NBET Tackles Omotosho, Olorunsogo Gencos over N13.2bn Payment...

Buhari insists NBET MD must complete four-year term

Nigerian Bulk Electricity Trading Plc (NBET) has faulted many entitlements by Omotosho Power Generation Company in Ondo State and Olorunsogo Power Station in Ogun State, which recently threatened to sue the company in the London Court of International Arbitration following a dispute over N13.2 billion Power Purchase Agreement (PPA).

The two Gencos recently accused NBET of mismanaging PPAs it signed with the them, which led to the alleged deduction of N5.2 billion from their accounts as foreign exchange differential.

NBET was also accused of withholding another N8 billion from the two Gencos, which the bulk trader claimed was surplus payments to them by the Market Operator (MO) for power supplied to the national grid.

The Chairman/CEO, SepcoPacific Energy Company Ltd, Chief Deji Adeleke, the owner of the two plants, was said to have sent a protest letter to the regulator and the Minister of

Finance, Budget and National Planning, Mrs. Zainab Ahmed, who is also the chairperson of NBET, raising some issues over PPA.

In the letters, NBET had instituted and sent dispute notices to the Gencos, claiming discrepancies in their March 2020 capacity payment invoices, which were thought to have been settled.

However, in a letter with reference Number: NBET/ CEO/PECL/2020/296 dated June 8, 2020, signed by NBET Managing Director/CEO, Dr. Marily Amobi, the company expressed serious concern about Adeleke's persistent quest for NBET to pay his power plants N5.25 billion, despite knowing that the sum is still in dispute.

“It is even so when you have deployed all forms of tactical approaches to having these funds paid to your companies without the conclusion of the processes that we need to follow to aggregating the premium your power plants have earned, which should be refunded and passed on to the consumers from whom your companies took the funds from.

“You have done the following: issued threats to the MD/CEO at different occasions and sought interventions from our principals in government. In a letter you often present to them chronicles of the situation, which you know to be untrue.

“Seeing that you have not made any progress, you have now resorted to use the print and social media to, in our opinion, blackmail the company and the government,” Amobi added.

Amobi said by the forensic evaluation NBET carried out in 2017, it was discovered that other generation companies like Adeleke’s power plants earned premium, adding that NBET has since then concluded and clawed back N18.9 billion as well as $76 million from two separate power plants.

“We are currently processing a claw of approximately $19.4 million from one of the same power plants. It is gratifying that none of these other power plants have deemed it appropriate or professional to deploy the arsenal that you have so far used, to intimidate and blackmail government officials from carrying out statutory roles," she stated.

The letter noted that the bulk trader had since 2017 made unsuccessful attempts to meet with Adeleke and his representatives to resolve the base exchange rate that should be applied to his plants and agree on the clawback that NBET needs to charge against his companies.

“It is to be noted though that our most recent estimate of the potential clawback NBET should recognise against your power plants revealed an aggregate value of over N15 billion," NBET said.

On the refusal by NBET to accept the monthly true-up invoices from Adeleke’s power plants, Amobi stated that PPA provides that the difference in the foreign exchange rate at the time of receipt of the invoice from his company and the date at which the payment is made, should be recognised on a bi-annual and not a monthly basis.

NBET also justified its refusal to refund Adeleke’s companies the amount MO erroneously paid to them above the amount the president approved.

‘’As the chairman may recall, in the financial year 2016, the Federal Ministry of Power secured a presidential approval for the sum of N14,579,285,557:27 to be paid to four generation companies. The payment was defined as covering portions of the debts that these four plants were owed by MO for pre-transitional electricity market liabilities, covering the period of November 2013 and January 2015.

"In the absence of any other source of funding, it was discovered that the funds for the payment be taken from the Collection Account of the International Customers. As you know, the International Customers Collective Account, which is in US$, belongs to all generation companies," she said.

Amobi explained that the sums the president had approved for Adeleke’s power plants were paid to them in dollars at CBN exchange rate that prevailed at the time, with Olorunsogo receiving $13.7 million (N4.208 billion) and Omotosho earning $13.166 million (N4.020 billion) – in excess of what the president had approved.

She said when reconciliation was carried out, as directed by the federal government, NBET was instructed to deduct the sums paid to the four companies, above what the president had approved for them.

“The relevant section of the approved report states as follow:

NBET can go ahead and subtract the sum of N4,208,535,131:25 ($13,782.179:30) and N4,020,520,405:38 ($13,166,466:88) from the outstanding of Olorunsogo and Omotosho – MO had already reconciled with the above mentioned Gencos as being overpaid.

‘’By deducting the said sums as NBET did, the organisation carried out a lawful directive of Mr. President. You may recall appealing to the MD/CEO of NBET on several occasions, to reverse the deductions that were already made against your power plants. And on each of those occasions, the MD/CEO counselled you on the impossibility of doing so," she said.

She explained that NBET only applied the base exchange rate of N169/$1 for Adeleke’s plants for 13 months based on the clarification from the Nigerian Electricity Regulatory Commission (NERC) that his companies’ base tariff was derived using the N169/$1 exchange rate.

NBET added that N5.2 billion, which Adeleke claimed

to be the financial implication of applicable base exchange rate, has not been passed on to the distribution companies as the sum is still in dispute.

Buhari Insists NBET MD Must Complete Four-year Term

Meanwhile, the presidency yesterday reversed the earlier announced termination of Amobi's appointment.

It also directed NBET boss to serve out her four-year term, which expires next month against the position of Minister of Power, Mr. Sale Mamman, who had earlier in a statement instructed her to immediately vacate the office.

The letter conveying the information, which was obtained by THISDAY last night, was signed by the Permanent Secretary, Ministry of Finance, Dr. Mahmoud IsaDutse, and was also copied Mamman.

“I write to convey the President's directives regarding your appointment as the MD/CEO of the Nigerian NBET. The president has approved that you serve out your tenure at the completion of which you should hand over to Dr. Nnaemeka Ewelukwa who is to take over from you as the MD/CEO. Your appointment which took effect from 25th July, 2016 for four years is to end on 24th July, 2020.

“Please ensure smooth transition and comprehensive handover to the new MD/ CEO. Your handover notes should be copied to the Minister of Power and Minister of Finance, Budget and National Planning.

“The Minister of Finance, Budget and National Planning and chair of NBET board thanks you for your services to the nation and wishes you well,” the letter said.

Before the latest information, Mamman had said Buhari approved the sacking of Amobi and for Ewelukwa to take over from her.

In January, Buhari had also overruled Mamman by reversing the suspension of Amobi.

The agency was also moved from the ministry of power to the ministry of finance.