Gas, delays in securing World Bank guarantees threaten IPPs

Delays associated with bureaucratic bottlenecks in securing the mandatory World Bank risk guarantees and gas supply agreements are threatening the completion of most ongoing independent power projects in the country, chief executive officers of independent power producers (IPPs) said Tuesday.

The CEOs told the Chairman, Nigerian Electricity Regulatory Commission (NERC), Sam Amadi, that though these elements are critical to the execution of the power projects, the difficulty in getting them in place constitutes a major challenge to the effort to complete ongoing projects and boost the country’s power supply capacity.

Representatives of over 60 licensed IPPs, who were speaking on the challenges they are facing in increasing in power generation in the country, said potentials of about 13,000 megawatts (MW) would remain locked up for as long as the IPPs delay in realizing the economic values.

Executive Director, Supertek Nigeria, Ray Oguego and Chief Technical Adviser of Geometric Power, Ben Caven, had said that the inability to overcome the gas supply and the bureaucratic bottlenecks in securing partial risk guarantee (PRG) from the World Bank are major setbacks.

 “The process of getting the PRG, assurance secured by the Federal Government to encourage investments in the power sector, will take an average of two years,” Mr. Oguego said. “This will in effect delay the signing of the power purchase agreement (PPA), and ultimately the project execution. The Federal Government should therefore find a creative alternative to the PRG.

For Mr. Caven, “Geometric might fire its first turbine of about 45MW by the first week of August, but work had stopped on the project since 2009 as a result of financial challenges.”

Though he said work has since resumed, Mr. Caven complained about the rights of ways for the transmission and distribution lines, which he said have been encroached by private buildings on account of over a year of delay in the construction.