Oredola Adeola
Nigeria’s former President Muhammadu Buhari was misled by high-ranking individuals to approve a US$10 million partial risk guarantee (PRG) for the Nigerian Bulk Electricity Trading Plc (NBET) to sign transaction documents with Accugas, a natural gas supplier to the Calabar Generation Company Limited (CCGL), in March 2017. against the interests of the citizens.
Femi Adesina, former spokesperson to former President Buhari, in a revealing account from his book “Working for Buhari,” disclosed that the former Nigerian leader had during an encounter with Dr. Marilyn Amobi, former Managing Director of NBET, expressed deep regret over approving a $10 million partial risk guarantee (PRG) for the NBET to sign transaction documents with Accugas.
Adesina in his book, spanning pages 83 to 86 explained that the deal, according to the discussion between the former MD of NBET and Buhari, was facilitated by the World Bank, to supply natural gas to the Calabar Generation Company Limited (CCGL), a power plant under the Niger Delta Power Holding Company (NDPHC) portfolio, in March 2017.
Adesina’s book revealed that President Buhari, in a candid conversation with Mrs. Amobi, confided in her that he was misled into signing away $10 million of Nigeria’s funds.
The former President, known for his trust in high-ranking advisors, in Adesina’s book expressed dismay, stating, “I don’t know why they have done this to me and to this country. This is very bad”.
Advisors Reports’ findings showed that Accugas Limited, a subsidiary of the British headquartered Savannah Petroleum, is a leading natural gas provider to the domestic market, with a gross output of 113.5 million standard cubic feet per day in the first half of 2020.
During that period, Accugas escalated its gas supply to Nigeria’s power sector by 35 percent.
The Calabar Integrated Power Project (IPP) was completed in 2017 with five turbines installed by General Electric to generate 560 megawatts, MW, using 131 cubic meters of gas supply a day, after it signed a ‘Take or Pay’ gas supply agreement with Accugas, supported by a Partial Risk Guarantee (PRG) from the World Bank’s International Finance Corporation (IFC).
Advisors Reports gathered that based on the deal, the Nigerian Government is liable if the IPP fails to pay Accugas for the gas.
The Calabar IPP is obligated to settle its gas invoice at over $10 million a month since 2017, even if it does not receive payment from DisCos for electricity it distributed to customers.
Further investigation showed that the Calabar IPP is one of the generating companies that have recently been facing challenges in meeting its financial obligations to its lenders due to the government’s failure to pay the monthly invoice.
Moreover, Accugas has on different occasions threatened the Federal Government with the PRG provision, which, if enforced, could impact Nigeria’s sovereign credit ratings, thereby affecting the country’s ability to borrow from international funders.
The World Bank’s “Partial Risk Guarantee” structure has been signed by successive Nigerian leaders, costing the country billions of Naira and draining its purse.
Some of these deals were made due to liquidity crises in Nigeria’s power sector, as the Electricity Generation Companies (GenCos) have struggled to collect their market invoices.
Another example of this concession is the Calabar IPP, which used $237 million of debt to build the plant, with political risk insurance supplied by the Multilateral Investment Guarantee Agency and the Federal Government. This helped Azura deliver on budget and ahead of schedule by 7 months.
The Azura-Edo Independent Power Project (IPP) has secured a groundbreaking $900 million debt financing from a consortium of 15 banks, including major European development finance institutions.
This 450MW open-cycle gas turbine plant in Benin City, Edo State, is Nigeria’s first true project-financed IPP, setting a precedent for future investments in the power sector.
The Nigerian Government has come under fire for the poor remittance of invoices by the Distribution Companies (DisCos), with less than 25 percent of market invoices paid, leaving a significant percentage of unremitted power debt, causing concern among investors.
The Federal Government has managed to settle the invoices of the Azura IPP, but it has often come too close to missing the deadline giving investors cause for concern.
According to the terms of the Power Purchase Agreement (PPA), on the Azura deal, the invoice should be settled 15 business days after the invoice date.
