The Delta House of Assembly has approved Governor Sheriff Oborevwori’s request for the re-issuance of N18.1 billion Bank Guarantee from Sterling Bank to Access Bank Plc in favour of Bastanchury Power Solutions Nigeria Limited.
Bastanchury Power is the developer of the Asaba Independent Power Plant.
The governor’s request was communicated to the House through a letter read during Tuesday’s plenary session by Speaker Dennis Guwor.
According to the letter, the re-issuance is necessary to facilitate Access Bank’s partnership with the Delta government in managing the state’s composite internally generated revenue.
The governor explained that the partnership aimed to enhance the state’s revenue performance through improved systems and financial management.
He noted that the existing composite IGR account was currently tied to a bank guarantee exceeding N18 billion, which was issued by Sterling Bank, on behalf of Bastanchury Power, under the Asaba Independent Power Purchase Agreement.
He also explained that, under the terms of the PPA, the Delta government had two primary obligations.
“The first is the issuance of an N18.1 billion bank guarantee to cover compensation payment and the buy-out amount in the agreement, renewable annually. The second obligation involves the issuance of a monthly Irrevocable Standing Payment Order of N430.7 million, with a 2.5 per cent annual increment in capacity charges.
”This payment covers capacity charges, operations, and maintenance costs for the power infrastructure, all to be drawn from the composite IGR account domiciled with Access Bank,” the governor stated.
He also informed the lawmakers that the State Executive Council had approved the arrangement for Access Bank to issue a fresh N18.1 billion bank guarantee in the same format as the existing one from Sterling Bank.
”Upon the issuance of the new guarantee, the one from Sterling Bank will be cancelled to ensure a seamless transition,” he added.
After the presentation of the governor’s request, the leader of the House, Emeka Nwaobi, moved a motion for its approval.
The motion was unanimously adopted by the house, after it was put to a voice vote by the speaker and seconded by Deputy Speaker Arthur Akpowowo.
(NAN)