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$1.2bn Azura Power Project: Did Suswam’s Committee goof?

$1.2bn Azura Power Project: Did Suswam's Committee goof?

The nation’s polity has been heated up and awash with accusations and counter-accusations in recent times, as politicians, top government functionaries and whistle blowers have been embroiled in a face-off, blame trading, name-calling and even in some instances, smear campaign against each other, as to who should take responsibility for either failed contracts or mismanagement/ misappropriation of funds purportedly allocated for state projects running into billions of naira.

Drama ensued recently during the probe of the Niger Delta Development Commission, NDDC, when acting chairman of the Commission, Prof. Kerebradikumo Pondei fainted in controversial circumstances while answering questions on financial recklessness from the panel set up to.probe activities of the Commission. The saga between Minister of Niger Delta, Godswill Akpabio and former NDDC MD, Joy Nunieh, is another twist to the matter. All these have left a sour taste in the mouth, to say the least.

Only recently, as well, one Jackson Ude falsely claimed that embattled Economic and Financial Crimes Commission, EFCC, chairman, Ibrahim Magu, gave Vice President Osinbajo N4 billion. The now suspended EFCC chairman has since debunked the allegation, stating that it was a fabrication of falsehood and outright lies, and, as expected, Ude could not substantiate his claim.

Nigerians were, again, shocked when a serving Senator and former two-term governor of Benue State, Dr. Gabriel Suswam, alleged that of Vice President Yemi Osinbajo, SAN, and the Minister of Works and Housing, Mr Babatunde Fashola, signed the $1.2bn Azura power project agreement on behalf of the Federal Government.

Allegedly falsely linking VP Osinbajo and Fashola to the Azura power deal has sparked reactions from Nigerians, who wonder why some individuals derive pleasure from mischievous falsehoods and baseless allegations.

Suswam, who chairs the Senate Committee on Power, had argued that the deal signed wasn’t in the best interest of Nigeria, saying that pulling out $1.2 billion or any amount from Nigeria’s foreign reserves was unhealthy for the nation’s growth. He described the Share Purchase Agreement (SPA), between the Federal Government and Azura Power Plant as a drain on the nation’s resources. He argued that Vice President Osinbajo and Fashola, signed the controversial agreement, which he claimed, was detrimental to the nation’s resources.

Following his skewed submission, the Senate had called for a review of the SPA after its committee on power made the recommendation.

Barely a week after the former governor’s misguided recommendation, many Nigerians have described the lawmaker’s allegations as a big shame, saying that his understanding of the Azura power deal falls short of proper research and lacks substance.

A businessman, Razak Akin, stated, “I’m surprised that Suswam or his Committee did not carry out due diligence and research on the Azura power deal. If they did, they would have known that the deal was signed under the former administration. Suswam’s recommendations is not fact-based. Hence, it should be regarded as unsubstantiated and probably mischievous.”

Just like Akin, many Nigerians have described the linking of Osinbajo and Fashola to a deal that was signed before the Buhari administration came into office in 2015, as mischievous and a public embarrassment to Senator Suswam.

Also commenting, a Nigerian on Twitter, Ekiti Ketan stated the false conclusions on Azura was targeted at the VP. He tweeted, “The Power Purchase Agreement was signed in 2013 by GEJ led Admin with Azura…They are trying hard to smear Osinbajo using different channels, from fake blogs to newspapers. They will always fail.”

Putting the record straight, an official in the Presidency, who pleaded anonymity, said contrary to the wrongful accusation, the deal was signed during President Goodluck Jonathan’s administration and therefore couldn’t have involved Vice President Osinbajo and Fashola.

The source said: ““With the agreement having been signed before the inception of this administration, the questions one may ask are who profits from claiming that it was done by Osinbajo and Fashola? What is the motive behind this mischievous falsehood? And in their desperation to attack these gentlemen, why are they willing to rubbish a company that produces nearly a tenth of our nation’s power as things stand today?

“Neither Vice President Osinbajo nor Mr. Fashola signed any such agreement. They were not even in office when the Azura agreements were signed. Records show that the Power Purchase Agreement or PPA for the transaction in question was signed on April 22, 2013, during the tenure of the then President Goodluck Jonathan.”

The source explained that there was a Put/Call Agreement signed with Azura on October 22, 2014, whereby Nigeria reserved the option to buy over the assets or the company to give up the assets and seek payment if Azura defaults.

According to the official, following the PPA signed on April 22, 2013, the Put/Call Agreement was also signed by the Jonathan administration with the power plant in October 2014.

Explaining why the nation’s foreign reserve would not be affected by the deal, he said: “No investor can just pull out $1.2 billion or any amount from Nigeria’s foreign reserves like that. Yes, there was a Put/Call Agreement signed with Azura on October 22, 2014, whereby Nigeria reserved the option to buy over the assets or the company to give up the assets and seek payment if Azura defaults.”

The source also described as mischievous claims that Azura is draining the country’s financial resources, saying that such claims are mere attempts to blackmail the company, which has been generating 10 per cent of the country’s power supply.

According to the source, when the agreement was signed in 2013, it was a good deal for Nigeria, which he said was desperate for stable power supply and simultaneously seeking the establishment of power plants.

Also speaking on how the transaction became complicated later, to the extent of generating the current controversy, he said: “I will imagine that no one quite envisaged the current situation where electricity generating companies are kept idle because when power is produced, the transmission company may not be able to wheel the electricity fully for distribution to customers.

“It is no longer news that even when the electric power is made available for distribution, the distribution companies (Discos) at times reject it because they have failed to improve their networks and to meter their customers.

“The fear of the Discos is that they might be unable to deliver the power to customers or to collect tariffs. On their part, customers are reticent to pay because service is appalling and most of them feel cheated by estimated billing.”

While dismissing the pull-out call by the Senate, the source said: “Over 80 per cent of Azura’s power is currently being transmitted and distributed, while the rest is being used by the Transmission Company of Nigeria to stabilise the national grid.”

There were more knocks for Suswam and the Senate Committee recommendations that was quoted in some sections of the media.

For instance, the management of Azura Power West Africa Ltd – the plant’s parent company, clarified that the contract for the Azura power project signed with the Federal Government between the periods of 2013 and 2014 was binding and in force, at the time the Power Purchase Agreement (PPA) was signed in April 2013.

In the same vein, the Managing Director of Azura Power West Africa, Mr. Edu Okeke, speaking during an interview on a TV station, explained the signing of the Power Purchase Agreement (PPA) in 2013 which was later amended and signed in 2014.

He said, “To get that process going, a lot of parties had to be involved, it was about the Nigerian government, it was about lenders – most of the lenders were developing financial institutions from different parts of the world. That negotiation took quite a long time, also the World Bank was actively involved, and it culminated in the signing of the PPA in 2013 and this was later amended and signed in 2014.

Also, Engr Ahmed Rufa’i Zakari, the Special Adviser to the President on Infrastructure clarified in a statement he signed that, “because there was already a valid and binding contract between the Federal Government and Azura-Edo, that would have led to an international case similar to the P&ID scenario.”

“Again, laying out the facts already stated in previous communication about this matter, there is no doubt at all that the binding agreements which brought about the plant were signed in 2013 and 2014. On April 22, 2013, the Power Purchase Agreement was signed.”

The statement noted that “another curious mischief in this controversy is the assertion that Nigeria will become liable in the sum of $1.2billion 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,” it read.

By Benjamin Omoike

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