By Mohamed Kamara
The Ministry of Energy is facing increased scrutiny following the 2023 audit report that brings out major lapses in financial management, oversight, and the establishment of crucial operational units. The findings suggest a lack of proper monitoring and supervision by the Ministry, which could potentially undermine the financial stability of key state-owned energy companies.
The audit report, which covers the review period, raised two main issues: direct payments to suppliers by the Electricity Distribution and Supply Authority (EDSA) on behalf of the Electricity Generation and Transmission Corporation (EGTC) and the failure to establish an Energy Asset Unit.
Direct Payments to Suppliers Raise Concerns
One of the most pressing concerns is the practice of EDSA paying EGTC’s suppliers directly, rather than paying the EGTC for services rendered. This deviation from established financial processes has led to fears of financial mismanagement, which could weaken the EGTC’s financial position. The practice raises serious concerns about transparency and accountability within the sector, with the potential for inefficiencies, service delivery delays, and increased operational costs.
The audit team recommended that the Ministry of Energy establish clearer, more efficient payment processes to ensure direct payments to EGTC. This would enhance transparency and help improve financial oversight. Furthermore, the report called for stronger monitoring and supervision frameworks to ensure that financial transactions adhere to established protocols.
Failure to Establish the Energy Asset Unit
Another critical issue highlighted was the Ministry’s failure to establish the Energy Asset Unit, a crucial oversight body responsible for the transfer of energy assets between EGTC and EDSA. This failure has hindered the smooth functioning of the power sector, delaying important asset transfers and complicating coordination efforts.
Despite previous recommendations from the Auditor-General’s Annual Reports, the Ministry has yet to act on the issue. The report stresses the urgent need for the establishment of the Energy Asset Unit to improve oversight and facilitate the unbundling of energy assets to ensure more effective management and operation within the sector.
Official Responses and Auditor’s Comments
In response to the findings, the Ministry provided an update on the outstanding issues:
Non-payment of Invoices by EGTC to EDSA – The Ministry explained that some debts owed to EGTC by EDSA had been written off as of April 2024, following an agreement between the dissolved boards of the two entities. While payment of current invoices is reportedly being honored, the Auditor-General’s office noted that the documentary evidence to support the write-off of the outstanding balance of NLe618,975,288 was not provided for review. As of June 2024, a substantial amount of NLe79,285,063 remains unresolved.
Non-payment of Electricity Bills by Government MDAs – The Ministry acknowledged that non-payment of electricity bills by various government ministries, departments, and agencies (MDAs) remains an ongoing challenge. However, efforts are underway, including correspondence with the Ministry of Finance, to ensure that future payments are deducted directly from MDAs’ allocations to address the issue.
Energy Asset Unit – The Ministry confirmed plans to establish the Energy Asset Unit, but indicated that it would be dependent on the reconstitution of the dissolved boards of EDSA and EGTC. This delay has caused frustration, as the establishment of the unit remains critical to improving asset management within the energy sector.
Auditor’s Comment
The auditor expressed concerns about the lack of progress in establishing the Energy Asset Unit, noting that the failure to reconstitute the boards of EGTC and EDSA further delays the crucial oversight process. Without the unit in place, asset management and coordination between the two entities continue to face significant challenges.
Continued Scrutiny and Next Steps
The issues raised in the audit report underscore the need for greater accountability and improved oversight mechanisms within the Ministry of Energy. With the failure to address these key concerns, there is growing pressure on the government to take swift action to resolve financial discrepancies and improve the management of the country’s energy assets.
The audit’s findings call for urgent reforms, and stakeholders across the energy sector are watching closely to see whether the Ministry will implement the recommended changes to restore trust and improve the overall functioning of the nation’s energy sector.
