It is possible the 14 solar independent power projects (IPPs) Nigeria signed Power Purchase Agreements (PPAs) with investors in July 2016 may be constructed after all going by the latest decision of the government to extend the deadline for the expiration of the Put Call Option Agreements (PCOAs) of the investors by an additional six months.

OGN gathered from reliable sources that the six months PCOAs extension was done in July and government through the Nigerian Bulk Electricity Trading Plc (NBET) now expects investors to close-up their investments plans for the projects within this period.

In July 2016, the NBET signed PPAs with investors in the 14 solar IPPs. These projects would cost the investors $2.5 billion to be built in mostly states in northern Nigeria, but the investors could not go ahead to conclude their PCOAs following some challenges that held them back.

Some of the challenges included the reservations of the government with the tariff agreed in the PPAs for the solar IPPs. The government had after signing the PPAs reportedly turned back to question the agreed tariff. This then resulted in the NBET extending the long-stop-date for the PCOAs several times to allow the government and investors reach a conclusion on the issues.

Notwithstanding, sources close to the development in the NBET and Nigeria’s power ministry told OGN that the deadline for the PCOAs had been extended further to last until January 2019 after the last extension expired in July 2018.

“I can tell you it has been extended until January 2019. NBET informed the developers that this will be the final extension, I understand,” said one of the sources.

Another stated: “PCOAs are now being initialled,” while informing that some investors have agreed to go ahead with their projects at $0.075 cent per kilowatt hour (kWh) instead of the 11.5 cent per kWh they agreed in the July 2016 PPAs.

The source explained that a long-stop-date in this regards means the last date by which the PCOAs must be agreed and signed given that the conditions had not been satisfied by then or the agreement would have to be terminated.

Speaking in the same vein, another source noted that the government had indicated it would approve PCOAs for the projects at $0.075 cent per kWh or less. He stated that this looked challenging to the investors some of who have continued with the project.

Local newspaper – THISDAY – in February reported that progress on the projects which could generate 1,125 megawatts (MW) of power to the grid had been slowed because of alleged opaque procurement of their PPAs, as well as claims by the government that the tariffs approved therein were expensive.

In the documents the paper quoted from, it noted that the immediate past finance minister, Mrs. Kemi Adeosun, queried the 11.5 cent cost of power approved for the projects.

It equally claimed the minister raised questions about the procurement processes, adding that it was not clear to the government and as such it would hold back approval of PCOAs for them.

The government even insisted the average cost of procuring solar power globally had continued to decline and that on that basis, Nigeria was at the risk of an unhealthy sovereign risk exposure if it went ahead to approve PCOAs on 11.5 cent per Kwh for the projects.

Adeosun, pointed out in the THISDAY report that development costs for solar power have significantly declined in the past few years. She reportedly said prices for the projects’ kWh of electricity must be reasonable.

She even made references to similar competitive procurements South Africa, Zambia, Egypt and Ethiopia had within the period Nigeria had hers, and which prices she noted were between five and seven cents per kWh.

Additionally, Adeosun, who has now left office, explained then that considering the risk cover to be provided by the government in the form of Partial Risk Guarantees (PRGs) and PCOAs, the tariff in Nigeria should at least be at par with that of these countries while project costs should reflect what obtains across the globe.

She informed the government would not approve PCOAs for the projects or any other one unless it was convinced the pricing was fair, competitive, and projects viable and needed by Nigeria.