…says goodwill can’t buy DisCo
CEC Africa Investments Limited (CECA), a major shareholder of the Abuja Electricity Distribution Company (AEDC) has blamed its partner, Xerxes Global Investment Limited for breaching a $41 million funding agreement for acquiring the DisCo in 2013.
In a statement by the company on Tuesday, CECA dismissed claims by the Chairman of Xerxes Limited, Amb. Shehu Malami in an interview in some newspapers, saying the investors’ crisis at AEDC is being fuelled by greed.
Malami in the interview claimed that CECA ought to pay him for his goodwill and name which facilitated the sale of AEDC to KANN Utility Company Limited, their consortium.
But CECA in the statement said goodwill could not have bought the DisCo. During the privatisation exercise, there were financial obligations the bidders were expected to meet which prompted CECA and Xerxes to agree on the financial arrangements, starting with the initial payment of $41m to the Bureau of Public Enterprises (BPE).
It said Xerxes immediately failed to pay its contribution leaving all the payments to be done by CECA.
“Till date, Xerxes has not shown any capacity to repay its part of that obligation to CECA, six years after the privatisation. Yet it wants to claim major ownership of AEDC but has failed to fulfil any financial obligation and has left the business risk on CECA,” said Engr. Emmanuel Katepa, the Managing Director of CECA.
Engr. Katepa further challenged Malami and Xerxes to tell the public if it brought any fund in the acquisition of AEDC. “Ambassador Shehu Malami failed to address the central issue which remains that he and his organisation are claiming shares for which they have failed to pay and show no capacity to pay.
“In recognition of its failure to pay its share of the acquisition cost in 2013, Xerxes even pledged to CECA, as security, half of its equity share in KANN. At the time, the arrangement was expected to be cured within 120 days, during which time Xerxes was to source its contribution and pay its share. As we speak, Malami has not paid, yet is denying us the right to that majority equity stake,” Katepa noted.
He said it was on this basis that CECA and Xerxes went to the London Arbitration Court and secured judgement in favour of CECA. This award was further recognised in the High Court of Nigeria in February 2018. Not pleased with this, the statement said, Xerxes approached the Appeals Court sitting in Abuja, where the appeal is pending.
“We have the facts. We have managed power utilities in several African countries and are transforming AEDC but Xerxes is frustrating this effort, insisting on the removal of the very qualified and experienced officials who, working hand in hand with Nigerian personnel, are making the change at AEDC possible to be replaced by unknown people with no recorded experience of managing any power utility.”
CECA insisted that having goodwill does not translate to financing the acquisition of the power utility firm.
“We will not be driven into silence for exercising our rights in steering the affairs of AEDC to improving the power supply experience of our esteemed customers,” Engr. Katepa concluded.
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