Inside story of NERC commissioners’ N2bn severance payout

Fresh facts have emerged on how the board of the Nigerian Electricity Regulatory Commission (NERC) controversially approved billions of naira preparatory to pay its members in severance gratuity and pension.
Documents obtained by Daily Trust revealed that on August 15, 2014, the seven commissioners who constitute the board chaired by Dr. Sam Amadi at their sixth management meeting passed a resolution which permits them to receive 120 percent of their gross annual salary and two years’ salary in full amounting to N2billion.
The commission, established in 2005 regulates the electricity industry in the country.
The base line for the calculation of the severance gratuity of the pioneer commissioners who were removed from office for alleged corruption in 2009 was 300 percent of their annual basic salary.
On November 2, based on what multiple sources from the commission had said, Daily Trust reported that the present commissioners had earmarked N2.7 billion as severance package for themselves. The commission issued a statement afterward dismissing the report as “false claims”.
 “A commissioner shall receive 120% of his/her annual gross remuneration as severance/gratuity at any time of leaving the service of the commission,” the commissioners’ resolution of August 14, 2014 read in part which in effect reversed the resolution of the pioneer commissioners which was to calculate severance of retiring commissioner as 300 percent of their annual  basic salary.
The commissioners also said “…On project vehicles for staff, a commissioner, who is interesting (sic) shall similarly be entitled to the right of first refusal for their assigned project vehicles when leaving the service of the commission” but will pay the book value.
Also, “a commissioners shall be entitled to pay the book value of the computers and accessories in their possession when leaving” office just as they also resolved that the “commission shall provide a retiring or disengaging commissioner with monetary value of a new vehicle of equivalent value to the status project vehicle that he/she would have been entitled to if he/she were still in (service).”
The five year tenure of the present commissioners which began on December 22, 2010 ends December 22, 2015.
In an out of court settlement with the federal government, the former commissioners-seven- including their chairman were paid a total of N1.5 billion, the two years’ salaries left of their five years tenure inclusive.
While the case they instituted against the federal government lasted (two years), they were not paid salaries which were factored into their severance later.
The present commissioners have received their salary till date Daily Trust learnt but the change in the formula for calculating their severance and a hike in their salary has pushed the figures higher up.
Checks by Daily Trust indicates that the chairman of the commission earns N83 million per annum; vice chairman earns N77 million while each of the five other commissioners earns N72 million annually.
The seven commissioners resolve is to be paid thus: two years full pay (chairman: N166million plus 120% of annual gross remuneration which is N99.6 million), as well as pension and monetary value of new cars amounting to N339 million.
The vice chairman who earns N77 million per annum is to take a total pay of N311 million while the five other commissioners are to each get N277 million as severance gratuity. Cumulatively, the figure stands at N2.04 billion.
The commission, Daily Trust was told has been having problem paying its workers in recent months after buying a building for N12 billion and moved N2 billion into its retirement accounts in May.
Chairman of the commission Dr. Sam Amadi had issued a rebuttal to Daily Trust’s report of November 2, saying only N2 billion was in the severance scheme account of the commission meant for the whole “164 staff of the commission.” While saying that they were entitled to two years full salary for trade restraints, he did not specify how much it was.
He had said: “The present Commissioners have not fixed any special allowances or perks for themselves. We have retained what was approved by the former Commissioners since 2006 and further upgraded in 2010 for all employees by the Administrator. We have approved nothing special or extra for ourselves.”
‎Daily Trust’s checks reveal otherwise
Since December 22, 2010 till date, the present commission has adjusted its allowances upward at least twice, a source told Daily Trust. The National Salaries, Incomes and Wages Commission was not consulted as required by Section 42:18 of the Electricity Act.
Efforts by Daily Trust to reach the former administrator/CEO of the commission Imam Talba who head the forth for some ‎22 months while the case against the former commissioners lasted in court were unsuccessful. He remains a staff of the commission.
It was learnt that he was on leave and Daily Trust couldn’t confirm if he was outside the country.
However, a source from the commission told one of our reporters that the ex-administrator only implemented 53 percent raise in staff salaries as was approved the president for all federal government workers in 2010.
The journey to the raise of the board members‎’ severance package started on June 4, 2014 when two commissioners Dr. Steven Andzenge and Mr. Patrick Umeh sent a memo to the chairman and other commissioners making a strong appeal for the review of the commission’s January 10, 2006 resolution which says their severance gratuity shall be 300 percent of annual basic salary.
The officials argued that improved welfare packages for employees of the commission had put “the commissioners in a disadvantaged position with their gratuity being much lower than that of employees”.
A new amendment recommended was to expand the severance package into four components;” pension, severance gratuity, compensation for two years trade practice prohibition and other severance packages.”
That of former commissioner was in three; pension, severance package and other severance packages.
 Consequently, August 15, 2014, the commissioners resolved that the new method to compute the severance payout of retiring commissioners would be 120 percent of their gross annual salaries as against 300 percent of basic annual salaries.
 Although, the Electricity Act in section 36:2 bars the commissioners from working in the sector for two years starting from when they exit, it did not make provision for them to be paid as a result.
The elements of the present commissioners’ salaries include; meal allowance, entertainment allowance, electricity rebate allowance (previous commissioners earned diesel allowance), utility allowance, domestic allowance, leave allowance, holiday allowance, productivity allowance and Cost of Living Adjustment Allowance dubbed COLA.
Some other elements are: hazard allowance, dressing allowance, telephone, DSTV, internet allowances, rent subsidy and house maintenance allowances etc.
The basic allowance of a commissioner Daily Trust observed is markedly higher than some other federal government agencies as provided by the 2008 National Assembly amended allowances and salaries for political, public and judicial office holders contained in government gazette.
The former commissioners were however paid severance which is statutorily due to them as political appointees with a baseline of 300 percent of their basic annual salaries including two years’ salary as negotiated with the federal government in lieu of the two years they are not to work in the sector.
Daily Trust gathered that upon the removal of the board members in 2009, two years away from the end of their tenure for alleged corruption, they took the federal government to court challenging the powers of the president to remove them. The court affirmed that the president had the powers. The criminal case against the commissioners by the federal government was later withdrawn.
It remains, unclear why the federal government withdrew the case and opted for an out of court settlement.
The former commissioners who were sacked from office over allegations of corruption received a total of N1.5 billion, according to documents from the ministry of power.
The then Director of finance and account of the ministry of power Dr. Agabi Yusuf Moh’d on behalf of the minister of state ordered the payments on November 15, 2010 in two tranches; the first being N268 million and the second, N1.2 billion to be paid from the budget of 2011.
A letter from the then Solicitor General of the Federation and Permanent Secretary of the Ministry of Justice Abdullahi Yola dated November 2, 2010 to the state minister of power made it clear that “the matter regarding the commissioners of NERC has been decided by Mr. President in furtherance of comprehensive settlement agreement reached with the commissioners”.