ber after the AEDC took over in Novem­ber 2013. The high­est paid di­rec­tor, Amb. Malami got N5.667m, while five other di­rec­tors re­ceived be­tween N3.5m and N4m. One other di­rec­tor, who could be the BPE rep­re­sen­ta­tive, Mr Dikki or his as­sis­tant, Mr Uba re­ceived no salary in 2013.

The same of­fi­cials re­ceived N183.983m for the 12 months of 2014, the re­port said. The break­down in­di­cates that Mr. Malami had N36.330m penned to his name in 2014.

The high­est paid di­rec­tor got N24.220m in 2014, as stated in the re­port sent to the Nige­rian Elec­tric­ity Reg­u­la­tory Com­mis­sion (NERC) re­cently.

The ex­act earn­ing na­ture, in Abuja Disco, of the Direc­torGen­eral of the BPE, Mr. Dikki, who is al­ways rep­re­sented by the al­ter­nate Di­rec­tor, Uba is not clear. Dikki earn salaries at the BPE as di­rec­tor, but the AEDC seat en­ti­tles the oc­cu­pier to an an­nual salary range of over N24m.

Li­a­bil­i­ties on ac­crued as­sets in AEDC op­er­a­tions

In the 2014 re­port, Abuja Disco’s as­sets rose by 10 per cent from N96.028bn when it took over to N105.530bn. In con­trast, its li­a­bil­ity ex­ploded by 645 per cent. The li­a­bil­ity, which was pegged at N3.030m at take-over stood at N22.590m in 2014.

Salaries gap, poor net­works up­set union

In its pro­posed 10-year tar­iff plan sub­mit­ted to the NERC re­cently, the Disco said it had spent only N2.3bn to im­prove its net­works. But un­der the pri­va­ti­za­tion terms, it is ex­pected to have in­vested N39.8bn in strength­en­ing its net­works within five years (by 2017). But the pro­posed tar­iff plan would seem to ad­dress the lag in the in­vest­ment re­quire­ment in the pri­va­ti­za­tion terms, as it shifts a N73.3bn spend­ing fore­cast to 2024.

The Nige­ria Union of Elec­tric­ity Em­ploy­ees (NUEE), es­pe­cially the work­ers of the Abuja Disco, last Tues­day protested poor re­mu­ner­a­tion and wel­fare is­sues at the AEDC head­quar­ters in Abuja, lo­cal news agency re­ported.

The Deputy Pres­i­dent, North­ern zone of the union, Mr Isaac Ab­e­gye, said the pri­vati­sa­tion of the sec­tor had brought un­told hard­ship to the elec­tric­ity em­ploy­ees. He took to Face­book to post re­ac­tions on an on­line re­port of the salary dis­par­ity shortly be­fore the union’s protest.

“The ex­po­si­tion of the fraud be­ing per­pe­trated by the 'new own­ers' of the AEDC cuts across the coun­try. From the Yola Com­pany through to P/H, La­gos to Kano, etc, if in­ves­ti­gated, will un­earth the sor­did and mind-bog­gling hap­pen­ings in these pri­va­tised power util­ity com­pa­nies,” Ab­e­gye posted.

As the re­ac­tions swell on the so­cial me­dia, an­other NUEE mem­ber, North­ern zone, Adamu Naal­lah posted, “Not only that, the com­pa­nies are pay­ing three dif­fer­ent types of salaries to the com­pany work­ers. Ex­am­ple: the in­her­ited PHCN work­ers salaries were slashed by more than 50 per cent, while those re­cruited by the com­pa­nies are be­ing paid be­tween N750,000 and N1.2m.

“While work­ers are work­ing just like slaves, the elec­tric­ity con­sumers through­out the na­tion are pay­ing for what they did not con­sume. I think it is high time the fed­eral govern­ment did some­thing to ar­rest the sit­u­a­tion.”

Daily Trust’s anal­y­sis shows that while the high­est paid low to mid­dle cadre em­ployee at the AEDC gets about N1.6m monthly, the high­est paid di­rec­tor takes home N12m monthly, in­di­cat­ing over a N10m dis­par­ity in salary level in its staffing struc­ture.

Other is­sues raised by the union be­side the huge dis­par­ity in salary struc­ture in­clude poor med­i­cal care, and lack of work tools like ve­hi­cles and lad­ders. Elec­tric­ity cus­tomers kick The Na­tional Elec­tric­ity Con­sumers Ad­vo­cacy Net­work (NECAN) re­cently scolded Abuja Disco for “in­ef­fi­cient” op­er­a­tions and al­low­ing heavy col­lec­tion losses while seek­ing tar­iff in­crease.

Speak­ing through its As­sis­tant Na­tional Sec­re­tary, Mr Obong Eko, NECAN said, “We no­ticed that pri­va­ti­za­tion will lead to ef­fi­ciency but we are here in Abuja and we con­ducted a sur­vey where we dis­cov­ered that AEDC is not do­ing enough.

"Be­cause of in­ef­fi­ciency in the Disco, they have NEPA II en­gaged to work even when they are not on their pay­roll and these peo­ple in­vade com­mu­ni­ties to col­lect monies and de­fraud cus­tomers,” Eko said.

The Daily Trust learnt that the Pres­i­dency has or­dered an au­dit of the 11 Dis­cos to de­ter­mine their ef­fi­cien­cies be­fore the next tar­iff in­crease by Jan­uary 2016.

We are in­ves­ti­gat­ing high pay, op­er­a­tional con­flicts AEDC

The man­age­ment of the Abuja Disco said the al­leged pay dis­par­ity, es­pe­cially on the di­rec­tors’ emol­u­ments, and con­flict of in­ter­est by a con­sult­ing firm ren­der­ing ser­vices to the com­pany were mis­lead­ing.

The board and man­age­ment, in a state­ment ob­tained by the Daily Trust and pub­lished last Fri­day said, “No mem­ber of the AEDC Board of Di­rec­tors and man­age­ment staff re­ceives N36m re­mu­ner­a­tion as quoted in the story.”

The Disco said it would im­me­di­ately start in­ves­ti­ga­tions on that, “We will, with im­me­di­ate ef­fect, in­sti­tute in­ves­ti­ga­tions through in­de­pen­dent au­di­tors on the al­le­ga­tions of con­flict of in­ter­est of the con­sul­tancy firm men­tioned in the ar­ti­cle.”

On is­sues raised by em­ploy­ees on poor work tools and oth­ers, an of­fi­cial ac­cused the union of­fi­cials of ped­dling al­le­ga­tions. He ac­cused of­fi­cials of the com­pany’s union chap­ter of de­lay­ing the en­dorse­ment of staff rules and reg­u­la­tions the man­age­ment drafted to en­sure the work­ers were al­ways taken care of.

He ar­gued "the protest was un­called-for as the union is aware of our ef­forts to im­prove work con­di­tions."

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