‘Padding’ scandal rocks electricity agency over software, rent

Controversy is trailing ‘questionable’ allocations allegedly included in the annual budget of the Nigerian Bulk Electricity Trading (NBET) over the past four years, Daily Trust reports. It was gathered that one of such budgetary allocations is for the purchase of accounting software which kept appearing in the agency’s annual budget under the same code with […]

Controversy is trailing ‘questionable’ allocations allegedly included in the annual budget of the Nigerian Bulk Electricity Trading (NBET) over the past four years, Daily Trust reports.

It was gathered that one of such budgetary allocations is for the purchase of accounting software which kept appearing in the agency’s annual budget under the same code with increasing costs since 2017.

Another contentious item in NBET’s budget that has raised eyebrows is for “Relocation to New Office Complex (rent, partitioning, IT installations, furniture and equipment) which has gulped hundreds of millions of naira.

Budget documents seen by Daily Trust indicate that the proposal to purchase ‘Enterprise Resource Planning (ERP) and Business Process Management Application/Software’ was first included in NBET’s 2017 budget at the cost of N14.5m under the code: ERGP29110160.

Curiously, the same software was represented in its 2018 budget with a higher allocation of N96.8m under the same code, while another sum of N979.4m was voted for the software in NBET’s 2019 budget.

Daily Trust checks show that in the current Appropriation Bill which was recently presented to the National Assembly by President Muhammadu Buhari, the sum of N1.1bn has been appropriated for the purchase of the same software.

Documents from the budget office show that NBET got N3.7bn for capital projects in its 2017 Appropriation Act and had its budget raised to N22.794bn in 2018 with zero allocation for personnel expenditure.

Questions have been raised as to why the same item is being repeated in the electricity agency’s budget over the past three years with the cost increasing each year.

Sources at NBET described the budgetary allocations for the accounting software over the years as a waste of resources, especially for an organisation with less than 50 employees.

A source at the agency who sought identity protection, said, “How can a small organisation like NBET that buys power from the Generation Companies (GenCos) and sells to the Distribution Companies (DisCos) while making payment only once in a month be opting for an ERP as if it were a big financial institution like the CBN? How many bigger organisations in Nigeria have the luxury of that software? It is clearly a white elephant project.”

A Google search on ERP indicates that at its most basic level, it is a software that integrates various functions into one complete system to streamline processes and information across an entire organisation.

Google further indicates that, “The central feature of all ERP systems is a shared database that supports multiple functions used by different business units. In practice, this means that employees in different divisions-for example, accounting and sales-can rely on the same information for their specific needs.”

ICT experts speak

An ICT expert, Prof. Foluso Ladeinde, said the figures for the purchase of the ERP softwares “appear inflated.”

Prof. Ladeinde further said, “One of the most expensive ERP software is from SAP (Germany), and I don’t believe it’s anywhere as expensive. The way this software goes is that you license them – you don’t own them. So there is no way a license would cost $2.85m since you don’t own the software.

“Furthermore, not minding how much you pay for the license, you still have to pay about 20 to 25 per cent of the initial license fee every year forever to keep getting access to the software. This is an addition to the original amount you pay for the license.

“For software of that calibre, a license fee of more than $200,000 will be too expensive since this attracts an additional maintenance fee of at least $50,000 every year. I am very skeptical.”

However, Chukwuemeka Fred Amata, another IT expert, said he could not categorically say whether the amount was inflated or not.

Amata said, “The reality is that because the software development is intellectual property-based, one cannot say exactly whether N1bn is high or low because at the end of the day, it amounts to just roughly $3m; which is quite low for many types of software programmes depending on the problem statement.

“The bigger issue in my opinion is the local content component and why it keeps recurring each year in our budget. I totally believe Nigerian companies can develop such a solution and be given the right of first refusal.”

Minister asked to intervene

As a result, the Minister of Finance has been requested to thoroughly investigate suspicious insertions in the 2019 Appropriation Act, particularly allocations to NBET, “to forestall fraud and colossal loss of public resources.”

The African Centre for Media and Information Literacy (ACMIL), on September 5, wrote a petition to the minister for a probe of NBET’s 2019 budget by the audit team of the ministry.

Signed by the Coordinator of ACMIL,ChidoOnumah, a part of the petition obtained by Daily Trust reads: “It is absurd and almost unfathomable that such a heavily indebted agency with less than 47 employees will contemplate and be allocated almost a billion naira to acquire an accounting software package despite worsening electricity performance.

“The honourable minister would recall that the Federal Government has extended NBET N1.3tn loan (N701bn-plus N600m to enable it to bridge payments to GenCos.”

Copies of the petition were also forwarded to the Minister of Power, Chief of Staff to the President, Chairman, Independent Corrupt Practices and other Related Offences (ICPC), the Acting Chairman of the Economic and Financial Crimes Commission (EFCC), Director General, Budget Office, Chairman Nigerian Regulatory Commission (NERC) and the Managing Director/CEO of NBET.

Other ‘questionable’ allocations

Another item in NBET’s budget that has raised eyebrows is for “Relocation to new office complex (rent, partitioning, IT installations, furniture and equipment).

The electricity agency had proposed to spend N487.7m to relocate to a new office complex by 2018, after it had gulped N600m in 2017; according to documents from the Budget Office.

Daily Trust gathered that the agency was formerly operating at the BOI building by Unity Bank, along AguiyiIronsi Street in the Central Area of Abuja, but later secured a two storey office space at the Nigerian Electricity Regulatory Commission (NERC) where it renovated and moved in 2018.

But in its 2019 budget, the agency voted N112. 4m under the code: ERPG10110154, for the same purpose of relocation to new office.

The petitioners alleged that, “NBET under the leadership of current Managing Director (MD), Dr. Marylyn Amobi, indeed, has a history of padding the company’s budget with superfluous expenditure, notable among which is an N645m surreptitiously introduced to the company’s budget under 2017 Appropriation in the name of “relocation to a new office”. It is instructive that another N112m has been earmarked this financial year (2019) for a project that was completed almost two years ago,” Similarly, NBET budgeted the sum of N1bn for research and development and another N233m for legal consultancy.

In reference to this allocation, the petitioners said: “It is equally astonishing that NBET will be allowed N1bn for research and development and N233m for Legal consultancy when it has two Ph.D. holders in Law in its employment (the company secretary and head of procurement, in addition to a retinue of highly qualified in-house lawyers) to squander on accounting software package despite worsening electricity market performance.”

The petitioners requested the finance minister to institute a probe of NBET’s 2019 budget by the continuous audit team of the Federal Ministry of Finance to “determine the extent of budget padding and the propriety, appropriateness and authenticity of the allocations to NBET.”

The minister was also requested to order for the immediate suspension of further cash – backing of the approved amount pending final determination of a probe.

We’re reviewing the petition – Finance minister

When contacted, the Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, said she had received the petition over alleged budget padding from ACMIL.

Mrs. Ahmed said, “I have received the petition and have asked the permanent secretary to review and advise.”

However, the Permanent Secretary, Alhaji Mahmoud Isa-Dutse, told Daily Trust that he was yet to see the petition.

Alhaji Isa-Dutse said, “I have not seen the petition yet, although I have been travelling lately and somebody else has been acting on my behalf as the ministry’s permanent secretary.”

He, however, explained that the minister “is Chair of NBET, but it (NBET) is not our parastatal; it is under the Ministry of Power. I will check all the same.”

NBET denies padding budget

NBET in a response to Daily Trust inquiries confirmed that the agency had received a copy of the petition, saying the software project and the rent of office space alleged to be padded got the approval of the National Assembly.

NBET said while it received a copy of the petition which was also addressed to the presidency, the allegations of budget padding were untrue.

The Communication Office of NBET said, “Kindly note that this agency is aware of this petition because we received a copy, but the allegations are untrue.”

On why the agency was spending so much for the software and “relocation to the new office”, the office, which is directly under the office of the MD, Dr. Marylyn Amobi, said, “The information you seek is available in the public records submitted through appropriate budgetary process and approved. Appropriate budgetary review and approval was granted.”