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Bulk Trader, Kingline Sign PPA for 550MW Ondo IPP

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Electricity - Investors King

The Nigerian Bulk Electricity Trading Company Plc (NBET), otherwise known as the Bulk Trader, has signed a power purchase agreement (PPA) that will enable the 550 megawatts (MW) Ondo open cycle independent power project (IPP) to achieve a financial close.

The PPA was jointly signed in Abuja by the Managing Director of NBET, Dr. Marilyn Amobi and Managing Director of Kingline Development Nigeria Limited, Mr. Akinnola Fola.

The agreement will offer the project’s promoters, the opportunity to negotiate their put-call option agreement (PCOA) with the government, take a final investment decision (FID) and begin construction.

Amobi said shortly after signing the PPA, that the development was good for Nigeria’s quest to improve her power generation capacity. She explained that the NBET would expect Kingline to quickly move to site.

“For NBET, we are working assiduously every day to see that people who have to sign PPAs, the agencies they have to interact with and the foundations they need to continue to develop their project is strengthened. I hope that this is the baseline you need to move quickly to complete this project,” said Amobi.

Fola, in his remarks, said that an Engineering, Procurement and Construction (EPC) contract with South Korean firm, POSCO E&C has been signed and that construction work at the site will last for 24 months once a FID is achieved.

He also said the company was talking with Seplat for gas supply to the plant which he said will also share existing gas and transmission infrastructure with the Omotosho power plant in Ondo.

“It is a major step forward for the project, you know the PPA is a major component in this sort of project. What this indicates is that we can move to the next stage of finalising commercial discussions with our lenders and other investor because without the PPA, nobody will be willing to put down anything,” said Fola.

He further explained: “This signifies that NBET the off-taker is ready to take the power from us when we come on stream. We have secured the other heads of agreements needed and one of the last pieces of developmental activities on this is the PPA which we have initialled today.

“We intend to achieve financial close in the next four or five months and from then we can issue the notice to proceed to the contractor. The construction period will take 24 months from the time of the financial close and once that is completed we will have 550 megawatts put in the national grid.”

He said the plant will cost the promoters $550 million to build and that he expects the PCOA to be signed soon to give comfort to the lender.

“The ministry of finance is handling that (PCOA) in conjunction with the NBET. That also has to be in place and I am confident it will happen soon.

“We have practically done all we have to do and we appeal to the agencies of government to expedite action on the PCOA because it could be a major holdback,” he added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Energy

U.S. and Ghana Inaugurate New $64.7 Million Energy Infrastructure Investment at Pokuase

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electricity

U.S. Ambassador to Ghana Stephanie Sullivan joined the President of Ghana H.E. Nana Akufo-Addo and other Ghana government officials to formally inaugurate the Pokuase Bulk Supply Point (BSP) in Accra today.  The U.S. Millennium Challenge Corporation (MCC) funded the $64.7 million (GH₵ 391.9 million) electrical infrastructure project under the Ghana Power Compact.

“The Pokuase Bulk Supply Point represents sustainable infrastructure investment by the United States with Ghana that will benefit hundreds of thousands of Ghanaians now and into the future,” remarked Ambassador Sullivan at the inaugural event. “It will help deliver more reliable power to the people, places, and businesses of Accra that drive increased economic activity benefitting families, businesses, and communities.”

This represents a flagship investment under the Millennium Challenge Corporation’s Ghana Power Compact.  The Pokuase BSP will reduce outages in the power system, help stabilize voltages, and improve the quality and reliability of power supplied to the northern parts of the capital city of Accra.  It will also reduce technical losses in the power transmission and distribution system, contributing to the financial viability of the Electricity Company of Ghana (ECG) and the Ghana Grid Company (GRIDCo) in the long term.  The Pokuase BSP is now the largest-capacity BSP in Ghana at 580 megavolt amperes (MVA) and will directly benefit 350,000 utility customers.

The Government of Ghana implemented the project through the Millennium Development Authority (MiDA).  MiDA formally handed over the new power substation to ECG and GRIDCo in today’s ceremony.

The Pokuase BSP is the first major construction project to be completed under the Ghana Power Compact. The $316 million compact is helping the Government of Ghana improve the power sector through investments that will provide more reliable and affordable electricity to Ghana’s businesses and households. The compact is also funding a BSP at Kasoa and two primary substations at Kanda and Legon, in addition to other power sector investments, energy efficiency programs, and women’s empowerment programs within the power sector. The compact program will officially close on June 6, 2022.

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Crude Oil

Oil Falls Slightly as China Steps in to Curb Rising Coal Prices

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Crude oil - Investors King

Global oil prices moderated slightly on Wednesday following the Chinese government’s decision to curb high coal prices and ensure coal mines function at maximum capacity.

Brent crude, against which Nigerian oil is priced, dropped to $83.98 per barrel at 11:00 am Nigerian time. While the U.S. West Texas Intermediate (WTI) crude fell by 80 cents or 1 percent to $81.20 a barrel.

“China is planning to take steps to combat the steep rises in the domestic coal market … which could put considerable pressure on the coal price there and reverse the fuel switch to oil,” Commerzbank said.

Prices for Chinese coal and other commodities slumped in early trade, which in turn pulled oil down from an uptick earlier in the day.

China’s National Development and Reform Commission said on Tuesday it would bring coal prices back to a reasonable range and crack down on any irregularities that disturb market order or malicious speculation on thermal coal futures. read more

Oil markets in general remain supported on the back of a global coal and gas crunch, which has driven a switch to diesel and fuel oil for power generation.

But the market on Wednesday was also pressured by data from the American Petroleum Institute industry group which showed U.S. crude stocks rose by 3.3 million barrels for the week ended Oct. 15, according to market sources.

That was well above nine analysts’ forecasts for a rise of 1.9 million barrels in crude stocks, in a Reuters poll.

However, U.S. gasoline and distillate inventories, which include diesel, heating oil and jet fuel, fell much more than analysts had expected, pointing to strong demand.

Data from the U.S. Energy Information Administration is due later on Wednesday.

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Crude Oil

Oil Prices Hit Multi-year Highs on Monday

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Crude oil - Investors King

Oil prices hit multi-year highs on Monday buoyed by recovering demand and high natural gas and coal prices encouraging users to switch to fuel oil and diesel for power generation.

Brent crude oil futures were up 59 cents, or 0.7%, to $85.45 a barrel by 0900 GMT, after hitting $86.04, their highest level since October 2018.

U.S. West Texas Intermediate (WTI) crude futures climbed 90 cents, or 1.1%, to $83.18 a barrel, after hitting a $83.73, their highest since October 2014.

Both contracts rose by at least 3% last week.

“Easing restrictions around the world are likely to help the recovery in fuel consumption,” analysts at ANZ bank said in a note, adding that gas-to-oil switching for power generation alone could boost demand by as much as 450,000 barrels per day in the fourth quarter.

Cold temperatures in the northern hemisphere are also expected to worsen an oil supply deficit, said Edward Moya, senior analyst at OANDA.

“The oil market deficit seems poised to get worse as the energy crunch will intensify as the weather in the north has already started to get colder,” he said.

“As coal, electricity, and natural gas shortages lead to additional demand for crude, it appears that won’t be accompanied by significantly extra barrels from OPEC+ or the U.S.,” he said.

Prime Minister Fumio Kishida said on Monday that Japan would urge oil producers to increase output and take steps to cushion the impact of surging energy costs on industry.

Chinese data showed third-quarter economic growth fell to its lowest level in a year hurt by power shortages, supply bottlenecks and sporadic COVID-19 outbreaks.

China’s daily crude processing rate in September also fell its lowest level since May 2020 as a feedstock shortage and environmental inspections crippled operations at refineries, while independent refiners faced tightening crude import quotas.

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