Processes involved in PHCN Liability Management

Processes involved in Liability Management

1. Receive liabilities from PHCN Head Quarters, Discos and Gencos in line the Transfer Order and the Pre-completion Liabilities Agreement.
2. Categorisation of liabilities into the following.
   1. IPPs PPAs Creditors;
   2. Engineering Creditors;
   3. Sundry Creditors;
   4. Local Financial Institution Liabilities;
   5. Legacy Debts;
   6. State Government Negotiated Tax and Consultancies;
   7. PHCN successor Companies;
   8. Contingent Liabilities, and
   9. Pensions Liabilities.
3. Check for complete documentation i.e.
   1. Work Order;
   2. Original Invoice;
   3. Job Completion Certificate;
   4. Store Receive Advice;
   5. Bank Account Details, and
   6. Tin Number.
4. Schedule Liabilities for verification at the originating Discos and Gencos.
5. Schedule verified liabilities for approval by the Board/Federal Ministry of Power, Works & Housing.
6. Prepare and forward the payment schedule and supporting documents for the approved liabilities to the MD/CE by the Liability Management Directorate.
7. Solicitation of 20% discount for liabilities above N5 Million in line with Board approval.
8. Forwarding of Liabilities by the MD/CE to the Internal Audit for vetting.
9. MD/CE approves Audit vetted invoices for payment.
10. Process Payment.
11. Update Liability Database

Inherited Liabilities

A summary of the total inherited liabilities is estimated at N760,774,915,081.79. It however, excluded the Transmission Company of Nigeria (TCN). As at 28th February, 2017 the total inherited liabilities is estimated at 527,261,442,208.99 . The liabilities invoices covers about 23,154 invoices with about 9,694 verified and settled. This leaves an outstanding liabilities of 13,460 invoices for verification. The table below explains further.

Summary of Liabilities

Inherited Liabilities

• IPPs PPA Liabilities – 45%
• Bank Loans – 19%
• Engineering Creditors – 2%
• Gas Supply – 2%
• PHCN-HQ 4%
• Successor Companies – 6%
• Foreign Loans – 8%
• Legacy Debts and Tax Liabilities – 16%

Outstanding Liabilities

• IPPs PPA Liabilities – 61%
• Bank Loans – 0%
• Engineering Creditors – 2%
• Contingent Liabilities – 20%
• PHCN-HQ 0%
• Successor Companies – 2%

Strategy Overview

Source of Funding

1. Sale of Non-Core Assets
2. Proceeds from Receivables
3. Inflow from Market Operator
4. Inflow from MDA Debt Recoveries
5. Rent of PHCN Properties
6. Payment through NEMSF
7. Budgetary Appropriation
8. Sale of PHCN Scrap Assets
9. Sales of Overtime Cargoes
10. PHCN Superannuation Fund