AfDB finalises partial risk guarantee for coal-to-power

17 March 2015, Lagos – The are strong indications that the African Development Bank Group (AfDB) has finalised its introduction and deployment of a Partial Risk Guarantee (PRG) to help bolster investment in Nigeria’s coal-to-power sector.

Professor Chinedu Nebo, Nigeria's minister of Power.

Prof Nebo

AfDB, it was learnt has set up the PRG with the Nigerian Bulk Electricity Trading Plc (NBET), leaving the World Bank Group behind in the equation, to increase electricity generation by catalysing private sector investment and commercial financing in the power sector.

The World Bank allegedly frowned on possible creation of a PRG for caol-to-power generation on the ground that it is not a clean source of electricity.

It was however not clear if the PRG programme was part of AfDB’s $184.2 million which it announced under the African Development Fund (ADF) pocket for PRG in 2013 to help increase Nigeria’s electricity generation capacity and mitigate NBET’s risk exposure.

AfDB’s senior energy economist, Bokar Toure confirmed in a telephone conversation with THISDAY in Abuja that the development bank has concluded the creation of a PRG for coal-to-power development in Nigeria.

Toure did not provide the full content of the PRG,  but noted that under the framework, investors in Nigeria’s coal-to-power sector will have to meet up with AfDB’s requirements in terms of project development and execution before they can benefit from the PRG.

The PRG, it was also gathered, might have been designed to last for about 21 years. As part of the roles of standard PRGs, it will  help the NBET, a government electricity off-taker to fulfil its contractual obligations under its power purchase agreements with eligible electricity producers.

The development will in turn increase the comfort level of private sector financiers and commercial lenders investing in the Nigerian power sector privatisation programme and the coal-to-power sector.

Minister of Power, Prof. Chinedu Nebo had in a statement, applauded the AfDB’s support of Nigeria’s coal-to-power sector with its provision of the required PRG, which the World Bank had shied away from.

Nebo who noted  that Nigeria needs not join the bandwagon of environmentalists against electricity generation from coal, stated that modern technology in coal-to-power generation lends credence to the fact that its operations can be clean and free from environmental abuse.

“Those who do not want us to develop our coal, developed all their engineering technology, manufacturing and industries using coal, even today, coal still constitutes a substantial portion of their energy needs”,  Nebo.

– This Day

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