Tuesday, July 23, 2019

Right of reply: NERC absolves NBET MD of fraud

Right of reply: NERC absolves NBET MD of fraud
March 07
09:24 2019
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BY SAMBO ABDULLAHI

I am one of the management staff mentioned in the above captioned story published by TheCable on March 1, 2019. I wish to state that the pre-payment audit carried out on the payment vouchers as enshrined under the Financial Regulations on both Olorunsogo and Omotosho revealed the shoddy deals. The internal audit resistance led to both departments of Power Procurement & Power Contract and Legal (as the departments were) to make an undertaking that the required documents to qualify for the payments shall me made available within 30 days in the first instance and further undertaking by the former for another 90 days.

The Power Purchase Agreements (PPA) for Olorunsogo Power Plc and Omotosho Power Plc were executed in December 24, 2013 and August 20, 2014, respectively while the NERC Order which guides the operation of the Transitional Electricity Market (TEM) takes effect from February 1, 2015, but dated March 18, 2015. Contract Activation Agreement between NBET and individual generating plants including both Olorunsogo and Omotosho was executed on February 1, 2016.

Clause 2 of the PPA Contract Activation Agreement requires the Gencos to provide a legally binding and enforceable Gas Supply Aggregation Agreement (GSAA) and Gas Transportation Agreement (GTA) in order to access capacity payments for Availability Events scenario which Olorunsogo and Omotosho did not possess as at the time the transaction was queried in September 2016.

Also, to ensure certainty of gas supply to the plants and assurance of plants capacity being made available, Clause 3.2.2 of the PPA (Seller’s Condition Precedent) provides an obligation on the part of Olorunsogo and Omotosho to have an executed and effective GSAA.

Rightly put, the GSAA and GTA are the confirmation that the plants can run up to tested capacity and since they were not available it makes their PPA in active and Clause 8 (iv) of NERC Order shall apply.

This assertion that both plants did not have GSAA and GTA can be evidenced in the last paragraph of the NBET MD’s letter addressed to Omotosho Power Plc demanding for the evidence of their GSAA and GTA dated September 22, 2016 and is herewith attached.

Furthermore, the meeting between NBET management and the law firm of Dr Paul C. Ananaba SAN & Co (law firm to Olorunsogo and Omotosho) held in December 14, 2016 at the premises of NBET aimed to cover up on illegal payments to both Olorunsogo and Omotosho among all the existing thermal plants that have inactive PPA with NBET is an attestation that even as at December 2016, the plants had no GSAA and GTA.

Undertakings for continuous invoice payments to Olorunsogo and Omotosho by Mr YesufuLonge and NnaemekaEwelukwa is a further attestation that the GSAA and GTA were NOT available when the audit query was raised.

INVITATION TO MEETING BY NERC ON FEBRUARY 19, 2019
The Nigerian Electricity Regulatory Commission (NERC) actually invited me to a meeting via a phone call at about an hour to the commencement of the meeting on Tuesday, February 19, 2019, in which I made my position known on NBET general issues, including Olorunsogo and Omotosho payments. At the meeting they tried to coerce me to answer “Yes” or “No” to their questions, but I resisted.

In the aftermath of the meeting, I wrote a letter to NERC duly acknowledged on February 21, 2019, wherein I requested for adequate facilities, time and the need to make the investigation public in the interest of the public itself. (Copy of the said letter is attached).

RESPONSE TO ISSUES RAISED BY THECABLE
1. That there was no proof of N2billion over-invoicing is not true as the plants had no GSAA and GTA as at the time queries were raised against them.

2. That the payment was in line with the PPA. As explained above, the payment violates Clause 3.2.2 of the PPA, Clause 2 of the PPA Contract Activation Agreement and the NERC Order.

3. That NERC interviewed me. This is true but I neither had the pre-knowledge of the meeting nor did they give time to provide evidence to the issues they raised. I eventually wrote the Chairman of NERC to demand for adequate facilities as enshrined in the NigerianC onstitution but this was never made available to me.

4. The payments were in gross violation of executed PPAs and Activation Agreements between NBET and the power plants.

5. That I could not provide further evidence. This is not true. At the meeting I had requested a convenient time for them to provide the requested evidence. I followed this request with a letter dated February 20, 2019, and duly acknowledged on February 21, 2019. Up until the publication of March 1, 2019, which TheCable referenced in its report, NERC did not respond to my request.

RESPONSE TO ADDITIONAL ISSUES RAISED IN THE NERC ADVERTORIAL PUBLISHED IN THE DAILIES OF THURSDAY, FEBRUARY 28, 2019.
1. NERC’s position was that a critical Condition Precedence (GSAA and GTA) contained in the PPA was waived. The question is when was it waived and who approved it and why was it not waived for other Gas fired plants. The waiver must be an afterthought to cover up.

2. NERC reiterates that the payment system was adopted by Mr Rumundaka Wonodi, Mr Waziri Bintube, and now Dr Marilyn Amobi (Pioneer, Acting and current Managing Director respectively). Internal audit can only carry out its function to the extent of information and documents made available. Though I cannot confirm whether NERC’s assertion is true as I made endless efforts to review the earlier payments before the transaction was queried and this was never made available to me.

FURTHER INVESTIGATION REQUIRED
Whereas NERC alluded to the fact that NBET entered agreement with Olorunsogo Power Plc and Omotosho Power Plc which implies that payments should be made directly to the companies, there is the need to validate whether payments were being made to these plants directly or by proxy. I raised issue on this in the past wherein I was overruled but I don’t have the required documents to back myself up at the moment. Though the required documents were already contained under paragraph 6 of my letter to NERC.

Sambo Abdullahi
Deputy General Manager/Head Internal Audit,
NBET

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