Proposed take-off of Azura thermal power plants

After the intervention of President Muhammadu Buhari, the federal government has signed a payment guarantee for the 500MW Azura thermal power plant in Edo state. Following this development, construction work on the thermal power plant is expected to commence soon.

Work on the site had been stalled when former president Goodluck Jonathan failed to accede to a request by institutions funding the project, including the World Bank, for the waiver of Nigeria’s sovereign immunity to further de-risk the project.

Legal opinions on the issue of sovereign guarantee say the globally acceptable norm is that when a government enters into a proper commercial transaction like that involving Nigerian Bulk Electricity Trading Plc (NBET), the government usually will accept to waive its sovereign immunity, to show good faith, especially in this particular case in which the government is the major promoter of NBET.

Former finance minister, Ngozi Okonjo Iweala, who was chairperson of the government backed Nigerian Bulk Electricity Trader, NBET, had sent the request to government, following the demand by the promoters of the project who have sought a guarantee that in the event of default in receiving payment for power generated and supplied to the national grid, they are able to put a claim on the Nigerian government.

President Jonathan performed the ground breaking ceremony of the almost $1 billion Azura Power on October 11 last year, to signal the formal commencement of construction at the site of what promised to be Nigeria’s most modern power plant, but a surprise delay by his officials meant that the project and its hope of substantially resolving Nigeria’s power mess were deferred.

It is unclear yet, how the new administration will handle a similar obstacle on the way of progress on the 1,000MW Mobil gas fired plant in Akwa Ibom. The Mobil power plant to be sited in Eket in Akwa Ibom state, has been on the drawing board for almost 20 years, having been first stalled during the Obasanjo administration, when the government failed to open an escrow account to be dedicated to meeting its own obligation. The power project located at Mobil’s Qua Iboe terminal in Akwa Ibom State includes the construction of a 500megawatt-capacity power plant as well as a 56-kilometre transmission line connecting the plant to the national grid at Ikot Abasi, also in the state. Mobil Producing Nigeria awarded the Front End Engineering Design contract for the project in September 2009 and performed the ground-breaking in March 2010.

In an official statement by ExxonMobil last year, Front End Engineering Design (FEED) and Environmental Impact Assessments (EIAs) for the project had been concluded, while commercial tenders for Engineering, Procurement and Construction (EPC) were near completion. FEED is the conceptual process of development and design for large industrial projects such as power plants. The Power Plant will provide 330kV export power to the national grid. However, obstacles still remain.

The recent resolution of the 500MW Azura thermal power plant is a significant breakthrough worth celebrating. However, the government should use the same zest to resolve other issues hundering other power projects like Mobil, Geometric so that their immediate coming on-stream can help trigger the much needed industrial revolution in the country.