Nigeria: 20 Gencos Sell Power Without Active Trading Agreements – NERC

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Twenty of the  25 power generation companies (GenCos) in Nigeria’s electricity market do not have active power purchase agreements (PPAs), five years after the country concluded its power market privatisation.

A status report from the Nigerian Electricity Regulatory Commission (NERC), which was obtained by THISDAY yesterday in Abuja, equally stated that 18 of the 25 power firms do not have guaranteed gas supply agreements (GSAs) with gas producers, thus indicating that transactional terms between the Gencos and gas suppliers are perhaps operated on best-endeavour basis.

According to the World Bank, PPAs secure the payment stream for a Build-Own Transfer (BOT) or concession project for an independent power plant (IPP).

It is usually between the purchasers or off-taker, which is often a state-owned electricity utility outfit like the Nigerian Bulk Electricity Trading Plc (NBET) and a privately-owned power producer.

On the other hand, GSAs are standard agreements for the sale and purchase of natural gas for delivery to a Genco or Liquefied Natural Gas (LNG) liquefaction plant.

Active GSAs and PPAs are, according to energy market experts, the model documents that signify that the electricity sector of a country is operated on firm contract basis.

However, the NERC document showed that the three hydro Gencos with generation capacities of 600 megawatts (MW) for Shiroro; 578.4MW for Jebba, and 760MW for Kainji do not have active PPAs.

Gas-fired Gencos, which include Afam; Delta; Geregu -1 and 2; Sapele 1 and 2; Egbin; Omotosho 2; Olorunsogo 2; Alaoji; Ihovbor; Calabar; Gbarain; Trans Amadi IPP; Rivers IPP; Ibom Power and Omoku, do not also have active PPAs and GSAs.

Omotosho – 1 and Olorunsogo –1 also are without GSAs but have active PPAs.

The NERC report stated that only three Gencos – 650MW Afam VI operated by Shell; 480MW Okpai plant operated by Agip, and 85MW-capacity Paras IPP have both active PPAs and GSAs.

It explained that the reason why the Gencos have not activated their GSA was that they were, “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.”

The NERC report also revealed the aggregate technical, commercial and collection loss (ATC&C) levels of the 11 electricity distribution companies (Discos) in the first five months of 2018, with Jos Disco recording the highest average of 74.6 per cent.

Abuja had 45.2 per cent; Benin – 54 per cent; Eko – 28 per cent; and Enugu – 56.2 per cent.

Ibadan,  Ikeja, Kaduna,  Kano Port Harcourt, and Yola had ATC&C loss levels of 51, 33.4, 70, 54.2, 66 and 68.6 per cent respectively between January and May 2018.

Meanwhile, Azura Power has announced the appointment of a new Managing Director, Mr. Edu Okeke.

Okeke succeeds Dr. David Ladipo, who has stepped down from the position.

A statement from the power firm which recently completed its 461MW power Genco months ahead of schedule in Edo, stated that Okeke would now replace Ladipo, who it explained, was a co-founder of Azura, and had spent more than eight years at the helm of the company. The statement said during Ladipo’s time, the company developed, built and commissioned its Genco which it said, was Nigeria’s first large-scale, privately-financed, independent power plant.

“As the company transits into 2019, he now passes the baton to his erstwhile deputy, Mr. Edu Okeke. Mr. Okeke joined Azura in 2014 as its Chief Operating Officer before becoming Deputy Managing Director in 2016,” the statement said.

It added that Okeke, who has a bachelors degree in electronic engineering from the University of Nigeria, Nsukka and an MBA from Imperial College, London, had already worked with Guiness Nigeria Plc; Schlumberger Oilfield Services; Lafarge Plc; and General Electric before joining Azura.

On Okeke’s appointment, the statement quoted Ladipo saying: “Mr. Okeke has already made a huge contribution to the Azura family. In his roles as COO and DMD, he has brought an infectious energy to every task he’s been given. He has also brought a wealth of international experience; a commitment to exceptionally high quality standards; well-honed leadership skills; and a seemingly effortless ability to bond with peope from all walks of life. From drivers to directors, from CEOs to cleaners, Mr Okeke is always able to connect at a very natural, very human, level.

“This combination of humility and charisma, proficiency and passion, perspiration and inspiration, will stand him in good stead as he takes over the leadership of Azura,” the statement concluded.

Authored By: Chineme Okafor

SOURCE: THISDAY

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