Nigerian company Accugas, which supplies gas to the Calabar Generation Company Limited, has issued a “notice of non-payment” to the federal government over unpaid invoices totalling $15.8 million. The notice could lead to activation of the World Bank’s Partial Risk Guarantee (PRG) inked with the Nigerian government as part of the Gas Supply Agreement (GSA).
If the PRG is activated, Nigeria’s could face a cut in its credit rating and a $118 million sovereign guarantee could be called in by the bankers JP Morgan Chase.
In 2017, Accugas signed a GSA with the Nigerian government which compelled it to pay over $10 million to the gas company irrespective of whether the Calabar Generation Company, takes delivery of gas.
Accugas has issued at least three notices of non-payment to the federal government over the non-settlement of invoices.
In a “notice of non-payment” dated May 29, 2020 and signed by Accugas’s Head of Commercial, Oge Peters, the company referred to clause 18.5.1 of the Natural Gas Sales Agreement between Accugas and the Calabar Genco dated May 12, 2017 between Accugas and the Calabar GenCo in addition to clauses 3 and 4.1 of the Support Agreement signed on the same day between Niger Delta Power Holding Company (NDPHC) and the Nigerian Bulk Electricity Trading PLC (NBET).
“A Monthly invoice of USD 17,978,938.76 dated 7thJanuary 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”),” wrote Peters.
“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 undisputed amount.”
The notice provided 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,” Peters wrote.
“This notice of non-payment does not include a demand in respect of interest or any sums other than guaranteed.”
Accugas’s letter was addressed to the Calabar Generating Company Limited, Niger Delta Power Holding Company (NDPHC),the Nigerian Bulk Electricity Trading Company (NBET) and copied to the International Development Association, JP Morgan Chase and Zainab Ahmed, Nigeria’s Minister of Finance.