Power Outages: Reps Grill NBET MD NDPHC over Purchase Power Agreements.

Jonas Ezieke, Abuja

The House of Representatives Committee on Finance has frowned at some treaties signed by Nigerian Bulk Electricity Trading (NBET) with some investors on power generation in the country.

The Chairman of the committee, Hon  James Faleke (APC-Lagos state) at a public hearing in Abuja on Friday, expressed concern that Nigerians do not get value for the monies paid by government.

The lawmaker said that Nigeria is in a situation where there is low revenue and high financial commitments and some of the agreements are bounded by law that Nigeria finds it difficult to pullout.

Faleke scowled at the “Take-or-Pay’’ contract signed with Azura Power Plant, saying that Nigeria pays 33 million dollars monthly yet Nigerians do not get value in terms of power consumption.

According to him, NBET signed this magnitude of contract without Federal Executive Council (FEC) approval and against the advice of the Minister of Justice.

“We are interested to know if the officers in charge of these agencies who sign these contract on behalf of Nigerians, took the necessary things into consideration.

“The power sector has been unable to meet the demands of Nigerians, we have heard of all types of bailouts that the CBN had made without any changes in the power Nigerians receive.

“There are two `Take-or-Pay agreement’ that we hear exist in the power sector; as we understand it, it means a government agency here signed agreement with an investor for a fixed amount of commodity; gas for power companies or power to supply to Nigerians.

“In very simple terms, what this means is that, weather the amount the agency signs to take is taken or not, the agency still pays that investor for the fixed amount signed for.

“If it is gas, if the companies did not take the gas as provided, the government agency pays for it as though the government agency took the contracted quantity.

“If it is power, weather the investor supplies or not, the government agency pays the investor for the full amount it signed for in that agreement,’’ he said.

Faleke said that if an investor wants to invest in power, he must have carried out his own survey to be sure that consumers are available to consume his power as it is pure business.

He said that there was no need bearing the risk of buying the power from investors and the selling it to consumers.

“We provided support. We are still where we are today. We have millions of Nigerians out of job, out of school but no job. We have no power to provide jobs.

“That is why I asked you, are you satisfied with the value for money. When we have no power for industries to be established, then why are we paying such money?

“My expectation would be that, you have provided power for Ariara market, and businesses are booming. Or an industrial area in a particular state and industries are booming, but the power is not there,” he said.

The Chairman ruled that the NBET should furnish the committee with details of all agreement signed and the proof of payment made by the agency.

He also ruled that the Transmission Company of Nigeria (TCN) should furnish the committee with details of volume of electricity transmitted from the Azura power plant.

He further ruled that a link should be made available on MBET’s website to house all the documents and agreements entered into, that will be presented at the hearing by agencies to properly inform the Nigerian public.

Earlier, the Managing Director of MBET, Mr Emeka Eweluka explained that in the `Take-or-Pay agreement’, the investor takes the entire risk of making a multi-million dollar investment in the country knowing that the investment could become stranded.

He said that for the investor to protect the fixed investment made and that cannot be carried out of the country, an assurance that the investor will build a power plant while government sorts transmission was needed.

He said that when power is produced by the investor, weather it is taken and utilised by Nigerians or not, the government pays for the power generated in line with the contracts.

Eweluka said that Nigeria had signed about 25 power related contracts one of which is the `Take-or-Pay’ agreement with the Azura Power Plant in which  about 30 million dollars is paid monthly by Nigeria for power.

He said that the Azura agreement was signed in 2014, revisited in 2015 and 2017 and became operational in 2018 saying that it has a lifespan of 20 years.

He said that MBET does not require FEC approval to enter into such contract irrespective of the N2.5 million approval limit for the office of the managing director.

Ewaluka explained that due diligence was done and the opinion of the Attorney-General of the Federal was sought before the contract is signed.

Eweluka acknowledged that the arbitration for some of the contracts are domiciled abroad and that the World Bank is the guarantor of the agreements under the auspices of the Minister of Finance.

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