‘How PPAs increased electricity payments to N5tr‘

The Nigerian Bulk Electricity Trading (NBET) has said that the administration of Power Purchase Agreements (PPAs) and vesting contracts by the agency has resulted in electricity payments worth N5 trillion from February 2015 to date.

In his presentation at the 2nd edition of the Power Correspondents Association of Nigeria (PCAN) workshop in Lagos, the Managing Director of NBET, Dr Nnaemeka Ewelukwa, also said that Azura, the first financed power project in Nigeria heralded an investment of close to $1 billion.

Ewelukwa also noted that NBET executed PPAs with 14 solar Independent Power Projects (IPPs) for one gigawatt (1GW) of electricity.

Acting as the anchor for the FGN-World Bank Power Sector Recovery Programme (PSRP), NBET caused World Bank to make available $750 million for the Power Sector Recovery Operations (PSRO) loan.

NBET, he said, was instrumental in FGN’s budgetary appropriation in addressing tariff shortfalls in the electricity market.

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Other milestones include the facilitation of privatisation of generation companies (GenCos) through PPAs with core investors, privatisation of GenCos and distribution companies (DisCos) in 2013, Afam Power Plc and Afam Three Fast Power Limited (N105.3 billion; $343.6 million); successful and transparent management of the N1.3 trillion Payment Assurance Facility (aided a 30 per cent increase in the highest peak generation ever attained, from 4500MW (February 2015) to 5,800MW (March 2021), due to capacity recovery by generation companies.

Speaking on the partial activation of contracts in the power sector, Head, Strategy, Co-ordination and Corporate Communications of NBET, Dr Eugene Edeoga, remarked that NBET purchases energy and capacity from 25 generation plants owned by the respective Generation Companies (GenCos) that have contracts with NBET.

While some have Power Purchase Agreements (PPAs), others have Interim Agreements executed pending the finalisation of PPAs.

“For the GenCos that have PPAs, some of the PPAs are active while others await the fulfilment of conditions for full activation. Despite the execution of a fully termed Power Purchase Agreement (“PPA”) with energy and capacity payment obligations between some of the on-grid GenCos and the Nigerian Bulk Electricity Trading Plc (“NBET”), the PPAs did not take effect due to inadequate capacity to wheel the generated power to consumers. For other GenCos, no PPAs were signed, and energy was being supplied to the grid and paid for by NBET on a best endeavour basis. In both cases, NBET would pay the GenCos only for the energy that is dispatched. The impact of this was both on the consumers and the investors – for consumers, a significant portion of the generation capacity in the Nigerian Electricity Supply Industry (NESI) were stranded and could not be delivered; for investors, the investments in the generation companies could not be recovered due to the sub-optimal utilisation of the assets,” he said.

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