Azura Power company, an Independent Power Producer (IPP) which generates over 10 per cent of Nigeria's total electricity, yesterday pushed back on claims it was singlehandedly collecting $30 million as power bills, revealing that at least 40 per cent of the fund goes back to the government.
The Managing Director, Azura Power West Africa Limited, Edu Okeke, who spoke in an interview with select energy journalists, noted that to reduce the sum, the government could simply stop the servicing of its loan on the project, being the biggest lender, or halt the payment of about $10 million monthly in the gas supply arrangement.
There have been a lot of hue and cry as to how much the company receives from the supply through its 461MW-capacity power plant to the country, with the House of Representatives Committee on Finance, being the latest to express dissatisfaction over the $30 million monthly payment.
The committee said the amount was outrageous, noting that the deal wasn't acceptable, given that electricity supply hadn't improved markedly in recent times.
But revealing that the invoices usually have two parts namely: Capacity and actual power put on the grid - Okeke explained that excluding taxes paid to the government, it has to fund the take-or-pay gas arrangement and loans to its creditors, including the federal government.
"But what they haven't told you is that the day they pay us that $30 million, 40 per cent goes back to government the next day.
"About $10 million of that money is gas and it goes to the Nigerian Petroleum Development Company (NPDC)/Seplat and NPDC owns about 60 per cent of that. So NPDC takes $6 million into its pocket.
'About $4 million goes to the Nigerian Gas Company (NGC) which is again owned by the government, which is the biggest lender to Azura.
"We have about 16 lenders. The biggest lender is the Central Bank of Nigeria (CBN) through the Bank of Industry (BoI), but they won't tell you that. And they get their money immediately," the Azura boss stated.
He added that he had approached the authorities to advise that if the amount the government is being paid is too huge, all they need to do is to slash it or halt payment of loans and payment of gas altogether, but that there had been no cooperation.
"Nobody will tell you we are paying that much. We are not talking about taxes now. We are talking about the loan repayment to the CBN and others.
"The World Bank is standing, wanting everybody to do the right thing... and they know that if you do anything untoward, you go to jail and I am not ready for that," he added.
Okeke argued that Azura was developed by a lot of people because every agency of government signed off on it, insisting that it went through the normal process, except the final one which was the 'legal opinion', eventually released by the Muhammadu Buhari administration after it was delayed under the Goodluck Jonathan government.
"For those that don't understand how it works, in project financing, when you finish signing all the contracts, more than 100 contracts that we signed on Azura, the lawyer will now give a legal opinion to say, I have the right and authority to sign on behalf of Nigeria. In the other party, the lawyer will do the same thing.
"So they actually came out with a legal opinion saying that because for Nigeria, the Minister of Finance and Minister of power had approved, it didn't need one from the Attorney General, but we insisted," he explained.
The power company is partly sponsored by the UK Government, US government, Germany, France Sweden, Netherlands and then the World Bank. "These people, do you think all of them will sit down and say how do we go and screw Nigeria? he queried.
On the controversial take-or-pay arrangement, he maintained that some countries where there's still some level of the sanctity of contracts do not need any Sovereign involvement in business deals.
"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's how it's structured in every project of this nature. And if you're generating power, that take-or-pay is immaterial, because you're using it," he explained.
He stated that Azura was not the only company with take-or-pay, stressing that Afam, Okpai, Omotoso, Olorunsogo which have firm and effective Power Purchase Agreements (PPAs) also do.
"The oil companies have also, but they don't call it take-or-pay because they own the gas and the power," he pointed out.
According to him, "the money is actually from government purse to government purse."
He explained that the notion that other plants had been shut down to allow Azura evacuate power wasn't entirely true, insisting that only the NPDHC was impacted, even though it wasn't the fault of Azura.
According to him, the evacuation study done by the Transmission Company of Nigeria (TCN) before Azura began evacuation, showed that the full evacuation by both NDPHC was achievable initially, saying that as it was, NPDHC could not even generate much because gas is not available to it.
He noted that if Distribution Companies (Discos) paid their invoices, there would be no need for a sovereign guarantee or even the involvement of the ministry of finance.
"If the government wants the about $30 million reduced , what they should do is to call NGC and tell them , meet all your obligations to Azura, but don't send your invoice at the end of every month or let the CBN call us and say we know you are owing us but suspend it. Because it's all these funds that compound up to the money we collect," he added.
He explained that most of the misinformation going on was because of paucity of information as to how the industry works.