Three government agencies have been enmeshed in a controversial withdrawal of $27.9 million and another $13.5 million from a $350 million Eurobond domiciled with the Nigerian Sovereign Investment Authority, NSIA.
The fund was given to the Nigerian Electricity Bulk Trading Company, NBET, by the Federal Government in 2013 as shareholder contribution to shore up its capitalisation and provide assurance to investors that the company is credit worthy.
NBET deposited the fund to NSIA in 2013.
Allegations of withdrawals from the funds first emanated when Dino Melaye, Kogi West, accused the Power Ministry of squandering up to $35 million of the funds on projects not appropriated for.
The Senate had mandated its committee on Public Accounts to look into the allegations.
Speaking before the committee on Wednesday, Stella Ojekwe-Onyejeli, Executive Director and Chief Risk Officer, NSIA, confirmed that the fund is still in NSIA custody.
“The 350 million funds in question which were given to NBET by federal government is in the custody of NSIA. We have an investment agreement between ourselves and NBET which spells out how we manage those funds on their behalf.
“These funds were not meant for the use in trading, it was meant for via instruction from FG to be handed over to the NSIA to invest on their behalf.”
She explained that the fund currently stands at about $380 million having accrued a $30 million interest from which NBET have withdrawn $13.5 million.
“I can give an estimation of the amount. We were given 350 million in 2013 to manage and till date there is a balance of about 380 million principal plus accrued interest. Last year, there was a drawing of $13.5 million for payment of interest for the Eurobond. There was a request from NBET which we honoured and which they handed over to the DMO to pay the Eurobond.”
She added that NSIA will return the fund by next year when it would have matured.
The lawmakers, however, frown at the withdrawal of $13.5 million from the fund and the perceived lopsided agreement between NBET and NSIA.
The chairman of the committee, Matthew Uroghide said, “Since the money is with you, it is you that is trading with the money and you get your interest out of which you pay interest to NBET. You trade with it and then pay them an agreed interest, not even minding whatever NBET or federal government has to pay the original lenders of the money.
Mrs. Ojekwe-Onyejeli responded that there is an investment management agreement between NBET and NSIA which sets out the terms of the paynents and they are following it.
The committee requested for details of the agreement, copy of letter authorising payment of $13.5m from NBET, and a copy of Eurobond Agreement from the Debt Management Office, DMO.
On the $27.9 million paid to General Electric for the AFAM 3 fast power project, Mrs. Ojekwe-Onyejeli told the senators that the fund was quoted to be advance payment according to information provided to NSIA.
She was unable to answer questions on breakdown of spending.
Loius Edozion, Permanent Secretary, Ministry of Power was unable to answer questions on why the $27.9 million was withdrawn despite not being budgeted in 2017.
“The fund was not appropriated,” he responded to Mr. Uroghide’s query. “The total cost of the project is $186 million. The entire cost of the project was conceived as an investment. It was to be ultimately put in the hands of private investors. To get it going, the financial arrangement with General Electric was that they will finance 85 per cent over a period of five years; and the investor, which began as the federal government, will finance 15 per cent. The intention was always to provide that 15 per cent as an investment and thereafter recover it from investors.”
Mr. Edozin was not able to provide the total sum Nigeria will spend on the project and what the $27.9 million already paid constitutes in the 15 per cent obligation.
The senators were also not satisfied with the ‘illegal’ withdrawal, the fact that General Electric which has an 85 per cent obligation in the project hasn’t spent its fund, yet received $27.9 million; and the country’s inability to maximally utilise the loan which will expire by 2018.
The lawmakers demanded the NSIA, DMO, and NBET provide detailed information as to agreements and withdrawals from the fund by December 18.
Documents requested include: details of the agreement between NBET and NSIA, copy of letter authorising payment of $13.5 million from NBET, Eurobond agreement by DMO, and details of agreement between power ministry and General Electric on the AFAM 3 fast power project.
