Kano electric coy hit by crisis over N670m ‘illegality’

Crisis has erupted in the Kano Electricity Distribution Company (KEDC) over an “illegal” payment of N670 million from its account to another company that is trying to buy the Kaduna electric firm.One of the shareholders of KEDC, INCAR Power Limited, owned by Alhaji Umaru Mutallab, has filed a complaint over what it said could constitute […]

Crisis has erupted in the Kano Electricity Distribution Company (KEDC) over an “illegal” payment of N670 million from its account to another company that is trying to buy the Kaduna electric firm.
One of the shareholders of KEDC, INCAR Power Limited, owned by Alhaji Umaru Mutallab, has filed a complaint over what it said could constitute a “malfeasance” by the management of the Kano Disco.
The Nigerian Electricity Regulatory Commission (NERC) had queried KEDC over this payment and other spending totaling N1.13 billion in six months to April 2014.
NERC said an audit found that managers of Kano Disco had, among other transactions, moved N670 million into an account of Northwest Power, a sister company which is the preferred bidder of Kaduna Disco.
“These transactions raise prudential issues that are of interest to the commission,” it said in a query.
Following the NERC query, INCAR Power Limited, one of the shareholders of KEDC, has now raised the alarm that the payment to Northwest Power was never approved by the board of Kano Disco.
In a letter to the KEDC managing director, dated October 2, INCAR Power dissociated itself from that payment and demanded an explanation for what it said was an illegality.
The letter was signed by INCAR chairman Mutallab, and copied to the Bureau of Public Enterprises, Fidelity Bank, through which the payment was made, as well as Sahelian Energy, which is managing the KEDC.
“We were alarmed to peruse the contents (of the NERC query), especially article (1) therein, in which a staggering amount of N670 million was surreptitiously withdrawn from the reserves of its consortium managed by KEDC and paid into the coffers of a private account with Fidelity Bank,” the letter said.
“We wish to bring to your notice that, as a major shareholder and board member of KEDC, we are completely in the dark as to this transaction because due process was not adhered. Our company thrives in integrity and aims to implement the highest Corporate Governance Standards at all times.
“In other words, this is an illegal transaction that was executed without our knowledge and consent whatsoever.
“We therefore demand an explanation from your organisation within the next 24 hours as to the motives behind this strange and irregular transaction. We also demand backup documentation from your organisation in justification of any explanation proffered by you.
“Take notice that if your response is not received within the time frame above, we shall be forced to treat this transaction as a possible malfeasance with serious consequences.”
When contacted yesterday for a reaction to Mutallab’s letter, KEDC spokesman Mukhtar Baffa declined comment, saying they were on Eid el-Kabir holiday.
“As you know we are on Sallah holiday. I cannot say anything on it for now but after the holiday, I will,” he said by telephone last night.
In its query to the MD/CEO of KEDC, dated 25 September, NERC demanded explanations for the payment of N670 million made on February 5, from KEDC central collection account to Northwest Power, the preferred bidder for Kaduna Disco.
The extended deadline for the payment of the 75 percent outstanding balance for the Kaduna Disco by Northwest Power lapsed yesterday, with the deal still yet to be fully consummated.
Northwest Power had an initial deadline of August 6 to pay up the balance of about N20 billion for the Kaduna Disco or risk losing the 25 percent (N6 billion) initial deposit for the acquisition.
This was extended by two months on the request of the company, to enable it raise the money. The company, according to BPE, hinged its failure to meet up the initial deadline on security challenges which made its offshore financiers to postpone disbursement of bank facilities already obtained.
The extension became controversial as the reserved bidder was expected to be called upon to pay for the privatised asset in the event the preferred bidder failed to pay in time.
On Monday, Director General of BPE Mr Benjamin Dikki said the Eid el-Kabir holidays impacted on the ability of Northwest Power to complete the transaction process.
“It is due this month like you are aware. We also have to take cognisance of the fact that three days of holidays have intervened, when you cannot do any banking business in Nigeria,” he told journalists when asked for update on the payment for the Kaduna Disco.