NERC Suspends Ibadan Disco’s Board Over N6bn Transaction
The Nigerian Electricity Regulatory Commission on Thursday announced the suspension of the Board of Directors and other key management staff members of the Ibadan Electricity Distribution Company on account of the firm’s default in the recovery of an inappropriate shareholder loan of N6bn granted to Integrated Energy Distribution and Marketing Group Limited by the Disco.
The IEDMG is the core investor in the IBEDC following the privatisation of the electricity distribution companies by the Federal Government in November 2013.
The commission stated that the suspension of the board of directors of the IBEDC was enforced through its Order No. NERC/181/2018 of June 19, 2018.
It explained that the loan was granted by the IBEDC from funds released to all power distribution companies by the Central Bank of Nigeria under the Nigeria Electricity Market Stabilisation Fund for the purpose of improving the networks and reducing aggregate technical, commercial and collection losses.
The commission had earlier slammed a fine of N50m on the IBEDC, which was communicated to the Disco on September 18, 2017.
The fine was for non-compliance with Order No. NERC/173/2017 directing the company to fully recover the outstanding sum of N5.7bn, being the balance of the loan granted by the utility to the IEDMG.
On October 13, 2017, The PUNCH had reported that the commission slammed the N50m fine on the firm as a result of inappropriate financial transactions conducted by the Disco.
The commission had stated, “Following the outcome of an open book review conducted on the financial records of the IBEDC, NERC found the company wanting on two grounds of inappropriate financial transactions and (it) was subsequently fined a sum of N50m.
“The fine was on account of its failure to secure a refund of an interest free-loan the board of the IBEDC granted to its core investor group.”
This also made the commission to review the utilisation of the Nigeria Electricity Market Stabilisation Fund in all the Discos last year.
It directed the IBEDC to recover the sum of N5.7bn, being the balance of the inappropriate loan of N6bn granted to the core investor.
It said the directive was issued via Order 173, adding that the loan was sourced from a total sum of N11.367bn disbursed to the firm under the NEMSF that was granted by the CBN towards the improvement of infrastructure in the Discos, including metering.
“The repayment of the loan to the CBN by the 11 distribution companies has continued to be made as a first charge on the revenues of the companies. NERC has reaffirmed that it will pursue the full recovery of the misused funds from the IBEDC, including the accrued interest at the Nigerian Inter-Bank Offered Rate, plus 10 per cent,” the commission had stated.