Nigeria's foremost Online Energy News Platform

Senate Calls for Review of Power Purchase Agreement with Azura

*Omo-Agege Calls for outright cancellation, describes PPA with Azura as “another P&ID in our hands

The Senate has called for a review of the Power Purchase Agreement (PPA) between the Federal Government and Azura Power Plant, stressing that the agreement was a drain on the nation’s resources.

This was recommended by the Deputy Senate President Ovie Omo-Agege while adopting the recommendations of the Senate Committee on Power on “Addressing Nigeria’s Power Problems.” The report was presented by Chairman of the Committee, Sen. Gabriel Suswam during plenary.

Omo-Agege who sought for outright cancellation of the agreements Nigeria has with Azura Power and Accugas said it have placed enormous strain on the country’s resources, adding that Nigeria’s agreement with Azura Power could be another P&ID case on the neck of the country.

In the Power Purchase Agreement Nigeria has with Azura, Nigeria is obligated to pay Azura $30 million monthly with or without power being taken from the generation company.

It was also discovered that to exit from the contract, Nigeria will have to pay $1.2 billion — enough to build a new 1,000mw plant.

Nigeria is also committed to paying Accugas $10 million monthly with or without gas supply to the Calabar GenCo, owned by Niger Delta Power Holding Company (NDPHC) Ltd, findings have revealed.

Speaking on the PPA with Azura, the Deputy Senate President said, “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 on Wednesday following a presentation by the power committee.

“With respect to the other agreements, if we are talking about review what we have identified so far is lack of capacity. We have the wrong set of people holding these assets, no review can get them out. Clearly, those agreements have to be cancelled because they don’t have capacity.”

The upper legislative chamber began seeking a way of out the agreements the federal government entered into after the report on the country’s power problems was presented for consideration by Gabriel Suswam, chairman of the committee on power.

Presenting the report, Suswam hinted that the agreement between the Federal Government and Azura power plant was signed between 2016 and 2017, noted that “government ordinarily shouldn’t have signed those agreements.  

“This is because what it means is that for instance Azura is a power plant that is supposed to generate 450 megawatts. What we signed is that we signed that even if we are unable to take that 450 megawatts we still pay full price for 450MW. “You call those agreements take or pay,” Suswam said.

The report by the Chairman of the Committee on Power also contained the recommendations for a revisit of the tariffs that had been set in the 2016 to 2018 Minor Review of the Multi Year Tarrif order (MYTO) 2015 and Minimum Remittance Order for the year 2019.

He said that was to clearly determine if N600 billion Payment Assurance Guarantee (PAG) being processed for disbursement would be sufficient to cover the tariff shortfalls that would arise if retail tariffs did not rise as envisaged.

“The gap between reality of Distribution Companies (Discos) and National Electricity Regulatory Commission (NERC) projections needed to be streamlined. ” This is on account of the fact that Ministries, Departments and Agencies (MDAs) including Federal, State and Local governments had not paid their legacy debts (2015-2018) or the current bills going forward in 2019.

Also speaking, the President of the Senate, Ahmad Lawan said “There should be an immediate removal of the increased custom duties of 35 per cent to allow Metre Asset Provider (MAP) clear meters stuck at the port.”  Lawan remarked that the report by the committee was so important.

“The power sector is the way for Nigeria to industrialise; in fact even to reduce the level of insecurity in the country by providing opportunities for wealth creation and jobs.

“We will continue to insist that the power sector performs better than what it is and this privatisation definitely has not been working for Nigeria and we need to look into it again,” Lawan said.