The former minister of finance argued that Nigeria convert the MUG to liquefied natural gas (LNG) and export it in order to generate cash for the federation.
More facts have emerged about how Zainab Ahmed, a former Minister of finance, budget and national planning, secretly engaged the service of private consultants for a questionable gas deal during her tenure.
Ahmed appointed Ahmed Zakari & Co, a private consulting firm as “transaction adviser” to execute a Make-up Gas Reprocessing (MUGR) deal, TheCable reports.
It was learnt that the deal was however illegal and a means to embezzle public funds.
Make-up gas (MUG) is gas that a power generation company (GenCo) has already paid for but has not used during the year for various reasons.
A gas supply agreement (GSA), a bilateral transaction between a GenCo and a gas provider, specifies provisions for a clause review.
The former minister of finance argued that Nigeria convert the MUG to liquefied natural gas (LNG) and export it in order to generate cash for the federation.
She later sought and got the approval of former President Muhammadu Buhari on her mission.
But, doubts have been raised over her use of Ahmed Zakari & Co, in what is a wholly bilateral deal between Calabar Generation Company Limited (Calabar GenCo) and Accugas Ltd.
Calabar GenCo is controlled by the Niger Delta Power Holding enterprise (NDPHC), a three-tiered government entity, whereas Accugas is a private enterprise.
“Accugas and NDPHC were already discussing the extension of the sunset date for the utilisation of the MUG without the involvement of any consultant or adviser. Both parties subsequently executed an addendum to the GSA that provides for the MUG to be utilised within seven years,” an official of the ministry of finance said.
“The implication is that at the time Zainab Ahmed executed the transaction agreement with Ahmed Zakari & Co in September 2022, they all knew that there was really nothing for the firm to do, besides being paid for doing nothing,” the source added.
TheCable was unable to establish the precise fees Zakari & Co were paid, although sources stated it was in dollars.
“The standard practice with respect to the use of MUG is for the buyer to contact the seller and for both contracting parties to negotiate alternative durations for the use of the MUG," an industry insider revealed.
This is required because the buyer has already paid for the gas. A third party is typically not required to be involved. Indeed, because the GSA is a bilateral arrangement, it will lose its bipartisan status if third and fourth parties become involved.
The source continued: “What would usually happen is for the two parties to concede doing one of the following or both: one, renegotiate the take-or-pay quantity upon which the GSA was executed or, two, extend the sunset date for the utilisation of the MUG.”
Recall that Moyi Dahiru, Ahmed's then-special assistant on electricity, initiated negotiations with power industry players to explore the MUGR plan in early 2022.
Officials from Nigerian Bulk Electricity Trading (NBET) Plc, NDPHC Ltd, Accugas, and Azura were present.
An official of the Ministry of Finance said, “Azura made it clear to Mr Dahiru that they do not have any business with the MUGR, particularly because the government is not a party to the GSA.”
However, the NDPHC, which controls the National Integrated Power Projects (NIPP), which include ten GenCos, did not protest, purportedly because it did not want to offend ministry employees who process the payment of gas invoices every month.
Ahmed obtained Buhari's consent in February 2022 to retain the accountancy firm Ahmad Zakari & Co as the transaction consultant.
This became effective from September 5, 2022 when the firm signed the agreement with the Federal Government of Nigeria (FGN), represented by the ministry of finance.
“Ahmad Zakari & Co’s agreement is of no effect, but money is being paid to the firm for doing nothing,” an official of the ministry of finance, who declined to be named for fear of victimisation, said.
“The truth is that top government officials usually connived with some of the principal members of staff in the Presidential Villa to mislead Buhari into signing all kinds of things, including appointments for the most unqualified persons and dubious payments.”
On May 24, 2023, Aliyu Ahmed, the permanent secretary in the ministry of finance, sent a letter to Total Energies titled 'Make-Up gas re-purpose transaction, conveyance of extracts of presidential approval of global framework transaction,' conveying the government's directive on how GenCos should treat MUG.
Calabar GenCo's make-up gas is subject to the MUGR.
“If I were to advise President Bola Tinubu, he should direct the ministry of finance to stop all payments to Ahmed Zakari & Co and ask the ministry to submit a report of the payments that have been made to the firm so far and for what purposes,” an official said.
“President Tinubu should ask for all the agreements under this MUGR and demand a copy of the addendum which the Accugas executed with the NDPHC that extended the sunset date for the utilisation of the MUG to seven years.”
TheCable has reached out to the former finance minister's media office for comment.
Accordingly, Dahiru has been exerting pressure on Calabar GenCo to carry out the contract since he left office with the former finance minister.