Posted by The Senate should look into the contentious Make-Up Gas (MUG) reprocessing deal involving the Federal Ministry of Finance, Niger Delta Power Holding Company (NDPHC), Calabar Generation Company Limited, and Acugas Limited, according to Senator Aniekan Bassey of Akwa Ibom North-East Senatorial District.
Sen. Bassey made the decision through a motion during Thursday’s Plenary, according to a statement from his media team that the 460play was able to get.
Bassey pointed out that if the Senate chooses not to look into the circumstances surrounding the execution of the GSA and MUG by the Federal Government with Acugas Limited, these transactions would represent an endless drain on the limited public funds that could have been used to carry out other urgent government projects.
The Immediate Past Minister of Finance, Budget and Economic Planning, Dr. Zainab Ahmed, the NDPHC, Acugas Limited, and Calab were among the parties to the transaction, and he urged the Senate to create an Ad-Hoc Committee and mandate the Committee to investigate the circumstances under which the GSA and MUG arrangement was executed, the parties involved, payments made to entities thus far, and the status of the GSA’s implementation.
The Niger Delta Power Holding Company (NDPHC), a company owned by the Federal, States, and Local Governments in Nigeria to hold and manage Nigeria’s Independent Power Projects, entered into a GSA with Acugas Limited for the supply of gas to Calabar Generation Company Ltd (Calabar Genco), a subsidiary of the NDPHC, sometime in 2017, according to Senator Bassey. According to the GSA, the Federal Government of Nigeria is required to pay Acusgas Limited more than $10 million each month. This monthly obligation was safeguarded and secured by a Take-or-Pay clause, which means that the Federal Government must consistently make the over $10 million payment regardless of whether the Calabar Genco accepts gas delivery or not.
“The fulfilment of the Take-or-Pay commitment by the Federal Government has become a serious issue for all well-meaning Nigerians due to its enormous load on the public budget as massive sums of money were paid to Acugas even for gas that Calabar Genco did not receive or use.
“The then Minister of Finance, Budget and National Planning, Zainab Ahmed, initiated a MUG deal involving Calabar Genco and Acugas Ltd. in an effort to get Nigeria out of this contentious Take-or-Pay cul de sac and put in place an arrangement to reprocess and redirect the gas that Nigeria has paid for but not utilized over time.”
To avoid the unpleasant situation the government is facing under the GSA with Acugas Limited and several other entities, the senator further urged the Federal Government, in particular the Office of the Attorney General of the Federation, to ensure due diligence in the preparation and execution of transaction agreements with businesses and other investors.