*Decision pushed by pressure from northern governors
Nigeria would rekindle its negotiations on Put Call Option Agreement (PCOA) with 14 pioneer utility scale solar plants expected to generate more than 1000 megawatts (MW) of solar-based electricity when constructed.
This is following disclosure that the decision to restart the negotiations was informed by pressures mounted on the government by governors in the northern states where the plants would be built.
OGN learnt in Abuja, that a meeting has thus been scheduled between investors in the projects and relevant government representatives which include the permanent secretary in the ministry of power, Mr. Louis Edozien, as well as the Nigerian Bulk Electricity Trading Plc (NBET) on Wednesday in Abuja.
Though, OGN could not immediately ascertain if all the 14 investors would be part of the meeting, however, sources that are privy to the development stated that most of the frontline investors who had shown immense commitment to their projects and have continued to push the government to advance its commitment to them, would be part of it.
Before now, the NBET extended the execution window for the power purchase agreements (PPAs) of the projects by six months to enable their promoters meet up with the condition precedents in their PPAs.
The PPAs were signed in July, 2016, between the promoters and the government. OGN previously reported that the PPAs were distributed between the World Bank and African Development Bank (AfDB) for reviews and implementations.
Sources in the NBET, informed OGN then that an extension which would take up to January 2018, was granted the promoters to enable them conclude their conditions precedents, after which the NBET would sign off on them.
The PPAs were randomly distributed to the AfDB and World Bank by the government, and both development finance institutions have reportedly being working on closing them out to enable promoters achieve financial close for the projects.
Collectively, the 14 projects would when completed, generate 1125MW of solar electricity to augment Nigeria’s electricity generation capacity. They will cost the promoters $2.5 billion.
When completed, the solar projects would with their capacities, buttress Nigeria’s plan to diversify its energy mix.
Also, by definition, PPA is a contract between two parties, one which generates electricity (the seller) and one which is looking to purchase electricity (the buyer).
Typically signed to last from 10 to 25 years, PPAs secure the payment stream for a Build-Own Transfer (BOT) or concession project for an independent power plant (IPP).
It usually takes the place of a BOT or concession agreement, and in addition to obligations relating to the sale and purchase of the power generated, the PPA also sets out the required design and outputs and operation and maintenance specifications for the power plant.
In terms of sale of capacity and energy, the power producer agrees to make available to the purchaser the contracted capacity of energy and deliver the energy in accordance with the PPA.