This is the first step in activating the World Bank partial risk guarantee (PRG) signed by the federal government under the gas supply agreement (GSA).
Nigeria’s credit rating will not only be at risk with the cost of foreign borrowing likely to go up, but the $118 million sovereign guarantees could also be called in by JP Morgan Chase Bank, the bankers.
Reports say that the ministry of finance is making efforts to settle the invoices and avoid the scenario.
Under the GSA signed in May 2017, Nigeria is obliged to pay Accugas over $10 million monthly with or without gas supply to the Calabar GenCo, owned by Niger Delta Power Holding Company (NDPHC) Ltd.
Accugas has issued at least three notices of non-payment to the federal government over non-settlement of invoices.
In a “notice of non-payment” dated May 29, 2020, and signed by Oge Peters, head of the commercial, Accugas referred to clause 18.5.1 of the natural gas sales agreement dated May 12, 2017, between Accugas and the Calabar GenCo as well as clauses 3 and 4.1 of the support agreement of the same date between NDPHC and the Nigerian Bulk Electricity Trading Plc (NBET).
“A Monthly invoice of USD 17,978,938.76 dated 7th January 2020 issued by the Seller and received by the Buyer on 9th January 2020 of which USD 2,141,176.30 has been paid leaving a balance of USD 15, 837,762.46 (the “Invoice”),” Peters wrote.
“Payment in respect of the Invoice was due on 8th February.
“A Dispute Notice has not been received in connection with the Invoice by the expiration of the Due Date.
“The following Guaranteed Payment is required to be paid into account details provided below: USD 15,837,762.46 for the undisputed amount.”
It provided both offshore and Nigerian bank accounts for the settlement of the liabilities.
“In the event that the above Guaranteed Payment is not paid into the aforementioned account within seven days, we shall have the right pursuant to Clause 1 of the Support Agreement to make a withdrawal under the IDA PRG L/C,” the company wrote.
“This notice of non-payment does not include demand in respect of interest or any sums other than Guaranteed.”
The letter was addressed to Calabar GenCo, NDPHC and NBET and copied to the International Development Association, JP Morgan Chase Bank and Zainab Ahmed, the minister of finance.