Financial recklessness: NERC queries Kano Disco over unapproved N1.1bn transactions

…Faults payment for Kaduna power asset

 The Nigerian Electricity Regulatory Commission (NERC) has directed Kano Electricity Distribution Company (KEDC) to furnish it with details of approvals for different financial transactions totalling over N1 billion within seven days.NERC, in a letter exclusively obtained by Daily Sun and addressed to the Managing Director/Chief Executive Officer of KEDC, dated September 25, 2014, with reference number, NERC/07/LLE/14/LAS/620, stated that the transactions were carried out between November 2013 and April 2014.

The letter, with the subject, “Open Book Review of KEDC Plc and Issues Arising Therefrom”, explained that details of the transactions were a fall-out of a report submitted by NERC’s team that conducted an open book review of the company’s accounting and financial records for the period under focus.

NERC, in the letter, demanded explanations in writing for the payment of N670 million, which was made on February 5, 2014, from KEDC central collection account to Northwest Power (the preferred bidder for Kaduna Disco); payment of N428.026 million to KCETAS Africa Power as Technical Service Agreement (TSA) fee in addition to $150,000 paid in cash for technical support and the expenditure of N10 million for a two-day board meeting, which consists of N8 million as sitting allowances for Chairman, six directors, Company Secretary and N2 million for accommodation.

The letter, which was signed by NERC’s Commissioner in charge of Legal, Licensing and Enforcement, Dr. Steven Andzenge, said the transactions raise prudential issues that are of interest to the committee as the regulator of Nigeria Electricity Supply Industry (NESI).

The letter read in part: “You are by this letter required to promptly submit to the commission the following: written explanation of the purpose of the payment made to Northwest Power (not being a market participant in NESI) and the conditions for payment; the resolution of the Board of Directors of KEDC authorising the payment; minutes of the meeting where such resolution was taken and the directors present; minutes of meeting where allowances for directors were fixed and the directors present at such meeting.

“In addition to the above, you are required to submit a copy of the approved management and Technical Service Agreement (TSA) with KCETAS Africa Power for which the sum of $2,890,000 has been paid for the commission’s perusal.

“Your response to the above issues is expected to be submitted within seven days from the date of this letter.”


Source : SunOnline

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