15 April 2014, Abuja – The federal government has disclosed its plans to transfer all legacy debts that arose from foreign loans that were left behind by the defunct Power Holding Company of Nigeria (PHCN) to the Debt Management Office (DMO) for cancellation.
It also stated that it would write off all debts which the defunct PHCN owed other government agencies, especially debts incurred from gas supplied by the Nigeria Gas Company (NGC), which is a subsidiary of the Nigeria National Petroleum Corporation (NNPC).
The Nigeria Electricity Liabilities Management Company (NELMCO) which was set up as a special purpose vehicle to liquidate operational liabilities incurred by PHCN explained that these options were thought up following efforts to reduce the huge debt inherited from PHCN overtime.
The Managing Director of NELMCO, Dr. Sam Agbogun, stated yesterday in Abuja that with the transfer of some liabilities to DMO and the writing off of debts owed NNPC and other agencies in what he described as ‘debt swap’, NELMCO’s liabilities would be less by N392.2 billion.
Agbogun disclosed that NELMCO had begun verification of liabilities left behind by PHCN and that as at March 31, 2014, NELMCO’s debt profile stood at N757 billion.
He added that the company was strategising on how to raise funds to offset same given the shortfall in budgetary allocation to meet its obligations.
He said at the moment, it was challenging for the company to pay PHCN staff pensions, which he said was N16 billion annually at an average of N1.3 billion monthly.
He stated that the 2014 budget only provided N14 billion for the purpose, leaving a shortfall of N2 billion.
“That is to say if we stick by the budget at the end of November, I won’t be able to pay December pension and that will be a challenge for everybody. As at today (yesterday) we have not paid half of the pensioners for March,” Agbogun said.
He said that NELMCO equally plans to liquidate funds in the PHCN Superannuation Fund, recover and sell of PHCN Awolowo Way Headquarters in Lagos, recover trapped funds in banks in the United Kingdom and negotiate some of the other big debts as part of strategies to further reduce the liabilities.
Agbogun further clarified that none of the PHCN assets had been verified so far as NELMCO was still awaiting title deeds for most of the lands and buildings and that no PHCN asset has also been sold except for some scrap and obsolete items which PHCN had earlier valued.
He said: “The only near resemblance of a sale transaction of a non-core assert of NELMCO is the PHCN headquarters in Abuja that has been transferred to the ministry of power for use as office. It might interest you to know that limited due diligence on the non-core assets will soon commence with the updating of the records and perfection of land title documents which have lapsed and which PHCN did not revalidate.”
– Chineme Okafor, This Day