Senate expresses concern over power expenses


The Senate on Wednesday expressed concern over the monthly payment of $30 million by the Federal Government for power.

The house said the payment had become statutory because of the Share Purchase Agreement (SPA) signed by the Federal Government with AZURA and ACU gas plants.

According to the Senate, the legal advice became necessary because the terms of agreement stipulates that about $1 billion will automatically be deducted from the nation’s foreign reserves if there is any breach is against the country’s interest.

The Red Chamber said it plans to engage the services of local and international lawyers to advise it on how to either review or renegotiate the agreement (SPA) that compels the government to pay power not necessarily consumed by Nigerians.

The Senate further urged the Federal Government to buy meters for unmetered Nigerians.

The procurement will cost the government between N227 billion to N354 billion. These were some of the resolutions taken by the Senate following its consideration of the report of its Roundtable on “Addressing Nigeria’s Power Problems”.

The report was presented by the Chairman of the Senate Committee on Power, Gabriel Suswam. He told his colleagues that Nigeria stands to lose about $1 billion from its foreign reserves if there is any breach of the agreement it signed between 2016 and 2017 on the gas supply issue.

He told reporters after the plenary session: “Now the second one, which is the one that became very controversial, was that certain agreements were signed. It is not the fault of the plants, that is AZURA and ACU gas. Pay or take agreements are something that is universal in the power sector when you are going into such ventures and so it is not anything that is fraudulent, but just that the government ordinarily shouldn’t have signed those agreements.

Furthermore, he said, “Because what it means is this; for instance, Azura is a power plant that is supposed to produce or generate 450 megawatts and so what we signed is that even if we are unable to take that 450 megawatts, we will stull pay full price for that 450 megawatts. And that is what has been happening. We call those agreements take or pay.

The same thing for ACU gas. This is a gas agreement that has been signed with the Calabar power plant. It is the same mode of agreement and they come with RPG which is guaranteed by the World Bank.

In conclusion, he said, “For instance in Azura, they have about three generators, now if only one is producing, it is not their fault. It is because TCN (Transmission Company of Nigeria) cannot evacuate the power. It is not their fault, they are generating they are ready to give power unfortunately we signed that agreement without being prepared and so if they can only give 100 megawatts we will pay for the full 450 megawatts. The same thing goes for ACU gas.

There was an agreement for them to supply gas to the Calabar plant and if the gas to supply to three generators, if they are only able to take only one we will still keep paying full amount as if the three were working.

Fatimah Oyesanmi

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