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Audit of Power Sector by KPMG reveals MYTO abuse

By on December 28, 2012

Renowned Global Auditing and Accounting firm KPMG has revealed in its recent audit of the operations and activities of the Nigerian Electricity Suppliers Industry , the abuse of the Multi Year Tariff Order, a cost effective electricity tariff framework.

The audit which was commissioned by the Nigerian Electricity Regulatory Commission (NERC) in 2010, was designed to get a clear assessment of the electricity value chain, identify areas that were liabilities and note the outcome of the reconciliation of accounts of the market operators.

KPMG was also saddled with the responsibility of authenticating the originality of the invoices issued out by Market Operators to market participants during the period of assessment. It was also meant to observe and note if the market settlement accounts was following the due process.

The Auditing firm was also mandated to ascertain the viability of the subsidy scheme for electricity disbursement and how viable it was to the power sector, while also making recommendations on how the market settlement process can be effective.

KPMG in its report stated that “Our re-computation of the value of invoices issued by the MO from July 2008 to March 2010 using the MYTO rates indicated that the amount due to NERC was overstated by N73.8 million, the amount due from the DISCOS Distribution Companies (DISCO) was understated by N34 billion, the amount due to GENCO (Generation Companies), TCN and the MO was understated by N85 billion, N16.5 billion and N273 million respectively.”
The report further showed that, “market participants were billed charges not provided for by the MYTO. Such charges include pension fund contributions, VAT, meter maintenance fund, outstanding debt factor and loan repayment”.

From the report, it was clear that there are a lot of unanswered questions as to the way the N178 billion Naira approved by the Federal Government for electricity subsidies for the period of 2008 to 2011 was managed .

Meanwhile, in response to the KPMG report, a source from the Presidency revealed that the N178 billion approved by the Federal Government for subsidy in 2008, was yet to be accounted for by the market participants and feared that another N46 billion earmarked for 2012 subsidy, may have been mismanaged.