NIGERIA is set to lose $1.2 billion if the Federal Government rescinds the Pull Call Option Agreement (PCOA), a power agreement deal, it signed in 2015 with Azura.
Azura is a power generation company and operator of Independent Power Plants (IPPs) across Africa.
The present administration of President Muhammadu Buhari had in 2015 signed a deal with Azura to secure a $237 million loan to finance its 450MW project in Edo State.
The deal birthed the Azura-Edo Power Station, a natural gas powered electricity generation plant.
However, the threat of losing the country’s resources follows the Senate’s recent proposal to review the power agreement which has obligated Nigeria to pay Azura $30 million monthly whether or not power is evacuated from the generation company.
Despite the power station having operational capacity to generate 461 megawatts, the Transmission Company of Nigeria (TCN) is unable to evacuate the electric power generated, causing inadequacy to wheel it to distribution companies (DisCos) and thus further compounding the problem already crumbling the Nigerian power sector.
On Thursday,the Cable reports that Ovie Omo-Agege, Deputy Senate President, called for outright cancellation of the agreements between Nigeria and Azura Power and Accugas, which he submitted has placed enormous strain on the country’s resources.
Nigeria is also committed to paying Accugas $10 million monthly with or without power supply to the Calabar GenCo, owned by Niger Delta Power Holding Company (NDPHC) Ltd.
“We cannot review that agreement, we will need to cancel that agreement outright. We have another P&ID in our hands clearly,” Omo-Agege said, following deliberations on the report of the Senate Committee on Power on addressing the country’s power sector issues.
According to the deal, if Nigerian Government fails to meet these monthly obligations, the World Bank partial risk guarantee (PRG) of up to $1.2 billion can be called by Azura’s creditors.
Alternatively, if Nigeria chooses to end the deal, a payment of $1.2 billion fine would be charged.
Describing the magnitude of the fix, Gabriel Suswam, Chairman of the Committee on Power said that the agreement signed between the country and Azura was done without ‘due diligence’, adding that competent lawyers be given the duty to make assessments and recommendations.
Also in his report, Suswam suggested that since the privatised power sector is currently insolvent, the government should use its 40 per cent share to get it solvent by providing meters for the DISCOs to distribute to electricity consumers, Premium Times reports.
Meanwhile, Nigeria recorded a total debt stock of N28.63 trillion in the first quarter of 2020.
Despite the drastic increase in foreign debt, Zainab Ahmed, Minister of Finance, had earlier claimed that Nigeria does not have a debt problem but a problem of revenue and that Nigeria’s debt is not high.