Nigeria’s bureaucracies may force 14 solar IPPs to reorganise funding structure

*W’Bank’s partial risk guarantee may take 9 more months to come

*NBET identifies irregularity in security bond posting, flags down affected project

Delays by Nigerian authorities to wrap up discussions with the World Bank on the latter’s expected provision of a Partial Risk Guarantee (PRG) to cover for further investments in the 14 utility scale solar power generating plants which the country signed Power Purchase Agreements (PPAs) for in 2016 may have forced some of the solar IPP promoters to consider alternative funding arrangements for their projects, OGN has learnt.

Reliably gathered in Abuja by OGN, a couple of the frontline solar IPP promoters may have initiated conversations with the Nigerian Bulk Electricity Trading Plc (NEBT) to restructure their funding plans for the projects following its delay in securing the World Bank’s PRG, almost a year after signing PPAs with them, and security bonds deposited.

It was learnt that parts of the changes they had reportedly shared with the NBET to advance their execution of the projects was to seek funding through equity as against debt which was initially on the table, but with the project’s execution phased out in smaller bits.

According to them, the idea would be to allow them raise funds through equity, so they can achieve some level of financial closures on a part of the projects since the World Bank’s PRG was taking time to come to reality.

Though the proposal is yet to be Okayed by the NBET, sources who spoke to OGN on it explained that the investors were worried about the length of time it was taking to get the World Bank to sign off on the PRG.

They noted that progress on the processes that would lead them to a financial closure for the projects was too slow, adding that it was just a couple of weeks away to make it a year since they signed the PPA with NBET on July 21, 2016 in Abuja.

Accordingly, if the proposal sails through the frontline promoters could then move on to source for investable funds through equity.

W’Bank’s PRG may not come so soon…

The development also follows discovery by OGN that it may take the World Bank up to 9 months to finalise its PRG package to Nigeria for the 14 solar IPPs.

The World Bank, it was learnt has remained meticulous in working out the PRG for Nigeria, and this is following the troubles in the country’s privatised electricity market.

The Bank had reportedly insisted on seeing the country’s plan to revive her electricity sector – the Power Sector Recovery Programme, which it initiated in partnership with the government, attain some level of committed application and execution in the market before it would put out a PRG for the solar IPPs.

This, sources in both the Bank and Nigeria’s power ministry say, may take another 9 months to come to fruition, hence, the reported decision of the IPP investors to begin to think about new funding approaches for their projects.

NBET flags down project for irregular practices…

Meanwhile, the NBET has also reportedly found out that one of the solar IPP promoters had breached its financial protocols by failing to submit its security bond in line with its established format.

The agency, the sources noted, discovered this anomaly during a periodic audit of the 14 solar IPP projects, and subsequently raised questions on how it was not detected.

The project according to the sources would be a 100 megawatts (MW) capacity plant hosted in Sokoto state.

When the irregular transaction procedures on the project were discovered, the NBET reportedly flagged it down and thus alerted the International Finance Corporation (IFC) which reportedly has a stake in the project.

The 14 solar plants are expected to generate circa 1125 megawatts (MW) of electricity into the grid, and collectively they are reportedly going to cost the promoters about $2.5 billion to accomplish.

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