Fed Govt gets 40% of Azura $30m Power Payment

Forty percent of the $30 million paid monthly to the Azura-Edo Power Plant for 452Mw energy and capacity charges returns to the Federal Government, through the Central Bank of Nigeria (CBN), Nigerian Gas Company and the Nigerian Petroleum Development Company (NPDC).

About five power plants have their Power Purchase Agreements with the Nigerian Bulk Electricity Trading Company (NBET).

Speaking with reporters during a tour of its 461Mw plant in Ahor, Benin, Edo State, the Managing Director, Azura Power West Africa Limited, Mr. Edu Okeke, explained that it is the nature of the 20-year take or pay gas agreement that has necessitated the payment of the $30million.

The House Committee on Power had recently summoned the company over the collection that the government must pay for the capacity whether it is delivered or not.

Okeke  explained: “There is take or pay. What does take or pay mean? For us to generate electricity, we have to have constant gas. Now for you to make sure you have gas, there is take or pay. That is how it is structured in every project of this nature.

“Normally, that take or pay is not the quantity of gas you use. It is likely below it. And if you are generating power, that take or pay is immaterial.’’

Now, Azura is not the only company that has take or pay. Every plant in Nigeria that has effective PPA has take or pay. Afam, Okpai, Omotosho, Olorunsogo, they all have it.”

He added: “The oil companies don’t actually call it take or pay. This is because the oil companies own the plants and also supply the gas.”

The managing director said the unused gas from the contract had never been lost as the NPDC, and that a government  company, is always in custody of it.

He recalled that for the two years the Take or Pay lasted, it was only a name that it was Azura that benefited the undelivered gas because it came through it but eventually the supplier, NPDC, which is the senior partner in a Joint venture with Seplat gained it.

Okeke said “Again, when people talk about this take or pay, what they don’t realize is that if Nigeria pays for that gas, they even have two year. That money that was paid in 2018 and 2019, Nigeria used the gas. It is not that if you don’t use this gas in two years, you lose it.

”But they won’t tell you that. The gas was finally used. That is not even the interesting part of it. That money even it goes through Azura, the contract goes through Azura. Who supplies the gas that bears that take or pay? Seplat and NPDC Joint Venture.

“NPDC is the senior partner.  So that money is from government purse. But people won’t tell you that NPDC is actually NPDC not Azura.  So, that is the notion. Since 2020, there has not been take or pay. They have corrected it.”

On the payment of  $30 million monthly, said there is no denying that the firm earns it although it could be lesser in some months.

He said about  $10million of the payment is for gas which goes to Seplat and NPDC.