The Nigeria Sovereign Investment Authority (NSIA) on Thursday said it paid about $417.46 million to the country's electricity bulk trader, the Nigeria Bulk Energy Trading Company Plc (NBET).
This, it said, is contrary to allegations by the Association of Electricity Distributors Investors (AEDI) and the Association of Nigerian Electricity Distributors (ANED) that the Ministry of Power had diverted the funds into the award of "frivolous, over-priced and senseless contracts."
The allegation followed the accusation by the Minister of Power, Works and Housing, Babatunde Fashola, that the electricity distribution companies failed to deliver on their mandate to the industry.
NBET, a 'special purpose electricity trader' was incorporated in 2010 by the federal government through the Nigerian Electricity Regulatory Commission (NERC) under the provisions of the Electric Power Sector reform Act (EPSRA) of 2005.
The agency is mandated to buy electricity and ancillary services from independent power producers in the country, including the successor, Power Holding Company of Nigeria (PHCN) and electricity generating companies (DISCOs).
The purchased electricity is with the objective of reselling to electricity distribution companies (GENCOs) and other large general service (LGS) customers, who take electric energy from locations across the integrated transportation network.
To enable it fulfill its mandate and drive investment into the country's electricity sector, NBET was provided $350 million fund as capitalisation to enable it cushion the impact of sovereign risks as well as prompt payment for power supplied by the GENCOs and independent power producers to the national grid.
Following the privatisation of the power sector in 2013, the fund had been in the custody of the NSIA since 2014 under a fund management agreement.
The funds allocated to NSIA was part of the proceeds from the S$1 billion Eurobond issued by the federal government in July 2013 under a fund management agreement
At the expiration of the four years investment term, the authority said it transferred the funds to NBET in three tranches: $8 million in May 2016, $5.5 million in August 2016 and $403.96 million in July 2018.
The Managing Director/Chief Executive Officer of NSIA, Uche Orji, said in in a statement sent to PREMIUM TIMES by his spokesperson, Titilope Olubiyi, the returned fund consists of the redemption of the principal sum ($350 million) and additional $67.46 million as interest and earnings over the investment period.
Mr Orji said NSIA return of over $67 million in addition to the original capital over the four years agreement period achieved the liquidity objective of the investment.
"The Authority accomplished its goals of enhancing NBET's liquidity position, whilst enabling the company to focus on its principal function of developing the electricity market," Mr Orji noted.
He said NSIA's role as fund manager helped to safeguard NBET's capital against market volatility and also conferred the agreed financial benefits on the company.
Managing Director / Chief Executive Officer of NBET, Marilyn Amobi, commended NSIA for the profitable management of the funds over the four years period.
"NSIA as a competent fund manager preserved the capital; thus, helping to promote NBET's credit worthiness as an off-taker for grid injected electric energy in the Nigerian Electricity Supply Industry (NESI)," Mrs Amobi said.
Executive Director, Research and Advocacy of ANED, Sunday Oduntan, told a media briefing last week that the Federal Ministry of Power had diverted the fund to the Rural Electricity Agency (REA) to utilise in implementing projects that are not only "exorbitant and over-priced, but also "do not make sense."
"Instead of utilising the $350 million to fund the over N1.3 trillion tariff gap in the electricity industry, the Ministry (of Power) is using it to implement projects that are not only "exorbitant and over-priced, but also do not make sense".
"It is clear some people are more interested in awarding contracts than putting the nation first and doing what is best to bring electricity to Nigerian homes," Mr Oduntan said then.
He cited the example of such projects to include the solar-powered project in Effurun, Warri, in Delta state and a gas-powered electricity project in Ile Ife, in an area, he said, was without access to gas, but replete with lots of solar energy.
The recent release of the funds now shows the alleged diversion to be false.
Mr Oduntan also alleged that about N78 billion was included in the budget for "distribution" projects to be executed by the Transmission Company of Nigeria (TCN) for the DISCOs.
The power minister, Babatunde Fashola, had earlier said he would have nothing to do with ANED as the association was not an investor or owner of any of the electricity distribution companies.