*FG pledges support for new project
Emmanuel Addeh in Abuja
The Nigerian Bulk Electricity Trading (NBET) and Transcorp Plc have signed a Power Purchase Agreement (PPA) for the supply of 726 megawatts of electricity by Trans-Afam Power Limited to the national grid.
THISDAY learnt that the deal would span a period of 20 years and is expected to boost power supply across the country in the coming years when it becomes operational.
The Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed, who spoke at the event in Abuja, pledged the federal government’s support for the project and expressed confidence at the capacity of Transcorp to deliver in a short time.
The minister who doubles as the board chairman of NBET, assured Afam that the company could approach any of the relevant government agencies if there were challenges in the process of executing the contract.
“ We thank Trans-Afam power for showing interest in the project. Transcorp has been one of the most significant players in the power sector. You were recently weaned off the routine monitoring by the Bureau of Public Enterprises (BPE).
“It shows that over the time, you have been able to understand the business, mobilise investment and taking the right decisions. Your bid shows you have the capacity to bring the right investment to increase performance of this plant you have bought.
“I welcome the continuous partnership with the federal government and Trans-Afam. I also need to commit on behalf of the government of our continuous cooperation and support that you will need during the course of your investment and as you manage the plant,” the minister explained.
In his remarks, the Managing Director of NBET, Dr. Nnaemeka Ewelukwa, said the deal would enable Transcorp to make capital investments to improve the capacity of the Afam power plant.
He noted that the 20-year agreement would lower the tariff over the years and enable long-term planning by the company, stressing that Trancorp had agreed to massively invest in the plant over a 15 years period.
“Basically, when we do an agreement, the longer the duration of the power purchase agreement, the lower the tariff. What you see is that with a 20-year PPA, it also shows the investor’s confidence in the country.
“This is because it is not a fire by night investor that wants to cash out within a few years. It is a 20-year solid commitment to stay put in the country and make sure that the sector works. It is a good investment for the country and for the sector,” he explained.
According to him, NBET’s part is to ensure power offtake, noting that negotiations had been on for a while in collaboration with the Nigerian Electricity Regulatory Commission (NERC), the Ministry of Justice, among others.
Ewelukwa stated that Transcorp has a footprint in the industry, explaining that the power company has agreed to ramp up generation as they get more investment.
“It’s a transaction that is good for the power sector and the country as a whole,” he noted.
On his part, the Chairman of Trans-Afam Power Limited, Stanley Lawson disclosed that Transcorp had spent over 50 million euros on the plant so far, stating that the company plans to invest another 150 million euros on the plant in the nearest future.
Lawson noted that the PPA remains a critical component of the financial viability of the plant, adding that with the PPA Afam Power will be better positioned to continue to work on its capacity recovery as well as incremental generation of electricity.
The Managing Director of Trans-Afam, Vincent Ozoude, in his comments said that the deal will empower the company with full reassurance that whatever electrons are put on the grid will be paid for.