Business Latest

Nigeria not obliged to pay $1.2bn fine for contract breach on Azura-Edo power project – Presidency

No documentation was endorsed between 2013 and 2015 showing Nigeria would be liable to pay $1.2 billion in case it breached the contract for the Azura-Edo Independent Power Plant, Ahmed Zakari, Special Adviser to the President on Infrastructure said Wednesday.

Gabriel Suswam, Chairman of the Senate Committee on Power, said last week the Muhammadu Buhari administration signed power deals with Azura, owned by a consortium of indigenous and foreign investors, to produce 450 megawatts of electricity.

The Senate has expressed worry on $30 million payment made by the Nigerian government to the firm every month even if it lacks the capacity to take power from the plant, prompting it to decide to seek the expertise of indigenous and foreign professionals in reviewing the pact.

Read also: 40 years after, will Mamman’s committee give life to much hyped N2trn Mambilla Power Project?

“Clearly, the controversy as to who signed the agreements has no real basis, if indeed the only quest is for the plain truth,” Zakari said in a statement titled, ‘Partial Risk Guarantee not an Issue in Azura-Edo IPP Contract, Says Presidency.’

He went further to say “Another curious mischief in this controversy is the assertion that Nigeria will become liable in the sum of $1.2bn if it defaults on the Azura contract. Nowhere in any of the documents signed from 2013 to 2015 is any such figure mentioned.

“The only possible payout indicated in any of the agreements is in case the put and call option is activated.

“In that event, the cost of the plant would be worked out using a formula and become due for payment, but at least Nigeria will get in return a functional 461MW plant.”

The presidential aide said since the current regime did not resolve to reject the contract, it proceeded to issue the needed legal opinion and ratified the World Bank guarantees that came into force in April 2014.

Ronald Adamolekun

Join the conversation


About the author

Ronald Adamolekun

Ronald Adamolekun is a creative writer with a mixed bag of experience in fields as diverse as data journalism, financial reporting and editing.

/* ]]> */