NERC worries over 20 Inactive PPAs, 18 GSAs in Gencos

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Chineme Okafor in Abuja
A status report of the Power Purchase Agreements (PPAs) and Gas Supply Agreements (GSAs) of electricity generation companies (Gencos) published by the Nigerian Electricity Regulatory Commission (NERC) has indicated that 20 Gencos do not have active PPAs, while another 18 do not have GSAs.

PPAs are contracts between two parties in which one party generates electricity and the other purchases the electricity.

It represents agreements to purchase a certain amount of power for a certain price and for a certain amount of time, thus reducing variability of costs and profits.
There are multiple uses for PPAs, including utilities, which use them to procure power from independent power producers, and large power users, who use them to obtain preferential and steady rates from utilities.

On the other hand, a GSA is usually a binding mutual agreement to sell and purchase stated volumes of gas at agreed times and places and for an agreed price between gas producers or suppliers and Gencos.

Obtained from the webpage of the NERC by THISDAY, the report claimed that the country’s hydro Gencos – 600 megawatts (MW) Shiroro hydro plant; 578.4MW Jebba hydro plant; and 760MW Kainji hydro dam, have active PPAs.
It also stated that eight of the 10 Gencos built under the National Integrated Power Projects (NIPPs) – 500MW Omotosho NIPP; 750MW Olorunsogo NIPP; 504MW Alaoji NIPP; 500MW Sapele NIPP; 435MW Geregu NIPP; 450MW Ihovbor NIPP; 625 Calabar NIPP; and 225MW Gbarain NIPP do not have active PPAs or GSAs.

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Also, five of the legacy gas power Gencos – 300MW Afam legacy thermal plant; 765MW Delta legacy thermal plant; 435MW Geregu legacy thermal plant; 720MW Sapele legacy thermal plant; 1320MW Egbin legacy thermal plant reportedly do not have PPAs and GSAs, while only two – 336.8MW Omotosho legacy thermal plant; and 336MW Olorunsogo legacy thermal plant have full active PPAs but no active GSAs.

For Independent Power Projects (IPPs) in the country, the report explained that the duo of 650MW Afam VI operated by Shell Petroleum Development Company (SPDC); and 480MW Okpai IPP operated by Nigeria Agip Oil Company (NAOC) have full active PPAs and GSAs with their gas been self-supplied. 85MW capacity Paras IPP also has an active-bilateral and fully active GSA.
However, 136MW Trans-Amadi IPP; 180MW Rivers IPP; 198MW Ibom power IPP; and 150MW Omoku IPP, do not have active PPAs and GSAs, added the report.

Providing details as to why the Gencos do not have GSAs or PPAs, the report stated that the total installed generation capacity of the Gencos was 12,019.20MW, but the Gencos have not activated their GSAs and PPAs with the Nigerian Bulk Electricity Trading Plc (NBET) because they do not have payment guarantees from the federal government through the NBET.

“Reason for non- activation of the Gencos (take-or-pay) GSA is that the Gencos are yet to receive the expected payment guarantee from NBET or any other federal government agency. They say as soon as the guarantee is obtained, GSA will be activated under 24 hours,” explained the report.

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