Power: Nigeria’s Bulk Trader Concludes PPA Negotiations on 10 NIPP Gencos

Nigeria’s bulk electricity procuring entity, the Nigerian Bulk Electricity Trading Company Plc (NBET) at the weekend disclosed that it had concluded all negotiations required for the successful signing of Power Purchase Agreements (PPAs) with the 10 thermal generation companies of the National Integrated Power Projects (NIPP).

NBET by this development has indicated its willingness to enter into a bulk power purchasing agreement with the 10 electricity generation companies which were built by the Niger Delta Power Holding Company Limited (NDPHC) under the NIPP scheme, but now slated for privatisation.

When consummated, the 10 NIPP plants will be able to sell electricity generated by them to NBET for onward resale to electricity distribution companies in the country.

The PPA will confer on both parties service rights and obligations that include timely payments for and power signed for.

Also, the bulk trader stated at the last Annual General Meeting (AGM) of its board in Abuja, that it is about to close out negotiations on the multi-layered Zuma Energy coal power project as well as four solar power projects which it will soon send to the industry regulator, the Nigerian Electricity Regulatory Commission (NERC) for vetting and approval.

A power purchase agreement represents the vital contract for any independent power generation project, especially in emerging electricity markets like Nigeria’s, to consider in proceeding with such projects.

It governs the sale and purchase of power between a producer and an off-taker or buyer and helps the promoter draw down on investment funds for its project.
The Managing Director of NBET, Rumundaka Wonodi, told journalists shortly after the AGM which was chaired by the board chairperson and Minister of Finance, Dr. Ngozi Okonjo-Iweala, that the company had gone on with negotiations on these PPAs, especially for what they represent to the sector.

He said: “We are working on so many PPAs, we are just about to close out the PPA on Zuma coal power and send it off to the regulator for approval. We have about four solar PPAs that we have just gone through in the last round and those ones could be initial depending on how they react to that version.

“We have a couple of gas-fired plant; Century, Omar Power, Proton Energy, Exxon and quite a couple of projects that are close to initialing and close out.
“The bulk trader has also PPAs with River State Independent Power Plant and has concluded the discussions for the NIPP PPAs,” Wonodi added.

He further said: “Currently, NBET has fully negotiated PPAs for four other gas IPPs and now has PPA templates for coal and solar powered generation projects. These PPAs need to undergo regulatory review prior to their execution.”

On what this means to the sector, Wonodi explained that when fully executed and the projects are on stream, it helps the bulk trader procure more capacity in the pool of electricity available to it to sell to distribution companies it has signed vesting contracts with.

Wonodi in his assessment of the current market situation with regards to commencement of the Transitional Electricity Market (TEM), said: “The transitional electricity market has begun and that means that we are beginning to receive payments from distribution companies from power supplied and we are making payments to the generation companies. Trading has fully begun.

“We believe compliance should be full for the month of March, the supplementary order came late and by the time it came, so many distribution companies were not clear on that and we understand that three made payments to the market operator and bulk trader.”

“We are bound to pay generation companies as necessary from the supplementary order and distribution companies are bound to pay us, there is discipline across the value chain, which is what is important,” he added.