Nigeria distributes 14 pioneer solar PPAs between W’bank, AfDB

The power purchase agreements (PPAs) for Nigeria’s 14 pioneer solar projects which were in July signed by their promoters with the federal government, have been distributed to the World Bank and African Development Bank (AfDB) for further implementations.

Sources familiar with the development, told OGN in Abuja that the PPAs were randomly distributed to the AfDB and World Bank by the government, and that both development finance institutions have 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.

“The government shared those PPAs between the World Bank and AfDB. Some were given to AfDB and some to the World Bank but through no specific procedure,” said the source.

It was also gathered that while the World Bank has placed some governance related conditions on its work on the PPAs it got, the AfDB was undertaking its without such conditions.

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.

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.