April 16, 2024

EKEDP board crisis, time for NESI regulators to exercise strict oversights in the power sector

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Nigeria’s leading electricity distribution company, Eko Electric Distribution Company Plc (EKEDP), has of recent been hugging the headlines for reasons not too good for its business.
The electricity company which prior to the roiling crisis had been the toast and envy of other electricity distribution companies (DisCos) in terms of value delivery to all stakeholders in the Nigerian Electricity Supply Industry (NESI), thanks to data emanating from the industry regulator, the Nigerian Electricity Regulatory Commission (NERC) has jumped on the bandwagon of its peers wracked by boardroom crisis.

Any keen follower of the NESI since its privatisation in November 2013 to date will agree that the crisis that led to the federal government takeover of some other Discos such as the Abuja Electricity Distribution Company (AEDC), Ibadan Electricity Distribution Company, etc actually began from the boardroom.
Without missing words, critical evaluation of the failure of the original core investors in these firms would reveal that it is not due to illiquidity as it is mostly portrayed but the absence of corporate governance. Evidence abounds that the quest of board members to recoup their investment either by hook or by crook, thus scheming for contracts, and juicy board position that gives an advantage to manipulate the system in their interest for the eventual failure they experienced.

Genesis of the crisis

Independent investigation reveals that trouble started when the Managing Director /CEO (MD/CEO), Dr, Tinuade Sanda issued queries to three senior members of Staff of the electric company demanding an explanation over the status of two personnel presumed to be ghost workers and two left on the payroll after their resignations.
The queries were served on the Chief Legal Officer (CLO), Wola Joseph-Condotti who was alleged to be the main culprit, the Chief Human Resource (CHRO), Aik Alenkhe, and the Chief Audit and Compliance Officer (CACO), Sheri Adegbenro for negligence of duty not to have detected these.
It is said that almost N100mn were lost as salaries and bonuses paid to these ghost workers, and the salaries paid to two staff left on the payroll after their resignation.
According to the report, the staff who were assumed to have been seconded to the legal department of the electric distribution firm enjoyed unilateral promotion for three years, leading to huge salary payments among other benefits..
Sensing that something was amiss, the MD/CEO requested an explanation from the three departmental heads responsible one way or the other for their engagement or otherwise.

The Obvious

Fillers from EKEDP indicate that the queries to three senior management staff who themselves were seconded to EKEDP from WPG led to squabbles as each is actually there to serve the interest of their master. While the MD/CEO under normal circumstances could have been presumed to be prudent and just doing her job as it should be, others within the system saw her actions as ‘Poke-Nosing’ into unsafe territories.

Following the staff agitation requting for justice to be done and the involvement of Union, the NLC, and escalation to the Regulators, the board of EKEDP was compelled to set up a Disciplinary Committee to look into the matter

Findings

A careful study of the report or findings of the Committee leaves no one in doubt that they tried hard to play safe using technicalities to circumvent the issues on hand.
Despite clear evidence and testimonies, the Committee still concluded that “Fraud was not established against any staff as no staff was found to have benefited directly or indirectly from the funds paid to the ghost workers. Rather, in the course of investigations, some administrative lapses were discovered.”

According to staffs of EKEDC, this is shocking especially as the Company usually requests monthly certification and confirmation from Chiefs and Heads, on staff that should be paid for the month in question., Which the CLO continued to confirm every month despite knowing very well it was all sham.
But more interestingly, is the Committee’s submission and recommendation which completely deviated from template already created in the past, at Disciplinary Committees that were chaired by the same CLO who applied Conditions of Service and fired several people few years ago, stated as follows:
The CLO should proceed on two (2) weeks’ leave of absence, which was deemed served. The CHRO and CACO were issued warning letters.
Obviously, the Committee members, as the report had it, were indeed faced with the challenge of treading carefully not to hurt their benefactors who are board members at the expense of corporate governance ethics
Flowing from the intrigues displayed in trying to circumvent apparent corporate best practices for self-interest from the Committee’s submission, there was no doubt in the mind of discerning observers and board analysts that someone would be scarified.
Hence, when the rumour of the sack of the MD/CEO started circulating recently, it did not come to industry watchers as a surprise. The only question on the lips of concerned industry watchers was how such a decision would affect the image of the company and whether EKEDP was set to toll the lines of Abuja and Ibadan Discos.

NERC to the rescue? Where is the BPE?

The MD/CEO would have had the industry regulators, the National Electricity Regulatory Commission (NERC), to thank for showing up as they ought to do even if it is for the sake of the 40 percent holdings of the government in the Disco, but for the vague directive they issued which afforded the EKEDP hawks the opportunity to twist and accomplish their selfish interest.
In a publication issued by one of the Directors of EKEDP who intends to uphold corporate governance says the news of the recall of the MD/CEO, Tinuade Sanda, was misleading.
Part of the statement read: “We refer to various misleading publications made about the above in certain news publications dated 26 and 27 March 2024 and the subsequent clarification issued by the Nigerian Electricity Regulatory Commission dated 27 March 2024
“We, therefore, wish to inform all stakeholders involved in the Nigerian Electricity Supply Industry (NESI) as well as the general public that on March 27th, 2024, NERC issued a letter clarifying a previous directive issued on 21 March 2024 which was misunderstood and unilaterally acted upon by the Chairman of the Board without recourse to the Board or the appropriate committees of the Board saddled with the responsibility for such oversight.
“This erroneous and unilateral action caused the Chairman of the Board to release a press statement recalling the MD/CEO Dr. Tinuade Sanda and other management staff to the parent company, WPG Limited, without due process and against the dictates of the NERC correspondence. Thankfully, NERC has clarified its position on this matter.
“The Commission has noted the strong public interest generated by the current event at EKEDP and the various interpretations of the resolutions conveyed vide the said letter, particularly, concerning paragraphs (4b) and 4(c).
“We, therefore, hereby provide further clarifications as follows: “Paragraph 4b: All staff of EKEDP, irrespective of their form of engagement, will be subject to the Conditions of Service of EKEDP.
“The Commission deemed it necessary to pass this resolution based on the submission of EKEDP, at the meeting of 20 March 2024, that the Condition of Service (“CoS”) of EKEDP was not applicable to Seconded personnel from third party providers”.

“The Board is resolved to align with the dictates of the regulator, going from our resolutions at the last board meeting held in March 2024.
“Paragraph 4c – “EKEDP Board is expected to conclude its review of its investigation into the allegation of Ghost workers to identify all personnel involved in causing loss of revenues to EKEDP no later than 27th March 2024.
“In a case where the indicted parties are seconded from third party providers and since they are reportedly NOT subject to the EKEDP CoS, they are to be recalled to their parent companies to avoid the risk of further losses to EKEDP”.
“This suggestion by the regulator is welcome as it strengthens corporate governance within EKEDP as an institution.
“We appreciate the proactive action of the Commission and the clarifications, which unambiguously indicate that: (A) all contracts of employment of anyone working for EKEDP, whether of WPG, EKEDP, or otherwise, must be subject to and regulated by the Condition of Service of EKEDP.”
However, the important lesson from the boardroom crisis playing out at EKEDP, is how NERC and the Bureau of Public Enterprise (BPE) can put their feet down and enforce serious application of corporate governance ethics in the privatized electricity industry.
The question that comes to mind on the EKEDP crisis is why the silence from the BPE member who sits on the board? What would have happened if the workers union in the industry had refused to escalate the EKEDP boardroom crisis, would the BPE member have remained silent forever? If yes, why? How many other companies supervised by government agencies like BPE suffer a similar fate? How involved was the BPE member on the EKEDP board in similar schemes that made him refuse to raise the red flag when it was obvious that things were heading in the wrong direction due to corruption?
On the final analysis, NERC and BPE must do all they can to protect Dr. Tinuade Sanda and other innocent members of the Management team that were unjustly recalled from the prey on the board of EKEDP who no doubt will continue to scheme to force her out for them to continue to devour the company at the detriment of others stakeholders in the NESI.

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