Almost three months after posting their respective security bonds to the Nigerian Bulk Electricity Trading Plc (NBET), the 14 solar power promoters who signed power purchase agreements (PPA) with Nigeria to build 1125 megawatts (MW) capacity solar farms across the country are yet to get their Partial Risk Guarantees (PRG) determined by the government.

OGN learnt from reliable industry sources that the PRG – a suite of legal framework that covers private lenders, or investors against the risk of a government failing to perform its contractual obligations with respect to a private project, has not be concluded on by Nigerian authorities.

The country, it was further learnt has also distributed the 14 solar projects to the World Bank and African Development Bank (AfDB) to cover their PRGs. The process has however remained quite slower than expected by promoters.

OGN could not reach the relevant authorities to comment on this development. A promoter however disclosed that the process which started at a very feverish speed, has suddenly tarried. The promoter noted that this would affect the final investment decision (FID) on the projects that are mostly in the northern states of the country.

In September, the NBET announced that it had received the security bonds of 11 promoters for the solar projects and was expecting the remaining three in September and October. It noted that $20,000 per megawatts was deposited by the promoters.

“The NBET is pleased to announce that 10 (Ten) of the Eleven (11) Independent Power Producers (IPP) that executed the front-runner solar Power Purchase Agreements (PPAs), on July 21, 2016 successfully posted their development securities to NBET on the due date of September 9th, 2016.”

“A key requirement of the contract is for each developer to post a $20,000 per MW development security letter of credit which provides security for the IPPs obligation to achieve the Financial Closing Date by the target closing date (the date which is Six (6) months after the execution of the PPA) or the long stop closing date (the date beyond which the target closing date may not be extended) as set in the Schedule 1 of the PPA. The development security will be refunded to the IPP when the closing date is met after which the IPP will begin construction of the plant,” NBET had said in its September statement on the bond deposits.

It added: “It is important to note that the additional three (3) IPPs that executed their PPA are expected to post their development security on their due date of September 28th 2016 and October 02, 2016. Furthermore, NBET notes that the posting of development security by 10 out of the 11 IPPs that were due is a testament to investor confidence in the Nigerian power sector and continued interest in the development of the same.”