EXCLUSIVE: Millwater promoters at war over juicy electricity deal with NDPHC

Promoters of Millwater Limited, an energy solutions service firm, are embroiled in a legal fight over juicy electricity deals with the Niger Delta Power Holding Company (NDPHC).

In May 2023, TheCable had reported a controversial power purchase agreement (PPA) between the NDPHC and Eko Electricity Distribution Plc (EKEDP).

Under the agreement signed in August 2022, the distribution company (DisCo) enjoyed a 15 per cent discount every month on a guaranteed 100MW of power supplied by either Omotosho, if it had gas, or any other plant owned by NDPHC.

The power was priced at N24.5 per kWh but the discount would not be applied if DisCo missed the payment deadline by even 24 hours, according to the agreement.

A third company called Millwater Limited — appointed as contract administrator by EKEDP — made the payments to NDPHC.

This raised eyebrows in the industry about why another company was needed to manage the transaction, especially as the discount was retained by the consultant.

NDPHC also said it had no direct dealings with Millwater because it was an agent of EKEDP and the DisCo acted legally by appointing the company as an administrator.

However, fresh facts have emerged on the details of the deal that have eventually torn the promoters apart. They are currently in court over allegations of “identity theft” and “breach of trust”.

The case is between Millwater Limited (1st plaintiff), Condorcet Limited (2nd plaintiff) and Veresh Limited (3rd plaintiff) and Millwater Agbara Power Limited (1st defendant), Enerix One Limited (2nd defendant), Vios Energy Solutions Limited (3rd defendant), Electric Utilities Nigeria Limited (4th defendant), Niger Delta Power Holding Co. Plc (5th defendant), and the registrar-general, Corporate Affairs Commission (6th defendant).

THE N19 BILLION ‘PHONEY’ POWER DEAL

In a suit filed at a federal high court in Lagos, Millwater accused one of its partners and the major promoter of the deal, Sola Arifiyan, a lawyer, of registering a new firm similar to the company’s name to clinch a new deal with their customers.

The second and third plaintiffs said Arifiyan approached them as a representative of NDPHC to form a partnership to clinch a business deal with EKEDP.

Thereafter, the partners agreed to use Millwater as a special-purpose vehicle (SPV) to handle the transaction.

According to the court documents, an agreement was reached between the parties for a restructure of the shareholding and directorship structure of Millwater Limited. The second and third plaintiffs had 70 percent shares of the SPV company, which included the right to appoint the chairman of the board. The defendants, led by Arifiyan, took 30 percent of the shares.

In addition, the deal generated a turnover of N18.8 billion for Millwater, out of which N16.9 billion was paid to NDPHC and N1.9 billion was retained by the SPV.

The second to fourth defendants were said to have benefited approximately N248 million during the one year of the deal, while the 2nd and 3rd plaintiffs got N746 million.

“The events that culminated in the institution of this suit against the defendants, particularly the 1st-5th defendants, commenced sometime in 2019/2020, when one Mr Sola Arifiyan, a lawyer and senior partner in Oak Legal and also the principal promoter of Enerix One Limited; the 2nd defendant herein, Vios Energy Solutions Limited, the 3rd defendant herein, and Electric Utilities Nigeria Limited; the 4th defendant in this suit, approached the representatives of the 2nd and 3rd plaintiffs, to join the 2nd-4th defendants in proposing a business deal to Eko Electricity Distribution Distribution Plc (EKEDP),” the court document reads.

“In the business proposal made to the representatives of the 2nd & 3rd plaintiffs by Mr Sola Arifiyan; on behalf of the 2nd-4th defendants, informed the 2nd & 3rd plaintiffs, that the 2nd-4th defendants, particularly their promoter, Mr Sola Arifiyan, were representatives of the 5th defendant, and Niger Delta Power Holding Company (NDPHC), a federal government power generation holding company that manages the electricity generated through gas thermal plants. It was stated by the 2nd-4th defendants that the said NDPHC was desirous of selling the spare electricity generated to EKEDP, with a view to expanding its (EKEDP’s) capacity to distribute more electricity to its customers, within its licensed geographical area, particularly the Agbara, Lekki and Ibeju areas.

“The 2nd & 3rd plaintiffs, whose representatives were approached by the said Mr Sola Arifiyan, had the capacity to broker a working business relationship with EKEDP, hence the approach made to the 2nd & 3rd plaintiffs by Mr Sola Arifiyan, as a representative of the 2nd-4th defendants, for a business relationship, for the alignment of the capacities of the 2nd & 3rd plaintiffs, with that of the 2nd-4th defendants, through the the creation of a special purpose vehicle company to be formed by the parties, that would then coordinate the proposed business deal that would result in NDPHC selling the spare electricity it generated to EKEDP, in order to improve electricity supply to EKEDP’s customers within its licensed geographical area, particularly the Agbara, Lekki and Ibeju areas.

“Pursuant to discussions held between representatives of the 2nd & 3rd plaintiffs, with that of the 2nd-4th defendants, a company known as Millwater Limited, the 1st defendant herein, that was already in existence, was agreed by the parties, to be used as the special purpose vehicle company, that would carry out the mutual business arrangement agreed by the parties as detailed above.”

The 15 percent discount was agreed to be shared between EKEDP (60 percent) and Millwater (40 percent).

WHEN THINGS FALL APART

Due to the floating of the naira by President Bola Tinubu-led administration, which led to the depreciation of the local currency, NDPHC increased its tariff as the company pays for gas for thermal plants in dollars.

EKEDP was unable to meet up with its newly increased invoice from the power supplied by NDPHC. To worsen the matter, the DisCo was restrained by the Nigerian Electricity Regulatory Commission (NERC) from passing the rising cost to its customers. Debts piled up. The business deal became unsustainable, and EKEDP suspended it in September 2023.

After the termination of the deal, the 2nd to 4th defendants, without informing other directors and shareholders of Millwater Limited, went to register and incorporate another company, Millwater Agbara Power Limited, which is similar to the name of the SPV.

The “clone company” was said to have approached the same customer (NDPHC), passing off as Millwater Limited.

The petitioners said the new company was incorporated on October 23, 2023, to deceive and create the impression to unsuspecting customers that it was the same as Millwater (incorporated in 2018) to retain their business and sideline the original company.

Millwater said it was totally isolated in the process.

The plaintiffs said their business has become grounded due to the “deliberate and malicious act” of the defendants.

The petitioners criticised the Corporate Affairs Commission (CAC) for failing to properly carry out its statutory function before incorporating a name similar to the company.

The petitioners are asking the court for an order directing 70% of the profit made by the “clone company” to them owing to the losses incurred from the “direct deceptive actions” of the defendants.

They are also asking for the sum of N10 million as general damages against the defendants.

“An order restraining the 5th defendant from further dealing with the 1st-4th defendants, how soever imagined with respect to any, and all matters covered by the Project Framework Agreement, particularly with respect to the supply and distribution of electricity in the Agbara, Lekki, and Ibeju Lekki areas of Lagos state, the subject matter of the Project Framework Agreement,” the document reads.

“That the 2nd-4th defendants, in furtherance of their use of the name of the 1st plaintiff, business reputation and goodwill, have proceeded to use the industry experience, goodwill and reputational business activities in the power sector of the 1st plaintiff, to make an application for the issuance of an Independent Electricity Distribution Network (IEDN) licence by the Nigerian Electricity Regulatory Commission (NERC), to the 1st defendant, for the purpose of allowing the 1st defendant to distribute electricity to the same customers that the 1st plaintiff had hitherto reached a business agreement with in furtherance of the understanding, principles and intent of the working relationship between the interest of the parties embedded in the 1st plaintiff company and EKEDP, which culminated in the access granted by EKEDP to the 1st plaintiff to conduct business activities with customers within EKEDP’s coverage area, to the mutual benefit of all concerned including the 2nd-4th defendants, who have now incorporated the 1st defendant to carry out business with the same customers.”

Millwater has asked the court to order the CAC to strike off Millwater Agbara from its register and for NDPHC to stop dealing with the “clone”.

TheCable understands that EKEDP/Millwater is still indebted to NDPHC for power supplied, yet the SPV company took 15 percent discount, which is against the PPA that says the discount only applies if the DisCo pays its invoice in full in 25 days.

EKEDP has also challenged the application by Millwater Agbara Power Limited, the “clone company”, for a licence to distribute electricity within the DisCo’s franchise area.