The Minister of Power, Works and Housing, Babatunde Raji Fashola (SAN), has called on solar power promoters / sponsors in the country to find lasting solutions to issues hindering the operations of 16 solar power projects across the country, which it is estimated would add 1300MW to the nation’s generation capacity.
The Minister stated this during a meeting with representatives of Ministry of Federal Capital Territory, State Governments, Nigerian Bulk Electricity Trading Company (NBET), Distribution Companies (DISCOs) and prospective solar power promoters/sponsors and investors recently in Abuja.
At the end of the meeting a communiqué was issued with the following recommendations;
1. The participants agreed that the meeting is timely. Addition of all sixteen(16) projects with a total of 1,300 MW capacity would be highly beneficial for the country’s energy mix, but the projects have been unable to progress because of lack of bankable Power Purchase Agreements (PPAs)
2. Government is mindful of the burden of the premium price of solar power in the pricing regime approved by NBET, which the sponsors/promoters considered difficult in light of contracting for solar power at the prevailing premium tariff, hence they are looking at subsidy requirement to cushion the adverse effect on their investment.
3. Solar sponsors have expressed concern and frustration that bankable PPAs have not been signed after so many years of negotiations with NBET. Thus the meeting was called to agree on the way forward as follows:
· Promoters agreed to meet over the next few days to redefine and update the pricing regime as well as make specific suggestions on incentives such as duty waivers, VAT exemption and access to concessional credit facilities to help bring down the price of solar equipment.
· Some of the promoters agreed to take on an obligation to find off-takers of the premium power they will sell to NBET under the PPA. The meeting agreed that those promoters willing to proceed on this way should progress their PPAs with NBET. The Ministry and NBET will provide assistance to those promoters to engage with DISCOs, State Governments and bulk off-takers of the premium solar power.
· Over the next few weeks, the Ministry, Nigerian Electricity Regulatory Commission (NERC), Transmission Company of Nigeria (TCN) and NBET will define the process and Magnitude of capacity to be procured under competitive procurement for solar power. NERC will also commit to incorporating the competitively procured solar power into the tariff regime, so that NBET is not exposed to any subsidy requirement.