DO NOT INVEST PENSION FUND IN ELECTRICITY GENERATION

DO NOT INVEST PENSION FUND IN ELECTRICITY GENERATION

I read in the Punch of Monday, March 26, 2012, a news item on page 20 captioned “FG to invest pension fund in electricity generation” and I shuddered.

According to the leading national daily “the Minister of Power, Prof Berth Nnaji, dropped the hint in London on Sunday when he signed a $10bn agreement on behalf of the government with General Electric to build 10,000 megawatts power plants in the country. He said the government would tap a small percentage of the national pension fund to finance some of the power projects”.

The Minister said “What the pension money is meant for is investment, but you invest in more secure instrument and this project is one of them” the paper reported. The Minister continued further, “pension fund is a secure fund so you cannot play around with people’s retirement money, so it is very important that everyone understands that the plan is not to just take the money and invest in projects that are risky”. The Minister explained further that infrastructure, including road and transmission lines, were guaranteed income earners “because charges accruing from them can fund the borrowed money from the pension fund” the paper further reported.

To start with, by the provisions of the Pension Reform Act, 2004, the National Pension Commission, the Pension Fund Custodians and the Pension Fund Administrators collectively determine where the funds can be invested, percentage of investment in particular equities, how the funds are invested, monitored and managed, so there are no sitting funds anywhere the Federal Government can commandeer for the investments in power plants where some corrupt officials and contractors are primed and waiting to loot the funds. The Minister will do well to counsel us on what happened to the funds of the old Railway Workers Pension Scheme. The Minister must be dissuaded from believing that pension fund is a slush fund somewhere to be disbursed at the whims and caprices of the Federal government.

It is obvious that the project, however much the Country needs it and however good intentioned the Minister is, is not secured one bit as the Minister would have us believe. ‘Cabal’ is a word loosely bandied around these days but cabals they are and so cabals I will call them. The cabals who will not let the power sector work are too entrenched, too powerful and too set in their ways for us to take for granted that this will work; that it will not be business as usual. Obasanjo’s government spent billions of dollars and no power plants were delivered, the Ndidi Elumelu led Committee wasted everyone’s time probing the power projects and today, whatever happened to the massive funds meant for the power projects we are none the wiser. This Government reached this kind of understanding with General Electric in the past and nothing came of it. So what exactly is now new. The last we heard from the hallowed chambers of the Federal judiciary in Abuja, all corruption charges brought against Ndidi Elemelu as a result of the botched power projects had been dismissed as there was ‘no evidence of wrong doing against the lawmaker’.

We have played too much politics with the power sector for anyone to now be convinced that anything has changed and that the Federal government will now deliver on its reform agenda in the power sector. Every aspect of our national life is rotten and putrefying. The recent Capital Market probe which unwittingly pitted Honourable Herman Hembe, the Chairman of the House Committee on Capital Markets against the Director General of the Securities and Exchange Commission, Ms Arunma Otteh revealed as much. The one before it, the Oil Subsidy probe in the National Assembly led by Honourable Lawan Farouk revealed much more. Corruption is the only thriving industry in Nigeria and a multibillion dollar industry at that.

The police pension probe at the National Assembly takes the cake. How anyone can mindlessly plunder pension funds meant for the security of aged men and women who have served this nation in various capacities beats me. Every time you think it cannot possibly get worse it actually does get worse in Nigeria. There is now no low level imaginable to which we have not sank. At the last count, over Fourteen Billion Naira had been looted from the police pension fund. And this happened right in the office of the Head of the Civil Service of the Federation. Worse still, Abdulrasheed Maina, the man appointed to cleanse the Augean stables it turned out only came to help himself.

The Minister of Power must stay his hands where pension funds are concerned. The gut wrenching and mind boggling sums bandied around in corruption cases these days does not help the Ministers cause. Good a thing the Minister alluded to the fact that “pension fund is a secure fund so you cannot play around with people’s retirement money, so it is very important that everyone understands that the plan is not to just take the money and invest in projects that are risky”.

Unfortunately however, the problem is that this particular venture of the Minister’s is very risky, there is no guarantee that the next government will not cancel the power projects and that some contractor or civil servant will not make away with the contract sum. Imagine if the N 5.2 Billion Naira over which Elumelu was arraigned and has now been cleared of any wrongdoing were pension fund? If the project were risk free why is General Electric only willing to invest 10/15 per cent in equity and will the Minister please tell us who the genuine private sector businessmen are who ‘will bring the balance’ in the circumstances.

The Minister and indeed the Federal government must not be allowed to play around with people’s retirement money. The National Pension Commission cannot allow the Minister a sniff of the pension funds for now. Let the power plants be built first and the Commission can then consider investing whatever fraction of the funds there is that will not endanger the scheme. The Commission must realize that the objective of safety and security of the funds override that of investment and other ancillary/incidental objectives for it is only when workers retirement benefits are due and there are enough pension funds in the scheme to match them that we can really say the 2004 Act and the scheme established thereunder has succeeded.

Investments such as the Minister is canvassing can wipe out the pension fund and endanger our new and celebrated pension scheme which as it were is still not on sure footed ground yet. The political and economic risks involved in Nigeria’s power projects and sector reform at this stage in history are too onerous for us to wager in pension fund into the bargain just yet.

Stephen O. Obajaja Esq. a Partner at the Lagos Law Firm of Fountain Court Partners is the Secretary General, Pension Lawyers Association of Nigeria (PLAN).

STEPHEN O. OBAJAJA

Fountain Court Partners

Block 36B, LSPDC Estate

Ogudu Road

Ojota – Lagos.

08052066172.