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Azura Power deal: Contingent asset, liability for us – Presidency says
THE Presidency has clarified that the Azura-Edo Independent Power Project (IPP) is a pioneering deal that stands both as contingent liability and asset for Nigeria, debunking the claim that the country is liable to lose $1.2 billion for the widely-speculated botched deal.
The presidency made this disclosure in a recent press release signed by Ahmed Rufa’i Zakari, special adviser to the president on infrastructure, in which, it stated that the Pull Call Option Agreement (PCOA) between the country and Azura, a power generation company and operator of IPPs across Africa, guarantees Nigeria purchases the asset upon default or termination of the contract.
The Azura power deal birthed the Azura-Edo Power Station, a natural gas-powered electricity generation plant with a 461 megawatts generation capacity.
The presidency in its statement further clarified that the Azura deal is not another Process and Industrial Developments Limited (P&ID) case.
In 2010, P&ID entered into a 20-year agreement with the federal government of Nigeria to build a gas processing plant. However, the Nigerian government failed to meet its commitments and for defaulting, a United Kingdom (UK) court ruled that the country’s state-owned assets could be seized if the country refused to settle its fine of $9.6 billion.
In Azura’s case, the presidency said the deal which was signed in 2013 by the previous administration was only guaranteed in 2015 by President Muhammadu Buhari.
On August 21, 2015, the Federal Government signed partial risk guarantees (PRGs) with the World Bank to provide backing for the Azura-Edo Power Plant.
It further disclosed that repudiating the contracts which already had a valid and binding agreement between the Federal Government and Azura-Edo would have resulted in another P&ID scenario.
While the presidency appears to have dodged a bullet by signing the deal, Nigeria is still obligated to pay $30 million dollars monthly to Azura, whether or not power is evacuated from the generation plant.
A reality that had sparked a demand for cancellation of the deal by Ovie Omo-Agege, Deputy Senate President.
Omo-Agege, while speaking on the floor of the Senate on July 23, had submitted that the commitment to Azura had placed enormous strain on the country’s resources, demanding that the deal be terminated.
The Aura-Edo Power is privately-owned though responsible for generating eight percent of the power on Nigeria’s National Grid, according to the presidency.