Management of Inherited PHCN Liabilities

NELMCO successfully put in place the following: 

1. Categorization of the Inherited PHCN Liabilities
2. Development of Triangular Verification Model (TVM).
3. Stratification of the inherited Liabilities
4. Strategy for the Payment of Creditors
5. Discount Solicitation leading to Savings to FGN
6. Electronic Data Management Services (EDMS) Implementation

A: Categorization of the Inherited Liabilities

1. Engineering Creditors:  Supplies and installations made by technical creditors prior to the privatization of PHCN.
2. Foreign Loans: PHCN foreign loans related, been handled by DMO
3. Gas debts: Agreement between NELMCO, NESI Strategy Ltd and NGC for legacy gas debts
4. IPP’s – PPA liabilities: These are liabilities owed to the likes of AGIP, SHELL, NDPHC etc on energy supplied
5. Legacy debts and tax liabilities: This class consists of  liabilities owed to government agencies such as FIRS, ITF, NSITF and States Board on Internal Revenue
6. Local Financial Institutions: These consist of liabilities arising from PHCN financial obligations to commercial banks
7. PHCN-HQ: These are inherited liabilities from PHCN corporate headquarters
8. PHCN Successor Companies Liabilities: PHCN Successor Companies Liabilities
9. Contingent Liabilities: These are un-qualified but potential liabilities, some of which may or may not crystallize

B. Due Diligence

C. Verification of Liability

To determine the actual amount owed to creditors as against the face value contained in the invoices

D. Solicitation for Discount

Solicitation of discount (initially 20%, now reviewed to 30%) discount on all verified claims above N5million.

E. Reconciliation/Negotiations

Intensive reconciliation and negotiations process with the aim of negotiating downwards the amount inherited as liabilities.

F: Payment Strategy

Short, Medium- and Long-term payment strategy for the liquidation of liabilities.

1. Short term Strategy: During this period liabilities of less than N1 billion are to be paid.
2. Medium term Strategy: Liabilities between N1 billion and N15 billion and unpaid Short-term liabilities.
3. Long term Strategy: Liabilities above N15 billion and unpaid Medium-term Liabilities. 

As at 30th June 2021, NELMCO inherited total liabilities of N711,343,865,463.06 from defunct PHCN. These liabilities were categorized into Engineering, Foreign Loans, Gas Supply, IPPs/PPAs, Tax, Legacy Debts, Legal, Local Bank Loans, PHCN Headquarters, Successor Companies (Discos and Gencos) creditors and contingent liabilities. Out of these inherited liabilities, N262,013,635,079.88 were transferred to other Government Agencies, e.g. DMO and PTAD. Savings and discounts of N91,152,461,873.06 and N2,258,588,485.55 respectively were realized for the Government. While creditors were settled to the tune of N51,708,162,741.81

Consequent to the above, the liabilities due as at 30th June 2021 stand at N522,028,652,708.16 (comprising of N511,450,703,566.71 Contingent Liabilities and N10,577,949,141.45 awaiting different stages of processing).