The Senate has described the Share Purchase Agreement (SPA) between the Federal Government and Azura Power Plant as a drain on the nation’s resources.
The lawmakers called for a review of the SPA on Wednesday after the committee on power made the recommendation, according to News Agency of Nigeria.
The recommendations were presented by Chairman of the Committee, Sen. Gabriel Suswam during plenary.
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Suswam, who said that the agreement between the Federal Government and Azura power plant was signed between 2016 and 2017, explained that government ordinarily shouldn’t have signed those agreements.
What it means: The agreement, according to the lawmaker, means that the nation must pay for any amount the plant claim to generate and it does not matter if they are consumed or not.
He said, “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.”
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Other recommendations Suswam said include the need to revisit 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.
This, he said 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.
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” 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.
“There should be an immediate removal of the increased custom duties of 35% to allow Metre Asset Provider (MAP) clear meters stuck at the port,” he added.
In his remarks, President of the Senate, Ahmad Lawan said 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.”
It is it a Share Purchase Agreement, but rather a Power Purchase Agreement. It sounds like the same sort of a Take-or-Pay arrangement that has gotten Ghana into loads of debt. Not surprised though, since government folks are usually dazzled by overseas trips and estacode, instead of getting competent advisors to negotiate these sophisticated deals. Dear Senators, in business, you do not get what is fair, but what you negotiate.