CBN, FIRS To Verify Financial Documents Of 8 Discos
In line with its ongoing scrutiny of the operations of electricity distributions companies (Discos), the Nigerian Electricity Regulatory Commission (NERC) has disclosed that the Central Bank of Nigeria (CBN) and the Federal Inland Revenue Services (FIRS) would be invited to verify every financial documents submitted to it by the eight Discos currently facing regulatory actions for reportedly failing to abide by the terms of the Electric Power Sector Reform Act 2005 (EPSRA).
NERC also stated that it would not hesitate to prosecute directors of any of the Discos, who submits false or misleading documents on their finances, as recommended by the EPSRA.
According to a follow-up notice on the regulatory action obtained yesterday by Economic Confidential, which was signed by NERC’s Commissioner for Legal, Licensing and Enforcement, Mr. Dafe Akpeneye, the regulatory body stated that the Discos would within 60 days from the date of receipt of the cancellation notice, write to it stating reasons why their licences should not be cancelled in accordance with Section 74 of the electricity industry law.
It also reiterated that it had given the Discos up till December 7 to respond to its queries with their written responses, addressing the issue of optimal utilisation of resources and efficient operation imposed by sections 32 and 76 of EPSRA.
The Discos under NERC’s regulatory hammer include Abuja; Benin; Enugu; Ikeja; Kaduna; Kano; Port Harcourt; and Yola.
They were in October issued notices of intention to cancel their distribution licences by the NERC for reportedly breaching provisions of the EPSRA, terms and conditions of their respective distribution licences and the 2016 to 2018 minor review of the Multi Year Tariff Order (MYTO) and Minimum Remittance Order for 2019.
The Discos initially filed petitions against the MYTO Order, but NERC in the new notice indicated that about six of them had withdrawn their petitions and preferred to pursue amicable resolution of their issues with it.
However, the commission stated in the new notice that it also wanted the eight Discos to send to it documents on the monthly balances in their revenue accounts from date of takeover to date; contracts with all revenue collection agents; monthly remittances by all collection agents from date of appointment to date along with fees paid by the Disco to the collection agents; as well as details of bilateral contracts and willing buyer/willing seller arrangements along with monthly revenue made from these arrangements.
According to the NERC, all the financial documents sent in by the Discos would be subjected to the scrutiny of the CBN and FIRS for verification.
It explained: “Discos are the designated revenue collection agents for the entire value chain in NESI (Nigeria Electricity Supply Industry) as they interface with end-use customers.
“The eight Discos have been unable to meet the minimum remittance thresholds specified in the minor review and minimum remittance order and the commission, therefore, requires that they provide the following information along with their written response to the cancellation: monthly balances in their revenue accounts from date of takeover to date; contracts with all revenue collection agents; monthly remittances by all collection agents from date of appointment to date along with fees paid by the Disco to the collection agents; details of bilateral contracts and willing buyer/willing seller arrangements along with monthly revenue made from these arrangements.”
NERC said the requested information must be submitted individually under oath in depositions by each of the Discos’ Managing Director; Chief Operating Officer; Finance Director/Chief Financial Officer; General Counsel/Head of Legal; and Head of Compliance.
It said that the officers of the Discos are, however, to be guided by the provisions of section 93 of EPSRA, which provides that any person who, in any declaration required to be made under this Act, makes any statement, which he knows to be false or does not have reasonable grounds to believe to be true, commits an offence.
Such offence, it added, was liable on conviction to a fine not exceeding N100,000 or imprisonment for a period not exceeding six months or to both.
The commission stated: “All financial submissions received from the eight Discos shall be forwarded to the Central Bank of Nigeria and Federal Inland Revenue Service for additional review.
“The consideration of a Disco’s written response to the cancellation notice is a matter of significant interest to the general public and the commission believes that the evaluation and decision-making process must be fair and transparent to all stakeholders.”