[size=14pt]PHCN’s accounts not audited in five years[/size] 
By Everest Amaefule, Abuja   
Tuesday, 3 Aug 2010   
   
Everest Amaefule, AbujaThe accounts of the Power Holding Company of Nigeria and those of its 18 successor companies have not been audited in the past five years, an investigation by THE PUNCH has revealed.

The investigation further showed that the non-audit of the companies had made it difficult to obtain information on how much they had generated or spent during the period.

The PHCN’s account was last audited in 2005. However, their 2005 Annual Report and Financial Statements were signed by its auditors on January 28, 2010.

The 2005 financial statement which was released earlier this year reported that the PHCN made a turnover of N107bn as against N101bn recorded in the previous year. This showed an increase of N6bn.

However, the auditors in an independent joint report to the members of the board of the PHCN dated January 28, 2010, said they could vouch for the company’s claim that it realised the said amounts both in 2004 and 2005.

The auditors also indicated that its built- up liabilities of N95.89bn in its pensions fund was in excess of its accumulated fund of N4.93bn.

In the report, the auditors said, “We were unable to confirm the accuracy of the sale of electricity amounting to N106.98bn (2004: N101.06bn) which is in excess of the average annual revenue collections of about N78.43bn (2004: N71bn).

“Billings for non-maximum demand customers were largely on estimates.

“An actuarial valuation of the company’s Superannuation Fund as at June 2004 indicates that the Fund’s built up liabilities is in excess of its accumulated fund of N4.93bn by the sum of N90.96bn.

“The excess liability of N90.96bn has not been provided for in these financial statements.”

It was learnt that the power company had not been able to contract the audit of its accounts since 2006 due to concerns over legal niceties.

Experts opine that the PHCN as it is currently constituted is illegal and ought to have been dissolved 18 months after it was incorporated as prescribed by the Electricity Power Sector Reform Act 2005.

The Act which also established the Nigerian Electricity Regulatory Commission prescribed that the PHCN should have finished transferring assets and liabilities to the 18 successor companies within 18 months.

General Manager, Corporate Affairs at the PHCN, Mrs. Efurun Igbo, confirmed that the last audited account for the company was for 2006 and attributed the failure to produce the audited accounts for the rest of the years to legal issues.

Although she did not offer details on the legal issues, she added that the respective boards of the 18 successor companies were supposed to procure the audit of the accounts rather than the PHCN.

Igbo said, “The successor companies receive money directly from the federation accounts and therefore their boards are supposed to order for the audited accounts.”

However, none of the 18 successor companies has a board. Even the PHCN does not have a board .

The successor companies are made up of six generation companies, one transmission company and eleven distribution companies.

The Electricity Power Sector Reform Act 2005 provided the legal basis for unbundling the PHCN (former NEPA) into the 18 successor companies.

The Act states, “The National Council on Privatisation shall not later than six months after the coming into force of this Act, take such steps as are necessary under the Companies and Allied Matters Act to incorporate a company, limited by shares, which shall be the initial holding company for the assets and liabilities of the Authority.

“The shares of the initial holding company on its incorporation shall be held by the Ministry of Finance Incorporated and the Bureau of Public Enterprises in the name of and on behalf of the Federal Government of Nigeria.

“The assets and liabilities vested in the Authority as at the initial transfer date and appearing on the audited balance sheets of the Authority, shall vest in the initial holding company.

“Within eight months from the initial transfer date, the National Council on Privatisation shall, on the finalisation of the opening balance sheet of the initial holding company, issue final order either confirming or specifying the transfer of assets and liabilities under subsection (2) and this part applies with necessary modifications to the final order.”

The provisions of the Act were part of the reform of the sector that had been initiated by former president, Chief Olusegun Obasanjo.

However, the unbundling of the PHCN had been reversed by the late President Umar Yar’Adua without any policy statement.

http://www.punchng.com/Articl.aspx?theartic=Art201008034535492

Since PHCN has been operating illegally, can we get refunds of our NEPA bills since 2005?