12 August 2015, Sweetcrude, Abuja – The Nigeria Bulk Electricity Trading, NBET, Plc said it concluded plans to reduce the content of Power Purchase Agreements, PPAs, to be negotiated and deployed by potential investors for setting up greenfield power generation plants in Nigeria, from three years to just six months.
The idea is to drastically cut down the length of time it takes by the organisation to negotiate setting up power generation plants and thus facilitate increased investment to generate power on time.
NBET, which is also referred to as the bulk trader, procures bulk electricity from generation companies for resale to power distribution companies in the country.
It explained that with its experience in negotiating and closing up frontline and legacy PPAs in the country’s reformed power industry, it is now able to understand and proffer solutions to recurrent issues in signing off functional PPAs with new power developers and has therefore compiled its experience to develop a prototype PPA for use in the sector.
Managing Director of NBET, Rumundaka Wonodi told journalists in Abuja that the improvements made in the PPAs templates will drastically shorten the length of time often put in negotiating and signing them up.
He noted that by this modification, it should not take more than six months for a standard PPA to be negotiated and procured for development of new power generating projects.
Wonodi explained that if approved by the Nigerian Electricity Regulatory Commission (NERC), the cut in PPAs negotiation would be down by almost two and half years.
According to him, it takes at the moment, almost three years before a closure on a standard PPA can be achieved with potential developers of power generation projects in Nigeria.
“We want to shorten the negotiation period and has therefore made our requirements clear in this new template so that once they come in, we can just begin with clear-cut negotiations,” Wonodi said.
He further stated: “We have submitted this PPA template to NERC and expects it to be approved for use.
Some of the previous PPAs we signed took about three years because we were going about discovering all their needs before treating them as they are to be treated.”
“These were things we were doing as part of discoveries but we are now saying that we have done all that in some many different scenarios and have come to a point where we know what is obtainable.
“We now have a standard bankable document that is saleable to anybody anywhere; all the stakeholders have taken a look at this and based on that, we think that we have a PPA template that is bankable and can be customised with peculiarities of projects,” he added.
Speaking more on the import of the development, Wonodi said: “With this, we will not be opening new issues and negotiations because all that could have taken time to find out and negotiated have been done and treated with this.”
PPAs are instruments used to facilitate the sale and purchase of electricity. It is usually signed between a generator and a credible off-taker as the case maybe and defines the revenue cycle in such trading arrangement.