We’re Not Liable To Pay $1.2bn For Breach Of Azura-Edo IPP – FG

The Federal Government has said that there is no binding documents signed from 2013 to 2015 which stated that Nigeria would be liable to pay $1.2bn if it breaches the Azura-Edo Independent Power Plant contract.

The Special Adviser to the President on Infrastructure, Ahmed Zakari, said this in a statement, titled, ‘Partial risk guarantee not an issue in Azura-Edo IPP contract, says Presidency’

The Azura-Edo IPP is a 461MW power plant owned by a group of investors led by Actis and includes the Edo State government as part of the owners.

According to reports, the plant supplies over eight per cent of the power on Nigeria’s National Grid.

The Chairman of the Senate Committee on Power, Gabriel Suswan, had last week decried the monthly payment of $30m by the Federal Government for power

Consequently the Senate decided to call for expert review of the agreement Azura- Edo IPP contract.

The contract however has a Take or Pay clause, which is currently causing controversy.

Based on the clause, the government will pay for the energy produced by the plant, whether it uses it or not.

The Presidential Adviser in the statement said, “Clearly, the controversy as to who signed the agreements has no real basis, if indeed the only quest is for the plain truth.

“Another curious mischief in this controversy is the assertion that Nigeria will become liable in the sum of $1.2bn if it defaults on the Azura contract.

“Nowhere in any of the documents signed from 2013 to 2015 is any such figure mentioned.

“The only possible payout indicated in any of the agreements is in case the put and call option is activated.

“In that event, the cost of the plant would be worked out using a formula and become due for payment, but at least Nigeria will get in return a functional 461MW plant.”

Zakari added, “Since the Buhari government had chosen not to repudiate the deal, it went ahead to issue the required legal opinion and signed the World Bank guarantees that had been initiated in April 2014. In fact the main Power Purchase Agreement was signed in 2013.”
 

FG added that repudiating the contract would have  definitely affected the country’s credit rating and credibility as an investment destination.

The statement said, “Some of the most reputable international banks and investors that were involved in the project include Development Finance Institutions of the US, UK, France, Germany, the Netherlands and Sweden.”

He further noted that the country has problems in its power sector that the Government is actively working towards addressing.