The Nigerian Electricity Regulatory Commission (NERC) has ordered the Ibadan Electricity Distribution Company Plc to recover N5.7 billion it illegally loaned to its parent company IEDMG from funds provided by the Federal Government to boost liquidity in the power sector.
IEDMG is the core investors in IEDC, one of the eleven electricity distribution companies privatised by the government four years ago.
NERC which imposed a fine of N50 million on the utility for the infraction, said the loan to IEDMG was diverted from the N11.367 billion disbursed to IEDC under the Nigeria Electricity Market Stabilisation Fund granted by the Central Bank of Nigeria towards the improvement of infrastructure in the company including metering.
A statement by the commission in Abuja on Thursday explained its decision thus: “Following the outcome of an open book review conducted on the financial records of Ibadan Electricity Distribution Company plc (IEDC), the Nigerian Electricity Regulatory Commission found the company wanting on two grounds of inappropriate financial transactions and was subsequently fined a sum of N50m.
“The fine was account of its failure to secure a refund of an interest free loan the Board of IEDC granted to its core investor group. Information from the Commission indicates that the industry regulator is also reviewing the utilisation of NEMSF in all other distribution companies.
“The Commission had, vide its Order 173, directed IEDC to recover the sum of N5.7bn being the balance of the inappropriate loan of N6bn granted by the utility to IEDMG, the core investor in Ibadan Electricity Distribution Company plc. The loan was sourced from a total sum of N11.367bn disbursed to IEDC under the Nigeria Electricity Market Stabilisation Fund granted by the Central Bank of Nigeria towards the improvement of infrastructure in the company including metering. The repayment of the loan to CBN by the 11 distribution companies has continued to be made as a first charge on the revenues of the companies”.
NERC in the statement issued by its Head, Public Affairs Department, Dr. Usman Abba Arabi, reaffirmed that it will pursue the full recovery of the misused funds from IEDC including the accrued interest at NIBOR + 10%.
When contacted on the development, the Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Mr. Sunday Oduntan declined comment, explaining that he was just hearing of the fine for the first time.