$550m Ondo power plant: PPA will improve national grid by 550MW
The Power Purchase Agreement between Kingline Development and Nigeria Bulk Electricity Trading Plc for construction of 550 MegaWatts plant valued at $550m will boost the confidence of would-be investors in the project.
KLD’s Managing Director, Mr Akinnola Fola, said this in an interview with newsmen in Abuja on Sunday.
Fola, who was speaking on the $550m power plant, said, “When you have the PPA signed it gives some kind of credibility to would-be investors and lenders, the reasons being that the PPA is so important to the power business.
“So, signing the PPA indicates that finally, the project is ready to go and that investors and lenders are now ready to support the project,“ he said.
He said the benefit of the PPA to the project would guarantee the addition of 550MW of electricity to the national grid when completed.
This, the managing director said, would ensure sustainability and government’s effort to generate and distribute additional power to Nigerians.
He also said that the PPA arrangement to the project would ensure future power stability in the country.
“You have a power purchase agreement that will ensure that in the next 20 years you are going to get power at a particular price.“
He said the project sited in Ondo would attract foreign direct investments into the state through increased economic activities and employment generation for all cadre of labour during construction.
“The PPA that has been signed, we still need to have some transaction agreements with lenders and financiers, then we are looking at third quarter 2018 to archive what is called financial close.
“After that, we have 24 months to do the construction; so, tentatively we are looking at first quarter 2020 before we start what we call commercial operation deal,“ he said.
Fola said given the availability of all energy resources, Nigeria had the capacity to be sufficient in power production.
“We have adequate gas; we have enough water, rivers and wind. When you look at these natural resources that are available, there is no reason why we can’t produce adequate power.
“The presence of independent power producers in the country is a right step in the right direction taken by the government.
“A country like South Korea that is 50 million population generates 80,000MW, while Nigeria, with a population of over 160 million, we are generating 6,000MW.
“But we have capacity and capability to go the extent of generating 50,000 megawatts.
“With government opening up the power sector, more investors can come in, more independent producers can come in, more financiers can come in.
“There are enough resources in this country, there are enough finances in the world to tap into to generate our own power,“ he said.
The managing director also said that he was not scared to invest a whopping sum of $550m in a sector described by some people as uncertain.
“The market is there if you talk about the issue of how do you recover your money, there are mechanisms in place by government to protect investors, one of this is the partial risk guarantee.
“There is also the political risk insurance; there is Put Corruption Agreement. These are what international lenders will need to see to put money in the business.
“It is not only in Nigeria that this risk exists; all we need is to create an environment conducive for foreign investors to come in.
“In business, you have to take risks. Everywhere in the world, there is risk; when people who started communication came in there was risk.
“But today it is over, same with power, you won’t say because there are challenges in the sector you will not invest, no, thank God, government is making the environment enabling,“ he said.