The Senate Committee on Public Account has uncovered how the Nigeria Bulk Electricity Trading Plc mismanaged N50 billion in an Escrow Account.
The Committee, chaired by Senator Mathew Urhogbide, relied on the 2015 report submitted by the Office of the Auditor General of the Federation, which exposed the mismanagement of public funds in the Escrow Account.
The N50 billion in the Escrow Account was from sale of Egbin, Omotosho and Olorunsogo power plants.
The query reads: “Funds in form of escrows in the possession of EGBIN ESCROW agreement, FCMB Escrow Account BPE/NBET 2435507018- N30,000,000.000, UBA Escrow Account BPE/NBET 1017699148 – N10,000,000,000.00, FBN Escrow Account BPE/NBET 2024063360 – N10,000,000,000.00.
“The following observations were made: there was no execution date, as the agreement only stated 2013.
“This has been left out deliberately and arouses suspicion of malpractices. This is evidenced by a mail sent by the Legal Counsel to Bureau of Public Enterprises (BPE), asking for this information which was never replied.
“As stated in the original draft agreement, the rate of interest generated on escrow funds shall be agreed between BPE, NBET and the escrow agents (banks) but subsequent manipulated agreement sighted states ‘The interest shall be CONCESSIONARY taking into account a reasonable compensation of the escrow agents in the CONSIDERATION for their OBLIGATION under the agreement.’
“The minutes of the meeting that decided the concessionary rate and the obligation of the escrow agents necessitating any form of consideration as well as the identities of the attendants and parties to the proposed and implemented 0.025 percent interest on the escrow fund should be produced.
“It is pertinent to note the financial mismanagement in the sum of over N5,000,000,000.00 (Five billion naira) which would have been realized on the investment of the funds in Nigeria Treasury Bills at interest rate of 10%.
“Olorunsogo power plant, OLORUNSOGO escrow agreement FCMB, IBANGB555CBL60910412544458, $10,110,000.00, Omotosho power plant OMOTOSHO escrow agreement Diamond Bank PLC IBAN 021000089, N10,110,000.00.
“Examined documents revealed a meagre interest rate on this escrow at 0.5%. I have requested to know the interest of the parties to this agreement and the reasons for negotiating such ridiculously low interest rate.
“There is a cloud of uncertainty surrounding the status of this account. Documents revealed that the account was to be re-denominated but confirmation of this was not presented during the audit exercise. The Managing Director/CEO was requested to produce the following documents and evidence:
“Detailed schedule of the 5 accounts showing all interests accrued in the period, detailed document declaring the status of the alleged re-denominated accounts and reasons for this action.
“Detailed financial and economic analysis defending all decisions regarding interest rates, all minutes of meetings and deliberations on decisions for fixing the interest rates and parties involved.”
But NBET in its written response said “it was never stated that the fund will be invested in the Treasury Bill. However. with the reduction in CRR, the rates on sitting balance for the Egbin was renegotiated to 2 percent from 0.02 percent per annum effective July 01, 2015.”
It was observed that the renegotiation was done after two years from 0.02 to 2 percent per annum.
