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.