PHCN Owes World Bank, Other Creditors N340bn

The total debt burden accumulated over the years by the Power Holding Company of Nigeria (PHCN) has risen to about N340 billion, the Nigerian Electricity Liabilities Management Company (NELMCO) has said.

These liabilities, NELMCO stated, were part of debts owed to creditors of the defunct National Electric Power Authority (NEPA) and PHCN in the form of unpaid charges for gas supply, borrowed funds from multilateral agencies, unsettled medical bills as well as unremitted withholding taxes and Value Added Tax (VAT).

Some of PHCN creditors include the World Bank, Federal Inland Revenue Services (FIRS), gas companies like Agip, sundry suppliers as well as some other government agencies who have all been invited by NELMCO to tender proven evidences of debts owed to them for due diligence check.

Speaking to the press shortly before receiving members of the House of Representatives Committee on Power, who were on an oversight visit to NELMCO yesterday in Abuja, the Managing Director and Chief Executive of NELMCO, Dr. Sam Agbogun, said the liabilities would have to be paid by the Federal Government over a tentative period of time.

Agbogun explained that apart from debts to NEPA and PHCN suppliers which constituted a major aspect of the total liabilities of the utility, the utility had through the non-existence of a cost reflective tariff regime in the sector consistently incurred heavy debts through non-payments for support services rendered to it over time.

He added that NELMCO in conjunction with other relevant agencies of government in the power sector would evolve veritable means of offsetting these liabilities; some of the options open to it in the process of liquidating the liabilities included proceeds from the sales of PHCN non-core assets which are not directly related to power generation, transmission and distribution, and sale of government bonds and treasury bills in the capital market amongst others.

“We are directly responsible for settling the over N340 billion liability of PHCN and as it stands, government will have to find a way to pay off the debt but how soon that will be, I cannot guarantee because it may take well over five years or more to clear.

“These liabilities emanated from gaps in the on-reflective tariff regime of the sector, debts to PHCN suppliers, medical services rendered, withholding taxes and VAT to the FIRS, as well as gas purchased by the utility but was not paid for because over the years it was like gas was being given to PHCN free of charge,” Agbogun said.

According to him, “PHCN creditors whom we have invited to tender credible documents for due diligence included gas companies like Agip, government agencies, multilateral agencies like the World Bank from which loans for construction of infrastructures were obtained and not paid back as well as other sundry suppliers.

“These debts were incurred over a long period, perhaps, from the days of NEPA and going forward we will be responsible for offsetting the prior debts while the Bulk Trader will take care of future debts because of the Partial Risk Guarantee which is within its responsibility.

“We have evolved means of settling these liabilities, although, some of them are still under consideration like the sale of government bonds in the capital market as well as the non-core assets of PHCN.”
Meanwhile, Agbogun has also disclosed that the total annual payable pension of PHCN’s pensioners has risen to about N10.8 billion.

He said that the calculated figure for the over 11,000 pensioners per month is between N850 million to N900 million, translating into N10.8 billion per year, adding that its possibility of increasing further was very open considering the rate of retirement at PHCN.

“We are supposed to equally manage the pension administration of the PHCN which has risen from N680 million to between N850 to N900 million per month as a result of the rate of retirement and wage increase recently effected by the government for workers of the utility.
“The total annual pension of the workers is now N10.8 billion for about 11,000 pensioners. If the workers retire now before the final sale of the PHCN, they will come into the purview of NELMCO in pension administration but if not, they will not,” he said.

By  Chineme Okafor