By Ndubuisi Micheal Obineme
The General Manager of Nigeria Bulk Electricity Trader (NBET), Yesufu Alonge, said that they are planning to launch a competitive procurement plan for the Power Purchase Agreement (PPA) in Nigeria. The announcement was made known in Lagos during an event, Solar Future Nigeria 2017, organized by Solarplaza, a Netherlands based company.
He further explained that the idea to launching the competitive procurement plan will breach the gap on the high cost of tariff which has been experienced on the previous PPAs signed. “The 14th PPAs that was signed by NBET created some kind of confusion in terms of the tariff plan when the project reached financial close and it became clear that the cost per megawatt is very high. For instance, if a tariff varies from 1.4 USD per megawatt issued to about 2.1 USD per megawatt this simple means that when we have a one hundred megawatt grant, it will cost from one hundred and forty million USD to two hundred and ten million USD. So in range of termination you will have almost about seventy million USD difference and this is a big concern for us at NBET as we are trying to get pass this because we don’t want to have issues of termination from companies that are given the tariff due to the high cost of the tariff, Yesufu said”
According to him, the new competitive procurement plan for PPA in Nigeria will remain pending for now as it will not be launched immediately. He said “Launching the competitive procurement plan in this stage will have tremendous impact on the 14th PPA signed already as they haven’t reached financial close and there will be no much interest from lenders, developers as such it could affect the PPAs that has been signed and the future PPA that will be signed”
He said “Our plan is to make sure we get some of the projects to financial close before we launch the competitive procurement plan. The benefits of the competitive procurement will enhance project efficiency and faster processing and the amount of ground work would have been done with all the documents prepared, tested and reviewed by lenders to see if they are comfortable with the structures.
“By the time we launch the program, the requirements will come first and there will not be a situation after signing the documents it will take longer time before it reach financial close, projects will be processed faster and efficiently. The competitive procurement program will also lead to having a very good competitive tariff price and the Government is in full support of what we have done so far, he added”
Yesufu Alonge also commented that “Government have also approved a payment recovery plan in collaboration with World Bank to resolve the liquidity issues currently facing the Nigerian power sector. The government has also given Seven Hundred and One Billion Naira (N701 billion) to NBET as its payment assurance which will be used to pay the GENCOs as they will also pay the people that provided services to them”
