Senate on Wednesday withdrawn from request for cancellation of Azura and ACU Gas Power agreement the federal government had with the companies in 2015.
It was gathered that the agreement on Azura Power would cost Nigeria $1.2 billion in its foreign reserve if it decides to exit the pull call option agreement (POCA).
Federal Government signed agreement with the companies to enable it secure a $237 million loan to finance its 450MW project in Edo state and get gas supplied to Calabar power plant due to inability of Transmission Company of Nigeria ( TCN) to provide the services.
Following inefficiency of the has plant, some lawmakers were irked to move a motion for the cancelation of the agreement.
But, the Chairman of the committee on Power, Senator Gabriel Suswam, told the lawmakers that fine of about $1.2billion would be slammed on the country and it will be withdrawn from foreign reserve.
Suswam who made the explanation as part of presentations made on report fcfrom the Senate’s Summit on Power Sector held in January this year , said the fine as contained in the agreement , will be drawn directly from the country’s foreign reserves .
” The agreement is a take or pay model which is highly disadvantageous to the country because , whether Azura generates the 450mw or not, Nigeria must pay the $30million to it per month without defaulting in anyway .
” The way out is for the Senate to liaise with the executive and the affected firms for way out of the injurious agreement and not going the way of breaching it to avoid the scary fine of about $1.2billion ” , he said .
Earlier in the report, Suswam explained to the Senate that since the Privatized Power sector as it is presently, is insolvent , government should use its 40% share to get it solvent by way of providing meters for the DISCOs to distribute to electricity consumers .
Doing this , he explained , will help government overcome monthly subsidies cum interventions , it has been injecting into the sector within the last seven years , totalling N1.5trillion now .