The execution window for the power purchase agreements (PPAs) of Nigeria’s 14 pioneer utility scale solar plants has been extended by six months to enable promoters of the projects meet up with the condition precedents in their PPAs, OGN has learnt.
Signed in July, 2016, between the promoters and Nigeria’s federal government, OGN previously reported that the PPAs were distributed between the World Bank and African Development Bank (AfDB) for reviews and implementations.
However, reliable sources in the Nigerian Bulk Electricity Trading Plc (NBET), informed OGN 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 decision on the extension also came just few days to the one-year anniversary of the government’s initialling of the PPAs in 2016.
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 1125 megawatts (MW) 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.
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.
Also 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.