Following the recent signing of power purchase agreements (PPAs) between the Federal Government and 14 front-line solar developers to generate about 1,125 megawatts through solar plants to the national grid, Waziri Bintube, the acting Managing Director of the Nigerian Bulk Electricity Trading Plc (NBET), recently clarified some potential issues in relation to some existing problems with payments for electricity by distribution companies (Discos) as well as transmission issues, ThisDay reports.
With regard to existing remittance challenges the NBET has had with the distribution companies (Discos), he said that the solar companies investments would be protected as the NBET had letters of credit (LC) from the Discos’ banks guaranteeing payment should the Discos fail to make payments to NBET. He said out of the 11 Discos, about 8 had given that guarantee. He added that the NBET had also assigned its rights in those guarantees to the Gencos who can enforce them if the Discos fail to pay.
He said there was also the World Bank partial risk guarantee; “though, it is not all the Gencos that have it, but what it does for the Gencos that have it is that if NBET and the Discos fail to pay them, then the World Bank through that structure pays them. That is why it is called partial risk guarantee and not full but kicks in when the need arises,” he added. He said NBET also has a working capital of up to $350 million which was given to it under the Euro bond facility and could be deployed in exceptional situations. In addition, the government has also given the NBET N50 billion from its privatisation proceeds from Egbin, which is in its escrow account.
With regard to the unstable transmission system he said; “The sponsors are also aware of the transmission constraints and have tried to locate their stations to areas closest to a transmission evacuation corridor. They are taking into consideration the existing constraints and optimising it within that kind of remit whilst requesting for more upgrade on the transmission.” He added; “The transmission constraints are being addressed, especially by the government now […] There are some key transmission areas like the South East corridor that once you resolve them, will sort out other impediments in the system.”
Source: Energy Mix