This Day (Lagos)

Nigeria: NERC Considers IPP's Request for Special Power Trade Tariff

The Nigerian Electricity Regulatory Commission (NERC) has said it was considering a request for special power trade tariff made by an Independent Power Producer (IPP) Azura Powers for sale of electricity generated from its 450 megawatts (MW) thermal plant located in Edo state.

Chairman of NERC, Dr. Sam Amadi, stated at a media briefing in Abuja that although the commission was considering the request by the IPP, it would however not engage in hasty decisions that could hurt operation in Nigeria's emerging power sector.

Amadi disclosed that the request would be made opened for extensive discussion by stakeholders in the sector, adding that such request was peculiar in a sector that is undergoing a transitional phase in market rules and operations.

According to him: "The commission in its last meeting in January 2013, considered the request by the Nigerian Bulk Electricity Trading Company to allow Azura Power to have a special tariff because of the cost of gas to them. Azura power is a 450MW power plant in Edo state, it is in partnership with the government of the state and some foreign financial partners, they have done a lot of work such that they are moving very fast and want to sign a power purchase agreement with the bulk trader.

But as you know, the MYTO has given a wholesale price of electricity from gas-fired plant which means that the power purchase agreement should reflect what you are selling but if there is need for special tariff, the process requires that we see your books, look at your gas and other operational costs to ascertain that they are prudent before passing them to consumers."

He further said: "In this regard, the board resolved that since it involves giving a special tariff to an IPP, we will make it public and invite comments from stakeholders including the NNPC, gas regulator and of course the distribution companies that would be buying power from Azura to look into it because the tariff they are asking for is bigger than what NERC has published.

"The public consultation will enable the commission to agree or refuse them the request and this is important to us because we believe that any decision we make as a regulator must be guided by high transparency standard which can be guaranteed when stakeholders make contributions in the best interest of the sector."

The 450MW Azura-Edo IPP is an Open Cycle Gas Turbine (OCGT) power station and an early project to be initiated by Azura Power in its 1000MW IPP facility being developed near Benin City.

The plant is sited on a 100 hectare, large enough to accommodate future expansion of the power plant. In line with extant regulations in the sector, the project has achieved certain key milestones that include acquisition of an IPP operational licence, Certificate of Occupancy (C of O), signing of a project implementation agreement with Edo state government, completion of an environmental and social impact assessment and resettlement action plan up to World Bank standards and grant of transmission connection.

It has also completed its equity financing framework and shortlisted for World Bank Partial Risk Guarantee (PRG) series for funding support. Accordingly, it is in its final rounds of negotiations on Power Purchase Agreement (PPA) with the bulk trader as well as negotiations on Gas Purchase and Transportation Agreements. Azura expects to reach financial closure soon and begin construction in 2013.

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