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How Nigeria signed itself into $1.2bn trouble with Azura Power

REVEALED: How Nigeria signed itself into $1.2bn trouble with Azura Power

ON August 21, 2015, the federal government signed partial risk guarantees (PRGs) with the World Bank to provide backing for the privately-owned Azura-Edo Power.

PRGs are a suite of agreements — including the indemnity agreement that could trigger a sovereign default, support agreement and corporation agreement.

The senate has called for the cancellation of the contract.

TheCable has now decided to publish some of the key government memos on the highly controversial Azura deal.

As reported by TheCable, the Goodluck Jonathan signed a series of agreements with Azura — namely the power purchase agreement (PPA) on April 22, 2013, the put/call option agreement (PCOA) on October 22, 2014 and the PCOA “direct agreement” on December 18, 2014.

However, Jonathan’s administration did not sign the contentious PRGs because of the failure to indemnify Nigeria in the event of default by Azura in repaying its banks loans.

DOWNLOAD THE FGN/WORLD BANK INDEMNITY AGREEMENT

DOWNLOAD ADOKE’S LETTER TO JONATHAN ON AZURA

DOWNLOAD CHINEDU NEBO’S LETTER TO JONATHAN ON AZURA

Mohammed Bello Adoke, then attorney-general of the federation (AGF), said the PCOA was injurious to the interest of Nigeria and that a sovereign guarantee would put the country’s foreign assets at risk.

Despite pressure from Chinedu Nebo, then minister of power, Jonathan refused to give the go-ahead for the PRGs.

This was the state of play as of May 29, 2015 when Jonathan left power.

However, Abdullahi Ahmed Yola, who was the solicitor-general of the federation and acted as the AGF in the first six months of President Muhammadu Buhari, came under pressure from senior presidency officials to change the legal advice.

Yola caved in and Nigeria executed the PRGs in August 2015.

The guarantees, which also cover a $237 million loan collected by Azura from various banks, have now placed enormous pressure on the nation’s resources.

Nigeria continues to pay $30 million to Azura monthly, even if it doesn’t have the capacity to take power from the plant.

The get-out clause is $1.2 billion.

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