A Review of the Nigerian Energy Industry

Govt investigate PHCN’s illegal pension scheme

Oscarline Onwuemenyi

18 July 2012, Sweetcrude, ABUJA – The Federal Government yesterday inaugurated a panel of inquiry into the alleged illegal pension scheme operated by the Power Holding Company of Nigeria (PHCN), as part of its avowed aspiration to reform Nigeria’s power sector in line with provisions of the Electric Power Sector Reform (EPSR) Act 2005 and President Goodluck Jonathan’s power sector roadmap.

The eight-man panel which has the former Auditor-General of the Federation (AuGF), Mr. Joseph Ajiboye and Managing Director, Nigeria Electricity Liability Management Company (NELMCO), Dr. Sam Agbogun as its Chairman and Secretary respectively is expected to investigate the operation of the PHCN pension scheme with an intention to unravel alleged abnormalities within 30 working days as the case may be.

Part of the terms of reference of the pane include investigation of the status of pension in the power sector vis-à-vis the pension laws, identification of officers involved in any act of misconduct in the management of pension and review of pension matters in the Agari committee report.The panel will also recommend measures to guard against occurrence of similar incidents in the future as well as sanctions against culprits.

There were indications that an estimated N200 billion is missing from the pension funds in view of claims that 25 per cent of workers’ salaries deducted over the years could not be accounted for; this was however refuted by the Minister of Power, Prof. Barth Nnaji who insisted that that the panel was out to establish facts on the status of the pension.

The PHCN has for years operated an in-house defined pension scheme that is referred to as the superannuation pension fund, and with only the management and leaders of the trade unions as trustees; this arrangement however runs contrary to provisions in the Pension Reform Act (PRA) 2004 and has been frowned at the federal government.

Nnaji in his remarks stated the government was in disagreement with unions on the method of pension payment that should be adopted, adding that it was the only outstanding issue to be resolved in its rounds of negotiations which is at its eight round now.

“Government must always follow due process and law in its programme and so the pension scheme for PHCN has not been operated in the way it should and has not followed the PRA; for some reasons some people in the PHCN want to continue with the old scheme but this clearly is against the reform act and this implies that it is against the law, this is not something that government will allow to happen,” Nnaji said.

He further explained: “Once we discovered in our negotiations that this is happening, we said that the PHCN companies with effect from July 1, 2012 must immediately comply with the PRA 2004 and that deductions must be made accordingly.

Consequently we want to look at the operation and management of PHCN pension scheme from inception to date, but this can be done by having credible Nigerians look into the scheme.

The panel will begin the process of this evaluation and should know that time is of essence because we like to have our workers to be able to enjoy the benefits in the sector.

I also want to say that we have been in disagreement with the unions on method to use for pension, they insist that we should go with the scheme prior to 2004, we insist that we will go with the law of the land because we are government and will not disobey the law; Nigerians should now decide which way we should go either to disobey the law and pay PHCN higher money, but whatever calculation on severance will be based on the law.”

Meanwhile, members of the PHCN unions have moved against the imminent the take-over of the Transmission Company of Nigeria (TCN) by Canadian firm, Manitoba Hydro International. Coming barely three 48 hours after the Bureau of Public Enterprises (BPE) took in technical bids for the privatisation of PHCN successor generation companies for evaluation, it was gathered that Nnaji, in company of officials of Manitoba were prevented by the union from entering the PHCN corporate headquarters in Maitama where the TCN operates from yesterday.

According to the north-central zonal organising secretary of the National Union of Electricity Employees (NUEE), Temple Iworima, the union were in protest of the imminent takeover of TCN by Manitoba owing to its alleged disagreement with government over unresolved labour issues. Iworima specifically said that: “Agreements on severance packages, pension and gratuity for the workers are still outstanding after 18 months of negotiations. It was agreed upon by both parties through the Hassan Sunmonu-led negotiation panel that there would be no take-over of the PHCN until labour issues are fully resolved. He accused government of breaching the agreement, adding: “They were unable to inspect TCN for take-over. This morning, the Permanent Secretary of the Ministry, Mrs. Awosika was also here, she too was turned back, we didn’t let her in.”

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