The Nigerian power sector may wallow in investment deficits and dismal performance if the National Assembly and the Federal Government fail to respect the sanctity of contracts, especially the $1 billion investment by the Azura Edo Power plant, energy experts told The Guardian yesterday.
Although this won’t be the first time lawmakers would point out the Azura issue, the House of Representatives Committee on Finance had insisted that the Nigeria Bulk Electricity Trading Company, dragged the country into Power Purchase Agreements that were detrimental to the interest of the country. Industry experts, who spoke with The Guardian noted that the dismal investment outlook in the power could worsen if government tampers with the pact it sealed with the investors, stressing that the National Assembly needs better understanding of the contract and how government should take the blame for not providing needed wheeling capacity as envisaged.
“As a result of the lack of sanctity of contract, most investors are burdened by the following questions when it comes to investing in the NESI: If an investor and the Government enters a contract or makes a commitment in writing, would it be respected? Can an investor enforce the terms in case of default? Would an investor have a remedy? And even where there is a remedy, would the Government honour the remedial...
“If individuals, corporate bodies and nations do not respect agreements, it will be impossible to deal with them. Respect for contracts or the sanctity of contracts has grave implications for every part of a nation’s socio-economic and political wellbeing,” he stated.