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How IBEDC’s Incompetent Management Led Their Gravy Train To Crash. What They Could’ve Done Differently

The Oasis Reporters

January 26, 2022

IBEDC, Tunde Ayeni.

For a nation of 220 million to live without adequate electricity for over 60 years is like the bands of wickedness that must be loosened and heavy burdens that must be undone so that oppressed Nigerians would break out from that yoke and go free.

FS Yusuf tweeted that this: “But it’s actually sad and utterly disgraceful that in 2022 we still don’t have electricity” on January 25, 2022 and Ub Robert tweeted his reply to @FS_Yusuf_

“If Nigeria continues like this for the next 50 yrs, there’ll still be no electricity. It’s not a curse but a reality. Nigeria is not destined to have electricity else they would have it just after independence. Is it now that the government is cashing out from generator dealers?”

I read an article in Tribune business titled;

IBEDC: How Boardroom Squabbles Brought Down A High Flier

The question is, which high flier is that, that can’t even touch the top of it’s own room cupboard ?

I quote:

“Although the Asset Management Company of Nigeria (AMCON) cited the indebtedness of Ibadan Electricity Distribution Company’s core investors, Integrated Energy Distribution and Marketing Limited (IEDM), to Polaris Bank as the reason for its takeover of IBEDC, the real cause of the company’s current quandary was the zero-sum game embarked upon by the two principal partners of the company”, according to Sulaimon Olanrewaju in his report.

“Barely two months after the Abuja Electricity Distribution Company (AEDC) was taken over by a bank sequel to its inability to live up to its debt repayment terms, the Asset Management Company of Nigeria (AMCON) last Thursday took over the Ibadan Electricity Distribution Company (IBEDC) as a result of a default in a loan servicing agreement executed with Polaris Bank, the successor of Skye Bank Plc.

AMCON said in a statement that pursuant to Sections 48 and 61 of AMCON Act 2010, it had been appointed “Receiver/Manager over all the Assets of Integrated Energy Distribution and Marketing Limited as stipulated in the instruments executed in favour of AMCON by virtue of the Loan Purchase and Limited Servicing Agreement executed with Polaris Bank Limited dated 30th November 2018 and a Notice of Appointment of the Receiver/Manager dated August 6th, 2021, which was duly stamped by the Commissioner for Stamp Duties.”

AMCON then announced the appointment of Mr Kunle Ogunba, SAN, as Receiver/Manager nominee, adding that the takeover gave it power over assets of IEDM, including shares and interests in related companies and entities, in addition to the monies kept in any of the 25 banks in the country.

The genesis

When the Jonathan administration expressed its intention to privatise the nation’s electricity generation and distribution companies, Dr Tunde Ayeni and Captain Hosa Okunbo, who were partners at Ocean Marine Solutions Ltd, came together with others on the platform of IEDM to bid for Ibadan Electricity Distribution Company (IBEDC) and Yola Electricity Distribution Company. The company won the two bids and 60 percent of each company was ceded to it by the Bureau of Public Enterprises (BPE), the government agency that supervised the process. But IEDM declared a force majeure over YEDC, citing security challenges, and returned the company to the Federal Government in 2015.

In 2014, IEDM turned to Skye Bank, where Dr Ayeni was chairman, to raise money to upgrade the facilities of IBEDC. Skye Bank led a consortium of banks to raise $160 million for the power company to scale up its facilities with a view to improving electricity distribution in its franchise. Similarly, the company received an interest-free fund from the Central Bank of Nigeria (CBN) under the Nigeria Electricity Market Stabilisation Funds for the purpose of improving networks and reducing aggregate technical, commercial and collection losses.

But both IEDM and IBEDC reneged on the terms of repayment of the Skye Bank loan. This, as well as other badly-managed loans, affected the liquidity of the bank and shored up its non-performing loan ratio. The effect of that on the bank was that it found it difficult to satisfy minimum thresholds in critical prudential and adequacy ratios. These forced it to consistently resort to the CBN’s lending window”.

With that development, the CBN, in July 2016, moved against the leadership of the bank citing corporate governance infractions. The apex bank sacked the chairman, all non-executive directors on the board, the managing director, deputy managing director, and the two longest-serving executive directors on the management team and reconstituted both the board and the management. In September of the same year, CBN revoked the licence of Skye Bank on the grounds of the inability of the shareholders to shore up its capital. In its place, it announced a bridge bank, Polaris, while AMCON was saddled with the responsibility of capitalising the bank and sourcing for new inventors to buy out AMCON. With that development, AMCON took over the debts owed Skye Bank/Polaris Bank, on which basis it went to court to take over the assets of IEDM to recover the debts”.

Let truth be told, when then president Goodluck Jonathan unbundled the power sector through privatization, his intentions were noble, so as to make the moribund Electricity body then known as Power Holding Company of Nigeria (PHCN), work.

But the new buyers of Ibadan Electricity Distribution Company (IBEDC) like one or two others, believed that they’d gotten a gravy train. They got carried away seeing customers troop in daily, Monday to Sunday to pay their electricity bills. Money was rolling in from the cash cow, so they forgot to invest on equipment, maintenance and expansion.

This time, they forgot that the agency that was free of government control would no longer have capital injections into it like other parastatals. Government had ceased to sink money into the massive electricity holes that others before them used to power their greed and corruption with. Now, all their loans had failed, with the management falling into debts.

The IBEDC started on the template of corruption. To cheat and extort the populace. You would hardly hear of electricity consumers receiving Electricity meters. Whereas, if they had cared, the electrical department of Covenant University in nearby Ogun State, had invented easy to use electricity meters that one could recharge from anywhere using a phone to buy units. All Electricity districts were understood to have kept a distance from the invention. They preferred to keep hapless Electricity consumers on estimated billing because they knew that giving people meters would make them work for their pay. IBEDC does not want that.

Consider some parts of Ibadan that hardly get up to two hours of Electricity in two or three days a week would be getting an estimated billing of about 10, 000naira per month. And consumers would pay faithfully, hoping for better days to come.

But at the time that the banks are squeezing their balls, IBEDC now sends estimated bills of about 10,000 naira to each consumer whereas the people are in pitch darkness. They want people’s money to bail them out of their self inflicted financial predicaments without rendering at least the basic threshold of contractual obligations.

The IBEDC board did nothing towards supplying electricity to it’s teeming consumers when there was goodwill and opportunities they could have leveraged on to do that.

Those missed opportunities shall be Explores in a subsequent article in this space.

Greg Abolo

Blogger at The Oasis Reporters.

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