Monrovia – The Common Auditing Fee (GAC) has uncovered severe governance and administration lapses on the Liberia Electrical energy Company (LEC), elevating questions on oversight, operational planning, and main agreements with key energy tasks.
By Gerald C. Koinyeneh, [email protected]
The audits cowl fiscal years ending June 30, 2018, 2019, 2020, 2021, the Particular Price range 12 months (SBY) 2021, and monetary years 2022 and 2023.
In response to the GAC, the LEC Board of Administrators did not reveal efficient oversight, opposite to Regulation M.12 of the Public Monetary Administration Act (PFM Act) of 2009, as amended in 2019, which mandates boards of state-owned enterprises to make sure the environment friendly administration of monetary sources and correct governance buildings.
The audit additionally cited a breach of OECD company governance ideas, which require boards to function with clear management, accountability, and outlined procedures.
No Proof of Board Conferences or By-Legal guidelines
Auditors reported that between July 2018 and December 2021, there was no proof of any board conferences being held. Minutes of conferences weren’t offered, and there was no proof of established committees, comparable to audit, danger, nomination, or remuneration committees — buildings which might be important to transparency and oversight.
The report warned that the absence of board by-laws and common conferences severely undermined strategic oversight, permitting administration to function with out checks and balances.
“Failure to develop a by-law that can information the actions of the Board could result in arbitrary choices by members of the Board,” the report cautioned.
GAC Recommends Pressing Governance Reforms
The Auditor Common really useful that LEC administration instantly collaborate with related authorities to develop, approve, and operationalize board by-laws and governance insurance policies. These ought to clearly outline the board’s composition, roles, duties, assembly schedules, and oversight mechanisms.
The GAC additional suggested that minutes of all board and committee conferences be correctly documented, signed, and archived for future reference and accountability.
In response, LEC administration knowledgeable the GAC {that a} Governance Evaluate Committee had been established to draft the company’s structure and by-laws. The administration additionally submitted a draft copy of the governance code for overview.
The Auditor Common acknowledged the administration’s dedication however stated the GAC will “observe up on the implementation of the suggestions throughout subsequent audits.”
LEC Lacked Authorised Strategic and Operational Plans
One other main lapse highlighted within the audit was the absence of permitted strategic and operational plans to information LEC’s operations in the course of the years beneath overview.
In response to Regulation D.19 of the PFM Act, every authorities entity is required to organize a strategic plan outlining its mission, targets, and measurable outputs, whereas Regulation D.22 mandates that such plans be reviewed and aligned with nationwide fiscal insurance policies.
Nevertheless, the GAC noticed that LEC “operated the entity with out proof of permitted strategic and operational plans,” elevating issues that the company lacked clear course for reaching short-, medium-, and long-term targets.
The fee highlighted that this hole in governance may forestall the company from figuring out and implementing short-, medium-, and long-term targets, thereby impairing its general efficiency and achievement of organizational aims.
“In the course of the audit, we noticed that Administration operated the entity with out proof of permitted strategic and operational plans for the intervals beneath audit. Danger: Brief, medium and long-term targets of the entity is probably not recognized, pursued and carried out, thereby impairing the achievement of the group’s aims,” the GAC report famous.
The report warned that this deficiency may lead to arbitrary decision-making and impair the entity’s capacity to fulfill its aims.
Administration Cites Expired Enterprise Plan
In its protection, LEC administration stated it beforehand operated beneath a five-year marketing strategy (2019–2023), which has since expired. A brand new strategic plan masking 2025–2030 has reportedly been drafted and submitted to the Board for approval.
“LEC had a 5-year marketing strategy from 2019–2023, which expired. A brand new (strategic) plan has been ready and submitted to the Board of Administrators masking the interval 2025 to 2030… Nevertheless, we observe the advice concerning the operational plan,” LEC administration said.
The Auditor Common, nonetheless, maintained that no proof of board approval was offered for both the expired marketing strategy or the brand new draft.
“We noticed no proof that the five-year marketing strategy was segmented into operational plans on an annual foundation,” the GAC famous, sustaining its findings.
The fee stated it will proceed monitoring the LEC’s compliance with its suggestions to make sure improved company governance, strategic planning, and accountability in future audits.
The audit report additionally uncovered monetary and operational irregularities within the LEC agreements with non-public electrical energy distributors—LIBENERGY, JEP, and LIBANGO—elevating recent issues about transparency and accountability within the administration of the nation’s power sector.
In response to the GAC, it discovered obvious compliance failures and weak oversight within the electrical energy provide and distribution preparations in Maryland, River Gee, Grand Gedeh, Nimba, and Bong counties, in addition to with the LIBANGO Tremendous Vendor Contract.
LIBENERGY Settlement
The GAC noticed that no proof existed of test and income meters at enter factors for measuring electrical energy provided and bought within the Maryland, River Gee, and Grand Gedeh distribution areas. The auditors additionally discovered no file of a set property register, no month-to-month billing and assortment stories, and no documentation of power provided by Côte d’Ivoire’s Compagnie Ivoirienne d’Électricité (CIE) because the settlement’s inception in March 2023.
The report additional revealed that there was no proof to point out that LIBENERGY, the distributor, remitted any authorities income share to the LEC and that upkeep of energy strains was poor, with overgrown bushes and unkept transmission corridors posing dangers to service continuity.
The GAC concluded that such lapses expose the sector to “underreporting and assortment gaps in income,” potential mismanagement of presidency property, and breaches of contractual phrases.
“Within the absence of installations of the required infrastructure, electrical energy acquired and subsequently distributed is probably not comprehensively decided,” the audit famous. “This will likely result in underreporting and assortment of supply income from electrical energy distribution.”
Suggestions
The GAC urged LEC administration to justify its failure to implement the phrases of the settlement and to account for all income collected by LIBENERGY however not remitted. It additional really useful that the company instantly set up test and income meters in any respect enter factors, develop and operationalize a set property register; require month-to-month billing and assortment stories from LIBENERGY; guarantee periodic inspection of energy strains and tools; and acquire the federal government’s share of income on a month-to-month foundation.
In its response to the GAC, LEC’s administration stated it had taken steps to strengthen oversight of the LIBENERGY settlement, together with the appointment of a Contracts Supervisor to coordinate contract monitoring and the institution of a Rural Electrification Unit to enhance these efforts.
“An engagement framework was developed and work started in earnest,” the LEC said. “At the moment, a Rural Electrification Unit is absolutely practical, complementing the contracts supervisor in making certain that each one situations specified within the contract are adhered to.” The LEC additionally claimed it had offered supporting documentation to reveal its progress towards enhancing contract compliance and monitoring.
Nevertheless, the Auditor Common’s Workplace rejected LEC’s rationalization, saying the administration’s assertions “didn’t adequately tackle the problems raised.”
The GAC maintained that LEC had failed to offer any substantive justification for not implementing the phrases of the LIBENERGY settlement or for not accounting for income collected however not remitted to the company.
This discovering comes as Liberia continues to battle with settling electrical energy payments owed to Côte d’Ivoire—the primary provider of energy to the southeastern area by CIE—which has, at instances, threatened to disconnect provide over unpaid money owed.
JEP Settlement: Defective Metering, Weak Oversight
In Bong and Nimba counties, the GAC reported comparable failings beneath the JEP Electrical energy Provide Settlement. JEP is owned by famend businessman Floyd Toma. The audit discovered that the test meter on the Ivorian enter level had been broken for about three years, leaving no system to precisely measure power imports and gross sales.
In response to the GAC, there was no proof that test and income meters had been put in on the enter factors to measure electrical energy provide, distribution, and billing. The audit additional revealed that the test meter on the Ivory Coast enter level had been broken for about three years, making it inconceivable to confirm the precise quantity of electrical energy imported and consumed in Liberia.
The auditors quoted JEP administration as saying that LEC had been unable to put in a practical test meter on the enter level in Ivory Coast because the begin of the settlement.
Owned and operated by Tomah Seh Floyd, Sr., Jungle Power Energy (JEP) was established in 2017 and acquired its working license from the Liberia Electrical energy Regulatory Fee (LERC) in 2021. The corporate holds a 25-year contract with the Liberia Electrical energy Company (LEC) to produce electrical energy to rural communities, together with these alongside the Liberia–Guinea border.
JEP operates beneath a Energy Buy Settlement (PPA) between the LEC and Côte d’Ivoire’s Compagnie Ivoirienne d’Électricité (CIE), which supplies 41 megawatts of energy to JEP. The corporate sells the electrical energy, with income shared amongst JEP, LEC, and CIE.
No Monetary or Exercise Experiences
The audit additionally discovered no file of periodic monetary or operational stories submitted by JEP to LEC — a key requirement to find out the Authorities of Liberia’s share of income, handle mounted property, and consider the standard of energy delivered to finish customers.
The GAC additional noticed that LEC did not conduct inspections of JEP’s operations, together with distribution, upkeep, and set up actions, and had not reviewed the corporate’s funds, accounts, or info methods.
As well as, there was no proof that LEC ready month-to-month statements of liabilities detailing quantities due from JEP as required beneath the settlement.
Dangers and Implications
The GAC warned that the absence of meters, information, and oversight mechanisms exposes the ability sector to severe monetary and operational dangers.
The audit additional warned that weak recordkeeping and lack of inspections may lead to mismanagement, income losses, and potential contract breaches, undermining the federal government’s capacity to make sure truthful returns from third-party operators.
To handle these lapses, the GAC known as on LEC administration to justify its failure to implement the phrases of the settlement and to take pressing corrective actions, together with putting in practical test and income meters at enter factors; making certain JEP prepares and submits month-to-month billing and assortment stories; implementing well timed cost of the federal government’s income share; conducting periodic inspections of JEP’s operations; and requiring common monetary and exercise stories to trace efficiency and revenues.
LEC administration, in its response, claimed it had taken steps to strengthen contract monitoring. It stated a Contracts Supervisor had been appointed to coordinate the monitoring of franchise agreements, and {that a} Rural Electrification Unit had been established to enhance this effort.
“An engagement framework was developed and work started in earnest,” LEC said. “At the moment, a Rural Electrification (RE) Unit is absolutely practical, complementing the contracts supervisor in making certain that each one situations specified within the contract are adhered to.”
Regardless of these claims, the GAC stated LEC’s response didn’t adequately tackle the core points recognized in the course of the audit.
The GAC maintained its findings and proposals, emphasizing that it’s going to observe up on their implementation in subsequent audits.
LIBANGO: No Document of Tokens Offered, Poor Oversight…
The GAC uncovered main lapses and irregularities within the administration of the LIBANGO Tremendous Vendor Contracts — a key element of the Liberia Electrical energy Company’s (LEC) pay as you go electrical energy system — citing lacking information, weak oversight, and unverified income figures from token gross sales.
In response to the GAC, there was “no proof of whole tokens bought by LEC to LIBANGO on an annual foundation” and no file of “tokens subsequently bought to finish customers by LIBANGO.”
No Document of Token Gross sales or Fee Reconciliation
The auditors additionally discovered no periodic gross sales stories from LEC to confirm whole revenues generated from token gross sales or to substantiate the commissions paid to LIBANGO. As well as, there was no proof that LEC performed the required biennial compliance assessments of LIBANGO, as stipulated within the Tremendous Vendor Settlement.
Cyberattack and Insurance coverage Oversight
The GAC additionally famous that LEC did not conduct or present any unbiased evaluation following a significant disruption in August 2023, reportedly linked to a cyberattack on LIBANGO’s methods. The report discovered no proof of an inner overview by LEC on the integrity and safety of LIBANGO’s IT infrastructure throughout and after the incident.
As well as, the auditors noticed that LEC didn’t assess or confirm insurance coverage protection for LIBANGO’s operations in the course of the disruption interval, as required beneath Article 20 (“Insurance coverage”) of the contract, which mandates that LIBANGO preserve insurance coverage on its property and operations and supply annual proof to LEC.
The GAC warned that the shortage of correct documentation and reconciliation creates severe dangers of income loss and monetary misstatement.
The audit additional cautioned that with out common evaluations of third-party contracts and companies, LEC dangers contract breaches and income shortfalls, doubtlessly undermining the federal government’s monetary pursuits within the electrical energy sector.
GAC Suggestions
The GAC really useful that LEC submit a complete annual report detailing the variety of tokens bought and related commissions, and that it strengthen its monetary administration methods to make sure full accountability.
The GAC known as on LEC to hyperlink its Microsoft Dynamics accounting system with LIBANGO’s monetary administration platform for real-time monitoring and reconciliation of token gross sales and commissions; create a subsidiary ledger to file all tokens bought, re-sold, and related commissions, conduct periodic reconciliations amongst tokens generated, bought, and recorded in financial institution statements, perform a biennial overview of LIBANGO’s compliance with the Tremendous Vendor Settlement; and preserve documentation of all reconciliations and compliance evaluations for future audits.
LEC’s Response
In its response, LEC stated it had connected a complete report of gross sales to LIBANGO and corresponding commissions paid. The company defined that commissions had been calculated based mostly on deposits made by LIBANGO into LEC’s financial institution accounts.
“Deposits are made prematurely of receiving credit, and commissions are calculated on the deposits on the time of receipt,” LEC stated. “This has been the mode of operation since April 2019.”
Previous to that, commissions had been calculated at a set fee of three.14 U.S. cents per kilowatt-hour (kWh) bought, based mostly on a uniform tariff of US$0.35 per kWh, the administration added.
Nevertheless, the GAC stated LEC’s response failed to handle the core audit points, significantly the absence of information on the variety of tokens bought.
The GAC subsequently maintained its findings and proposals, emphasizing that it’s going to observe up on the implementation of corrective measures in future audits.
TRANSCO CLSG — Lacking Portfolio Paperwork, Undisclosed Returns…
For TRANSCO CLSG, the GAC audit revealed main governance and monetary irregularities surrounding the LEC funding within the regional energy transmission firm. The findings expose the absence of important funding documentation, lack of transparency on returns, and failure to confirm key monetary confirmations — points that auditors say may result in misstatement of monetary information and potential lack of public funds.
In response to the GAC, the Monetary Statements Audit of the LEC for fiscal years 2018/2019 by 2023, auditors found that no funding portfolio paperwork existed to element the character, period, or worth of LEC’s multimillion-dollar stake in TRANSCO CLSG.
Regardless of vital contributions made by the Authorities of Liberia by LEC — together with an extra funding of US$975,000 in FY 2018/2019, bringing the entire to US$2 million in subsequent years — auditors discovered no file of returns on the funding.
The GAC additional famous that affirmation letters despatched to TRANSCO CLSG in the course of the audit interval weren’t returned, depriving the audit staff of important proof to confirm the investments’ existence and worth.
Lacking Paperwork, Undisclosed Goal
In its report, the GAC stated there was “no proof of the funding portfolio paperwork comprehensively cataloguing the character of the funding, the interval of the funding, the preliminary and subsequent funding necessities, the character of and returns on funding.”
Moreover, the auditors highlighted that LEC administration failed to elucidate or disclose the aim of the extra US$975,000 funding made by the federal government in the course of the 2018/2019 fiscal yr.
This omission, based on the GAC, represents a severe breach of Worldwide Monetary Reporting Requirements (IFRS 9), which requires investments in fairness devices to be acknowledged and disclosed at truthful worth, together with beneficial properties or losses recorded in different complete revenue.
Danger to Transparency and Public Funds
The GAC warned that with out portfolio documentation, the completeness and valuation of the funding couldn’t be assured, rising the chance of misappropriation and misstated monetary statements.
“Non-disclosure of data relative to the character and goal of the funding could impair truthful presentation and full disclosure of the monetary statements,” the report cautioned.
The auditors additionally raised issues that the shortage of return on funding and weak oversight mechanisms may result in the non-receipt of anticipated advantages from the federal government’s contributions to the CLSG regional power undertaking.
GAC Requires Motion
The GAC has really useful that LEC administration submit an entire copy of the TRANSCO CLSG funding portfolio doc to the Auditor Common’s Workplace, modify and disclose, within the monetary statements, full particulars on the funding’s nature, period, and returns, conduct periodic evaluations of funding portfolios to make sure compliance with phrases and well timed receipt of returns.
Administration’s Response and GAC Rebuttal
In its protection, LEC administration acknowledged the suggestions and claimed to have offered documentation classifying the GoL’s contribution to TRANSCO CLSG as an “Obtainable-for-Sale Funding,” citing disclosures on web page 48 of the 2020 TRANSCO CLSG Monetary Statements.
Nevertheless, the GAC rejected the reason, insisting that administration’s assertions “didn’t adequately tackle the problems raised.”
The Auditor Common maintained that the monetary statements weren’t adjusted to incorporate key funding particulars and that the requested portfolio doc was nonetheless lacking, leaving the auditors unable to validate the completeness and accuracy of LEC’s reported investments.
“We preserve our findings and proposals,” the report concluded, including that the Fee will observe up throughout subsequent audits.
A Sector in Disaster
The audit’s findings underscore a deeper disaster of governance inside Liberia’s power sector — one which threatens not solely monetary accountability but in addition the reliability of energy provide nationwide.
With unpaid electrical energy money owed to Côte d’Ivoire mounting, recurring system failures, and opaque contracts with non-public operators, Liberia’s electrical energy future seems each expensive and unsure.
The GAC’s report, spanning almost six years of audits, makes one conclusion unmistakable: the LEC has been working on autopilot — with out governance, with out accountability, and and not using a clear plan to energy the nation ahead.
