A Review of the Nigerian Energy Industry

Govt provides guidelines for power purchase agreements

21 January 2015, Abuja – The Federal Government has provided guidelines that power firms are to adhere to in order to efficiently sign Power Purchase Agreements with the Nigerian Bulk Electricity Trading Company.

Prof. Chinedu Nebo

The government noted that although some of the electricity firms were aware of the guidelines, it was important to provide the PPA requirements in a handbook in order to ease and speed-up the signings of future agreements with the NBET.

The Minister of Power, Prof. Chinedu Nebo, stated that the PPA was the instrument with which the NBET would manage risks in the electricity market, adding that the initiative had encouraged various foreign investors to invest in the Nigerian power sector.

Nebo, who launched the handbook entitled: ‘Understanding Power Purchase Agreements,’ explained that the PPA was a durable agreement to cement the predictability and durability that was needed for any long-term business venture.

Represented by his Special Assistant on Gas, Mr. Frank Edozie, the minister observed that the PPA would ensure the growth that was required for new investments in the sector.

The Managing Director, NBET, Mr. Rumundaka Wonodi, said the handbook was an important contribution to the body of knowledge on electricity generation in Africa.

“It ensures that stakeholders gain a clearer understanding of many issues surrounding contractual framework for power generation, including issues of risk allocation, tariff consideration, other project agreements in the electricity value chain that need to be aligned with the PPA, project finance and force majeure, among others,” he said.

Explaining the significance of the document by citing examples of delays encountered when signing PPAs in the past, Wonodi said one of the agreements signed in the wake of the reform took up to three years before it was eventually endorsed.

The Chairman and Chief Executive Officer, Nigerian Electricity Regulatory Commission, Dr. Sam Amadi, said the nation learnt fast about privatisation reform as there was no prior experience in the private power sector.


– The Punch

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