The firing of Engr. Meyen Etukudo, the chief executive of Akwa Ibom State-owned electricity-generating company Ibom Power, by the state government last week caught many people unawares and generated quite a buzz in the industry. The sack order was contained in a press statement issued by the Secretary to the State Government, Mr. Enobong Uwah, Thursday night. It came shortly after Etukudo had issued a statement explaining that the power plant had shut down because its gas supplier, Savannah Energy, had discontinued supply of gas due to a dispute over payments. The state was therefore thrown into darkness, which has continued for three days now. “This loss of gas supply coincided with a reported fault on the 132 KV Itu-Aba Transmission Line, which transports power from the national grid in and out of the state, hence the state-wide outage,’’ Etukudo stated and concluded that Savannah Energy “has remained adamant’’ during the discussions.
But Savanna Energy has publicly repudiated him, insisting in a public statement that the power cut in Akwa Ibom State is entirely due to the reported fault in the 132 KVA Aba-Itu Transmission Line, which, unfortunately, is preventing power from being transmitted into the state. A senior official of Savannah Energy told me that although gas supply to Ibom Power was discontinued momentarily for lack of payment, Savannah has since resumed supply, but the plants could not be restarted because they are in very bad shape. “I think the former MD used Savannah as a smokescreen to cover the rot he left behind,’’ added the official.
It is for this reason that the Board Chairman of Ibom Power, Engr. Etido Inyang, tried unsuccessfully to dissuade Etukudo from issuing his statement because it didn’t reflect the true picture. But he too was adamant. Government officials therefore believe that the former CEO was just out to embarrass the governor, and because his standing before the government was already weak, disengaging him was an easy decision. Meanwhile, the governor is so incensed that he may soon order a detailed financial audit into the affairs of the company, and there’s a possibility that the EFCC may be called in given reports of corrupt practices the government has, according to an informed insider.
I have spoken to several people in government, Savannah Energy, Ibom Power Company (IPC), and the electricity industry and reviewed volumes of documents; I can confirm that Mr. Etukudo was sacked for a myriad of reasons, the power outage being the last straw. “This is not just about the dispute between Savannah Energy and Ibom Power; he was let go for many reasons, including gross acts of insubordination to the government, incompetence, and embarrassing decisions the management took in the years he was in office,’’ a senior government official told me.
Etukudo joined IPC in 2016 with a transmission background, but in all those years, there has not been an improvement in the performance of the company, according to its five-year audited financial statement. The government is also displeased at his management style. He refused to be answerable to the governor and his employers, Akwa Ibom Investment Corporation (AKICORP), which owns almost 100 percent of the company. “Ibom Power has not rendered reports of stewardship to AKICORP and is yet to hold its first AGM. He has never briefed Gov. Umo Eno on the affairs of the company since he became governor, said a senior government official. The government is also dissatisfied with Etukudo for his inability to renegotiate the defective Power Purchase Agreement (PPA) that Ibom Power has with Nigeria Bulk Electricity Trading Plc (NBET). This defective PPA, officials claim, is one of the reasons Ibom Power’s bottom line has been in the red in the eight years Etukudo led the company.
Another source said the government was also embarrassed by Etukudo’s habit of giving frequent press interviews and issuing press statements, as well as his frequent foreign trips without approval from the governor. On each occasion he travelled out, he would hand over the company to a contractor who repairs the plant, sidestepping his executives. Early this year, Etukudo gave an interview accusing the state government of giving more money to Ibom Air while neglecting Ibom Power and boasted that if he had such support from the government, he would turn around Ibom Power. “But how could the government continue to sink money into a leaking hole? Comparing Ibom Power to Ibom Air is cheap blackmail, because while Ibom Air is growing rapidly, servicing its debts on time, and will soon break even, Ibom Power has been falling deeper and deeper into debt, quipped a Government House Permanent Secretary official. Under Etukdo, the company defaulted in repayment of restructured loans to lenders, particularly Afrexim, thus making it impossible for other state entities like Ibom Air to access credit from Afrexim.
The state government also blames the ousted CEO for frustrating every genuine effort by Accugas, a subsidiary of Savannah Energy, and AKICORP to renegotiate a gas sales agreement that supports the current industry realities and turning down every genuine effort to have discussions on the way forward. “He has never been an honest party in the government’s effort to reengineer the electricity market in the State, a step that is required to take advantage of the reforms in the energy sector in the country,’’ said an industry insider.
Ibom Power Company Limited was incorporated on January 15, 2001, as the pioneer independent electricity generation company. It has an operational plant at Ikot Abasi, with three turbines and a combined installed capacity of 191 MW. The plant has never operated at full capacity and is currently operating at less than 50 percent of the installed capacity. The company is owned 99.99 percent by AKICORP and 0.01 percent by Globeleq Ibom Holdings BV, a South African company. Ibom Power has been poorly managed over the years, and most recently gross operational inefficiency and management incompetence have been identified as its major weaknesses. The three turbines have never at any time been functional, resulting in unplanned downtime and loss of revenue. The lack of quality inspection and assurance has resulted in significant damage to the plant.
The company has been making losses since inception, resulting in negative net worth, with a comfort letter being issued to the external auditors to avert qualification of its financial statements. The Five-Year Financial Indices show a N4.23 billion loss in 2022; a N5 billion loss in 2021; a N20 million loss in 2019; and a N6.5 billion loss in 2018. The financial statement for 2023 is being audited. In addition, the company is indebted to Accugas to the tune of $12.6 million and indebted to Afrexim to the tune of $7.81 million. The bank obtained a judgement, requiring payment in 14 days with 8 percent interest per annum on any unpaid amount. Ibom Power has since defaulted. Ibom Power is also indebted to Access Bank to the tune of N420 million. It defaulted on the restructured repayment plan reached with the bank in 2017. Both Afrexim and Access Bank hold a joint charge on IPC power plants.
The string of losses over the years has threatened the going concern of the company. Ibom Power’s current and total liabilities exceed its current and total assets by N51 billion. A significant portion of the company’s liability, representing 56 percent of its total liabilities, is owed to AKICORP, the parent company. Each year AKICORP issues a comfort letter to the external auditors that it would not demand repayment and that it also guarantees the going concern of the company, without which IPC is insolvent and bankrupt.
Against the backdrop of the gross operational inefficiency, managerial incompetence, and bleak financial position of the company, the government this year commissioned Savannah Energy to carry out a plant audit, the first in time in its 23-year history. I understand that the audit report was very harsh on the management of the company. It noted that the plant is not in good shape due to poor maintenance. Plant availability is now significantly less than 50 percent; there is no managerial competency for power generation operations, resulting in avoidable gaps; there is a poor maintenance culture, inadequate safety policies, and an absence of basic HSE compliance. The report also noted that the fire cooling system is damaged, resulting in a hazardous operational environment. Inefficient operations manifest in collecting gas for two turbines when it can only evacuate power from one turbine, even when Accugas advised that this was an inefficient use of gas. IPC does not have an industry-best-practice Power Purchase Agreement (PPA) with NBET, the reason it has not taken advantage of better terms of purchase by NBET. The current PPA is not even legally binding on NBET, according to a company executive.
When I called Etukudo this Saturday morning, he refused to comment and directed me to the press statement he issued. You are a brilliant journalist; read the statement I issued and tell me what is wrong with it,’’ he told me. But when I pressed further, he retorted, “The governor has been commissioning projects; have you heard him mention power?” Indirectly hinting that Ibom Power has not been a priority of the government. I pushed back: “But I understand that the government had ordered an audit of the place this year, and is it not possible that the governor was planning to do something about Ibom Power? After all, the government does not do everything in one year.” I don’t want to talk again, he said and hung up. I was also going to ask him why the company has been making losses and many other questions.
Gov. Umo Eno refused to have elaborate discussions on this matter when I called him last night. “We will turn around Ibom Power,” he told me, adding, “Right now, we are busy with the 2025 budget and the funeral arrangements for my dear wife. I regret what has happened, but we shall turn around Ibom Power.”
The government should begin the turnaround by hiring a competent and experienced CEO who should be given clear targets to implement the recommendations in the Plant Audit Report; reposition the company; forge ahead with the power market reforms to supply power to Akwa Ibom people; and drive the company profitably in accordance with global best practice.
ETIM is a journalist and author.
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