Identifier
Created
Classification
Origin
07LAGOS147
2007-02-26 10:35:00
UNCLASSIFIED
Consulate Lagos
Cable title:
AES ISSUES SBLC PRE-DRAW NOTICE TO CITIBANK
how-toVZCZCXRO7462 RR RUEHMA RUEHPA DE RUEHOS #0147 0571035 ZNR UUUUU ZZH R 261035Z FEB 07 FM AMCONSUL LAGOS TO RUEHC/SECSTATE WASHDC 8556 INFO RUEHUJA/AMEMBASSY ABUJA 8382 RUEHWR/AMEMBASSY WARSAW 0168 RUEHCD/AMCONSUL CIUDAD JUAREZ 0148 RUEHIT/AMCONSUL ISTANBUL 0149 RUEHZK/ECOWAS COLLECTIVE RUCPDOC/DEPT OF COMMERCE WASHDC RULSDMK/DEPT OF TRANSPORTATION WASHDC RHEBAAA/DEPT OF ENERGY WASHDC RUEATRS/DEPT OF TREASURY WASHDC RUEAIIA/CIA WASHINGTON DC RHEFDIA/DIA WASHDC
UNCLAS LAGOS 000147
SIPDIS
SIPDIS
DEPT PLEASE PASS TO USTR
DEPT PLEASE PASS TO JAMES WILLIAMS, OPIC
E.O. 12958: N/A
TAGS: ECON PGOV EINV PREL NI
SUBJECT: AES ISSUES SBLC PRE-DRAW NOTICE TO CITIBANK
UNCLAS LAGOS 000147
SIPDIS
SIPDIS
DEPT PLEASE PASS TO USTR
DEPT PLEASE PASS TO JAMES WILLIAMS, OPIC
E.O. 12958: N/A
TAGS: ECON PGOV EINV PREL NI
SUBJECT: AES ISSUES SBLC PRE-DRAW NOTICE TO CITIBANK
1. (SBU) On February 21, AES Nigeria Barge Ltd. (AES),a U.S. power
services company, issued a stand-by letter of credit (SBLC) pre-draw
notice to Citibank, the SBLC-issuing bank. According to AES, this
measure was necessitated by the Power Holding Company of Nigeria's
(PHCN) failure to comply with payment obligations under a Power
Purchase Agreement (PPA) in place. Arrears total USD 22 million.
Post has spoken with Hassaan Mirza, AES Chief Financial Officer. AES
is not requesting any mission intervention with the GON at the
moment. AES's experience in the past has been that PHCN satisfied
arrearages after the pre-draw notice was issued.
2. (SBU) Mirza described the situation as follows:
- On January 31, AES wrote PHCN advising it of AES's intention to
issue a pre-draw notice on February 7 for a call on February 15.
Following receipt of USD 4.25 million from PHCN on February 7, AES
delayed the notice, allowing PHCN to make further payments. In a
February meeting, PHCN Coordinator A. Maigida indicated a readiness
to make further payments. However, these payments were not
forthcoming, and AES issued the pre-draw notice as a result.
- A pre-draw notice for USD 21,950,645 was delivered to Citibank on
February 21, with a draw date of March 5. A second pre-draw notice
is scheduled to be delivered on March 5 for a draw on March 14 in
the amount of USD 5,790,888.
- AES has emphasized to PHCN the need to adhere to the PPA, until
such time as a proposed amendment to the PPA becomes effective. This
ensures AESNB's ability to meet its obligations under the Credit
Facility Agreement.
- AES has issued pre-draw notices on a number of occasions, most
recently in September and November 2006. Both times, AESNB received
payments sufficient to avoid a draw-down, although payments in both
cases were received at the last hour.
- AES regularly speaks with PHCN officials: Mr. Maigida,
Coordinator; Engineer Achinaya, Market Operator. AES also briefs
Engineer Makoju, Special Adviser to the President on Power. However,
AES's contact with the Ministry of Finance, which must approve any
payments, has been limited. Dr. Bright Okogu, Special Adviser to the
Minister of Finance, has been unresponsive to requests for meetings,
according to Mirza.
SIPDIS
SIPDIS
DEPT PLEASE PASS TO USTR
DEPT PLEASE PASS TO JAMES WILLIAMS, OPIC
E.O. 12958: N/A
TAGS: ECON PGOV EINV PREL NI
SUBJECT: AES ISSUES SBLC PRE-DRAW NOTICE TO CITIBANK
1. (SBU) On February 21, AES Nigeria Barge Ltd. (AES),a U.S. power
services company, issued a stand-by letter of credit (SBLC) pre-draw
notice to Citibank, the SBLC-issuing bank. According to AES, this
measure was necessitated by the Power Holding Company of Nigeria's
(PHCN) failure to comply with payment obligations under a Power
Purchase Agreement (PPA) in place. Arrears total USD 22 million.
Post has spoken with Hassaan Mirza, AES Chief Financial Officer. AES
is not requesting any mission intervention with the GON at the
moment. AES's experience in the past has been that PHCN satisfied
arrearages after the pre-draw notice was issued.
2. (SBU) Mirza described the situation as follows:
- On January 31, AES wrote PHCN advising it of AES's intention to
issue a pre-draw notice on February 7 for a call on February 15.
Following receipt of USD 4.25 million from PHCN on February 7, AES
delayed the notice, allowing PHCN to make further payments. In a
February meeting, PHCN Coordinator A. Maigida indicated a readiness
to make further payments. However, these payments were not
forthcoming, and AES issued the pre-draw notice as a result.
- A pre-draw notice for USD 21,950,645 was delivered to Citibank on
February 21, with a draw date of March 5. A second pre-draw notice
is scheduled to be delivered on March 5 for a draw on March 14 in
the amount of USD 5,790,888.
- AES has emphasized to PHCN the need to adhere to the PPA, until
such time as a proposed amendment to the PPA becomes effective. This
ensures AESNB's ability to meet its obligations under the Credit
Facility Agreement.
- AES has issued pre-draw notices on a number of occasions, most
recently in September and November 2006. Both times, AESNB received
payments sufficient to avoid a draw-down, although payments in both
cases were received at the last hour.
- AES regularly speaks with PHCN officials: Mr. Maigida,
Coordinator; Engineer Achinaya, Market Operator. AES also briefs
Engineer Makoju, Special Adviser to the President on Power. However,
AES's contact with the Ministry of Finance, which must approve any
payments, has been limited. Dr. Bright Okogu, Special Adviser to the
Minister of Finance, has been unresponsive to requests for meetings,
according to Mirza.