GenCo, FG in ₦8.5bn ‘debit’, ₦5bn ‘debt’ dispute

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A silent war has broken out between the Federal Government of Nigeria and one of the generation companies over a dispute arising from the method used in calculating the payment, which the government made in respect of power generation by his two firms-Omotosho and Orogunsoso in 13 months. Dr. Deji Adeleke, a major player in the nation’s power sector and promoter of two power plants under the name of Sepco Pacific Energy Company Limited, is demanding the sum of N5 billion, which he claims the federal government owes his firm through the Nigerian Bulk Electricity Trading Company Plc, NBET, and another N8.2 billion, which he says was wrongly debited by the government from his company’s account. Also read: IMF cautions against rationing as dollars traded fall 88% in I&E window He has already written to NBET, the Federal Government’s Market Operator in the Nigerian Electricity Industry, and warned the government to either pay him the funds or be ready to face a legal challenge at the London Court of International Arbitration.

In a May 14, 2020 letter, which the Sepco Pacific Energy boss wrote to NBET, he accused the federal government-owned company of short-changing his company to the tune of N5 billion by inexplicably using an ‘incorrect’ base exchange rate of N167/$ instead of N157/$ for calculating his payment for the power generated into the national grid for the period in question. Adeleke asked the government to sort out several issues with his firm, Sepco Pacific Energy Company Limited in order for peace to reign, among them: the refund of what he called N5 billion underpayment to his company and the refund of another N8.2 billion, which the Market operator took back from Olorunshogo and Omotosho plants after discovering they were overpaid for power produced between March 2016 and October 2017.

Apart from NBET, Dr. Adeleke also wrote to the Vice President and drew his attention to the contentious issues and sought his intervention to get the amount he claimed, paid to him so as to continue the production of power from the two plants. But his appeal to the Presidency appears to have yielded no positive results, as documents obtained by Vanguard, indicated that the Vice President wrote back to NBET that the base exchange rate of N157/$ for Adeleke’s company was in order, a position also later ratified by the Nigerian Electricity Regulatory Commission, NERC. The Management of NBET dismissed Adeleke’s claim and threat to drag the company and the Federal Government to the London Court of International Arbitration, pointing out that the Power Purchase Agreement, PPA, which the government signed with him are guided by the rules of the PPA and not a foreign court. The Managing Director of NBET, Dr. Marilyn Amobi, in a comprehensive response to Dr. Adeleke’s threat to sue the company and the federal government over the ‘debts’ being owed his firm, made it clear, he was not entitled to the money he was laying claims to have used a wrong formula and base exchange rate to calculate what should accrue to his company.

The NBET Chief Executive Officer drew the attention of Adeleke to the fact that his company received excess cash from the Collection Account of the International Customers, which belongs to all generation companies in the country. Amobi wrote: “As the Chairman of Sepco Pacific Energy Company Limited may recall, in the financial year 2016, the Federal Ministry of Power secured a presidential approval of N14.5 billion to be paid to four generation companies. This payment was defined as covering portions of the debts that these four companies were owed by the Market operator for the pre-transitional electricity market liabilities, covering the period of November 2013 and January 2015. “The sums the President approved for your two plants were paid to them in United States Dollars at the CBN exchange rate that prevailed at the time: Olorsunsogo received the sum of $13,782,179.30 (N4,208,535,131.25) while Omotosho earned the sum of $13,166,466.88 (N4,020,520,405.38). This represents an excess payment of N4, 208,535,131.25 for Olorusongo and N4, 020,520,405.38 for Omotosho.

“Following the discovery of the excess sum which your company collected over what the President approved, NBET was directed to deduct the N8.2 billion from your company. By deducting the said sum as NBET did, the organization carried out a lawful directive of Mr. President. “We look forward to having our next conversation n the premium you have earned on the base exchange rate of N157/$ since 2013 and we need to claw back and reimburse consumers through the distribution companies. As you know, this aggregated sum, which we estimate to be over N15 billion, will significantly reduce the debt the federal government owes your company through NBET, pursuant to the terms of the ‘take or pay Power Purchase Agreement your generation companies hold. The letter by NBET was copied to the Attorney General of the Federation, the Minister of Power, the Minister of Finance, the Secretary to the Government of the Federation, the CBN Governor, and the Chief of Staff to the Vice President. It is not clear if Adeleke would be persuaded by the clarification from the Presidency and drop his threat to sue Nigeria and NBET at the London Court of International Arbitration.

 

Source: Vanguard

The post GenCo, FG in ₦8.5bn ‘debit’, ₦5bn ‘debt’ dispute appeared first on Energy News | Oil and Gas News.

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