SERAP: How Nigerians are Paying the Price for Corruption in the Electricity Sector

The common man in Nigeria, has been paying the price for corruption in the electricity sector. Nigerians have continued to pay the ultimate price of crazy electricity bills, for staying in darkness.

This and many other revelations are the findings of a 65 page Report titled “From Darkness to Darkness: How Nigerians are Paying the Price for Corruption in the Electricity Sector” recently launched in Lagos by the Socio-Economic Rights and Accountability Project (SERAP).

The Report, which is a researched work of Dr. Yemi Oke, an Associate Professor, Energy/ Electricity Law, Faculty of Law, University of Lagos, was sponsored by SERAP, with the support of the MacArthur Foundation.

According to the report, “The total estimated financial loss to Nigeria from corruption in the electricity sector starting from the return to democracy in 1999 to date, is over Eleven Trillion Naira (N11 Trillion Naira). This represents public funds, private equity and social investment (or divestments), in the power sector. It is estimated that this figure may reach over Twenty Trillion Naira (N20 Trillion Naira), in the next decade given the rate of Government investment and funding in the power sector, amidst dwindling fortunes and recurrent revenue shortfalls.”

The report revealed that, “The much-publicised power sector reforms in Nigeria under the Electric Power Sector Reform Act of 2005, is yet to yield desired and/or anticipated fruits, largely due to corruption and impunity of perpetrators, regulatory lapses and policy inconsistencies. Ordinary Nigerians continue to pay the price for corruption in the electricity sector–staying in darkness, but still made to pay crazy electricity bills".

The research found that, lack of effective monitoring and supervision; the top-down model of electricity governance in Nigeria; Institutional decay and the current corrupt attitudinal dispositions of sector officials, and other players in the power sector; The current structural arrangement; Institutional improprieties; State monopoly; State-controlled electricity governance model and lack of Decentralised Energy options, are among factors that aid the tide of corruption and impunity of perpetrators, in the Nigerian Power Sector.

The Dr. Ransom Owan-led Board of the Nigerian Electricity Regulatory Commission, was also accused of “settling officials with millions of naira as severance packages, and for embarrassing them with alleged N3bn fraud.

“The authorities must undertake a thorough, impartial and transparent investigation, as to the reasons why corruption charges were withdrawn, and to recover any corrupt funds.”

The report also called for the reopening and effective prosecution of corruption allegations, including the alleged “looting of the benefits of families of the deceased employees of Power Holding Company of Nigeria (PHCN), levelled against a former Permanent Secretary in the Ministry of Power, Godknows Igali".

It stated that, the Federal Government handed over the Transmission Company of Nigeria to a Canadian company, Manitoba, to manage under a management service contract of over $200m.

The report reads: “The Obasanjo’s administration spent $10 billion on NIPP with no results in terms of increase in power generation. $13.278,937,409.94 was expended on the power sector in eight years, while unfunded commitments amounted to $12 billion.

“The Federal Government then budgeted a whopping N16 billion for the various reforms under Liyel Imoke (2003 to 2007), which went down the drains as it failed to generate the needed amount of electricity or meet the set goals. Imoke was alleged to have personally collected the sum of $7.8 million for the execution of the contract for the construction of the Jos-Yola Transmission Line, which was never executed. There were documented/reported allegations of corruption against Imoke that fizzled-out shortly thereafter.

“Professor Chinedu Nebo handed over the assets of the PHCN to private investors on November 1, 2013. Prof. Nebo is alleged to have corruptly funded the privatised power sector, with over N200 billion despite privatisation. The allegation of N200 billion funding of the privatised power sector during Prof Nebo’s tenure should be thoroughly and transparently investigated, and anyone suspected to be responsible, prosecuted. Any corrupt funds should be fully recovered.

“Our research revealed that the sum of N1.5 billion with which the vehicles were acquired, was allegedly sourced from the diverted N27 billion insurance premium of deceased workers of the defunct Power Holding Company of Nigeria (PHCN).

“The National Assembly and members, should desist from and avoid manipulating the award of electricity contracts or cite projects in their constituencies, under the guise of “Constituency Project”. The National Assembly, should publish and ensure the full implementation of the recommendations of all power-related investigations to date.

“The Federal Government should back-down from Rural Electrification initiatives, and allow states to undertake rural electrification through their respective Local Governments and Development Areas. Federal Government should consider fully divesting its stake in the power sector, and allow for efficient, decentralised sector governance by Federal and State governments, as appropriate, in line with the provisions of the Second Schedule, paragraph 13 and 14 of the Constitution of the Federal Republic of Nigeria 1999 (as amended).

“The 36 state governments should wake up to their rights, duties and obligations, under the Constitution of the Federal Republic of Nigeria relating to the power sector by working to promote and ensure access to regular and uninterrupted electricity supply for all residents within their States. The 36 State Governments, have been abdicating their duties to the power sector, bearing in mind that, Power is an item on the Concurrent Legislative List under the Nigerian Constitution.

“When the late Bola Ige took up the mantle of the Power and Steel Ministry in 1999, he probably didn’t understand the magnitude of problems in the power sector and consequently, promised that within six months of his appointment, “power failure will be a thing of the past”, and that on a regular basis, he would brief the nation on the state of power, steel and aluminium. Current Minister, Babatunde Fashola, SAN, also claimed that ‘a serious Government will fix the power problem in six months’.

“The power sector under Ige, was characterised by epileptic and unreliable supply, bogus billing and archaic rate collection. The late Minister failed, and was unable to put an end to this. His failure was attributed to acts of sabotage and corruption, by people who were benefitting from the use of generators. The late Bola Ige, was not accused of corruption.

“When Rilwan Lanre Babalola (2008 to 2010) took over the affairs in the Ministry of Power, he met 3,700MW on ground and promised to increase it to 6,000MW and ensure a 24-hour power supply by the end of 2009. Six months after assuring Nigerians of making a significant impact in the sector, in September 2009, the 3,700MW capacity he met on ground dropped to 2,710MW, which shortfall was attributed to inadequate supply of gas to the new generators.

“The duo, Elumelu and Ugbane, allegedly colluded in misappropriating over N10 billion public funds from the account of Rural Electrification Agency (REA). The research also established, based on evaluation and analysing documents, a prima-facie case of misappropriation of unspent funds at the end of the year, instead of returning same to the treasury. Alleged misappropriation of N500million to buy houses; diversion of REA’s funds; flouting of government’s rules on award of contracts, and award of fictitious and unnecessary contracts, without following due process.

“The government of Nigeria handed over the transmission company to a Canadian company Manitoba, to manage, under a management service contract of over $200 million. Findings also show that the Transmission Company of Nigeria, could not execute most of its approved 44 projects after having 50 percent of its N30 billion 2016 budget released to it. Funds were released from Eurobond. $23.6 million allegedly paid to Manitoba Hydro International (MHI) of Canada to manage the Transmission Company of Nigeria (TCN), would appear to be without due process.”

“The privatisation of PHCN, would appear to have yielded the country total darkness. Gains of privatisation, were lost through alleged corruption, manipulation of rules, disregard to extant laws and lack of transparency in the exercise. The PBE encouraged the deferment of payment and restructuring of payment terms, in contravention of bidding rules to the disadvantage of other bidders.

“Billing methodology is shrouded in secrecy. Billings do not reflect actual electricity consumption, in most cases. Most, if not all officials of the DISCOs, are still very corrupt and demand gratification from customers before doing the job they are paid to do. Grand corruption against the Federal Government owner of the 40% stake in the DISCOS, and by implication, the Nigerian masses, due to non-remittance or under-remittances of the monies collected by the DISCOs.

“The Manitoba deal is shrouded in secrecy, as essential details of the deal remain unknown to Nigerians till date. The authorities should undertake a public-oriented audit, on the state of affairs of the TCN two years before and after the Manitoba deal. The outcome of the audit, should form the basis for further action and charges in court against the suspected perpetrators and corrupt funds fully recovered.

“The Federal Government should undertake a thorough, impartial and transparent investigation into the power sector privatisation, with a view to doing things the right, fair and just way. Ownership of public stake of 40% in those entities, should be revisited and further privatised, to avoid using government/public resources to subsidise private entities.

“Attention should be focused also, on petty corruption. Petty corruption in the electricity sector has not received much attention, as the focus has been on grand corruption in the sector.

“The Attorney-General of the Federation and Minister of Justice Abubakar Malami, SAN, should request the report of the House of Representatives Committee that probed government spending in the power sector from 2000 to 2007, and the Elumelu House Probe Committee which had accused 21 persons and 36 companies of subversion of government policy on due process, make the report public and ensure appropriate legal action is taken against anyone suspected to be involved in corruption, as well as full recovery of corrupt funds.

“Undocumented, monumental fraud and corruption, is said to be perpetrated at the Niger Delta Power Holding Company (NDPHC), and investigation by the EFCC and ICPC will ensure that those involved are effectively brought to justice.

“Mr. Malami should direct the EFCC and ICPC, to probe metering and billing fraud and corruption, and bribery among Discos. Most consumers are unhappy with their billing methodology, and feel short-changed by the operators. Mr. Malami should promptly make progress on all outstanding cases of corruption in the electricity sector, including ensuring effective prosecution of all power sector cases, being handled by the Ministry.

“The ICPC should make public the status of the investigation and recommendations for prosecution (if any) on the AEDC Recruitment Scandal/Jumbo Pay Scandal, given the facts that the Nigerian Government and public have 40% stake in the AEDC. The Manitoba deal is shrouded in secrecy, as essential details of the deal remain unknown to Nigerians till date. The EFCC/ICPC should lead a public-oriented audit on the state of affairs of the TCN two years before and after the Manitoba deal.

“The ICPC should tell Nigerians, about the current status of the probe of the recruitment scandal, and corruption-induced jumbo pay to workers of the Abuja Electricity Distribution Company (AEDC Plc). Anyone found to be responsible should be brought to justice, and corrupt funds fully recovered”, the Report stated.