Reps C’ttee faults NBET on $33m Azura Power Plant contract


By Aluta News

Aug 19, 2022

The House of Representatives Committee on Finance has frowned on some treaties signed by Nigerian Bulk Electricity Trading (NBET) with some investors on power generation in the country.

The Chairman of the committee, Rep. James Faleke (APC-Lagos State), at a public hearing in Abuja on Friday, expressed concern that Nigerians were not getting value for the monies paid by the government.

The lawmaker said that Nigeria was in a situation where there was low revenue and high financial commitments and that some of the agreements were bound by law,making it difficult for the country to pull out.

Faleke frowned on the `Take-or-Pay’ contract signed with Azura Power Plant, saying that Nigeria paid $33 million monthly; yet Nigerians do not get value in terms of power consumption.

According to him, NBET signed the contract without Federal Executive Council (FEC) approval and against the advice of the Minister of Justice.

“We are interested to know if the officers in charge of these agencies who sign these contracts on behalf of Nigerians, took the necessary things into consideration.

“The power sector has been unable to meet the demands of Nigerians, we have heard of all types of bailouts that the CBN had made without any changes in the power Nigerians receive.

“There are two `Take-or-Pay’ agreements that we hear exist in the power sector.

“As we understand it, it means a government agency here signed an agreement with an investor for a fixed amount of commodity; gas for power companies or power to supply to Nigerians.

“In very simple terms, what this means is that, whether the amount the agency signs to take is taken or not, the agency still pays that investor for the fixed amount signed for.

“If it is gas, if the companies did not take the gas as provided, the government agency pays for it as though the government agency took the contracted quantity.

“If it is power, whether the investor supplies or not, the government agency pays the investor for the full amount it signed for in that agreement,’’ he said.

Faleke said that if an investor wanted to invest in power, he must have carried out his own survey to be sure that consumers were available to consume his power as it was pure business.

He said that there was no need to bear the risk of buying the power from investors and then selling it to consumers.

“We provided support. We are still where we are today. We have millions of Nigerians out of jobs, out of school but no job. We have no power to provide jobs.

“That is why I asked you, are you satisfied with the value for money, when we have no power for industries to be established? Why are we paying such money?

“My expectation would be that you have provided power for Ariara market, and businesses are booming. Or an industrial area in a particular state and industries are booming, but the power is not there,” he said.

The chairman ruled that the NBET should furnish the committee with details of all agreements signed and the proof of payment made by the agency.

He also ruled that the Transmission Company of Nigeria (TCN) should furnish the committee with details of the volume of electricity transmitted from the Azure Power Plant.

Faleke ruled that a link should be made available on MBET’s website to house all the documents and agreements entered into, that will be presented at the hearing by agencies to properly inform Nigerians.

Earlier, the Managing Director of MBET, Mr Emeka Eweluka, explained that in the `Take-or-Pay’ agreement, the investor took the entire risk of making a multi-million dollar investment in the country knowing that the investment could become stranded.

He said that for the investor to protect the fixed investment made and that could not be carried out of the country, an assurance that the investor would build a power plant while the government would sort transmission needed.

According to him,when power produced by the investor, whether it is taken and utilised by Nigerians or not, the government pays for the power generated in line with the contracts.

<span class=”s1″He said Nigeria had signed no fewer than 25 power-related contracts one of which is the `Take-or-Pay’ agreement with the Azura Power Plant, in which about 30 million dollars is paid monthly by Nigeria for power.

He said that the Azura agreement was signed in 2014, revisited in 2015 and 2017 and became operational in 2018 saying that it had a lifespan of 20 years.

He said that MBET did not require FEC approval to enter into such a contract, irrespective of the N2.5 million approval limit for the office of the managing director.

Ewaluka explained that due diligence was done and the opinion of the Attorney-General of the Federation was sought before the contract was signed.

He acknowledged that the arbitration for some of the contracts was domiciled abroad and that the World Bank was the guarantor of the agreements under the auspices of the Minister of Finance.