AFDB commits $200m to coal-to-power projects, says FG

In its determination to deepen the development of the renewable energy, the African Development Bank, AFDB, has offered to provide a support to the tune of about $200 million towards the growth of coal-to-power projects in Nigeria.
The Managing Director and Chief Executive of Nigerian Bulk Electricity Trading PLC, NBET, Mr. Rumundaka Wonodi, who disclosed this while briefing journalists shortly after the Board meeting of the agency in Abuja, assured that other coal-to-power projects like Zuma energy project would soon be completed.
According to Wonodi, “It is welcome news and you know that we are also working with the World Bank for Partial Risk Guarantee (PRG) to support the projects that we undertake, unfortunately, the World Bank is very reticent and they are not quite committed to giving support to coal because they deem it to be dirty fuel and not very good for the environment.
“However, the AfDB which is African, understands that Africa needs power from every source that it can, is supporting coal, we welcome that and they offered to provide it in support of some the projects that we are working on like the Zuma energy if they feel that it is necessary and some of the other coal projects that we see around the country.
“It is very welcome news and we appreciate that. I know that the financial involvement is a number that is about $200 million,” he said..
Wonodi described the recent removal of collection losses from the MYTO by the Nigeria Electricity Regulation Commission, NERC, which resulted in electricity tariff cuts as a welcome development.
He said, “The tariff that we work with is the wholesale tariff which is between us and the generation companies. To some extent, I think the collection losses were in excess and the way the commission is addressing it is based on consultation with the distribution companies.”
On the level of response from distribution companies with regards to posting Letters of Credit to NBET, Wonodi said, “Currently, we have about eight of the distribution companies that have posted their LCs which shows that they are comfortable and confident that this market can take off the way it was designed to be.”
Speaking on the activities of the agency, the MD/CEO said, “The bulk trader was established to be a broker, a go-between the generation companies and distribution companies. We buy power from the generation companies and sell to the distribution companies.
“Since our incorporation, we have been working hard towards that mandate and entering into power purchase agreements that will lead to more power to the distribution companies and just recently the regulator announced the beginning of the transitional electricity market where all these contracts that we have signed with generation and distribution companies will become live and so going forward now, you will see us participating in the market and buying that power and settling the generation companies as well as selling to the distribution companies.

“That is the latest, today the board met and continue to provide management guidance on how we are to play this role in the market.
This has already started, the transitional electricity market started by the first of February according to the declaration of NERC and so we are into it now.” On the task of playing its role in the market, he said, “It is a tasking mandate but the good thing is that this has been thought through by the government. The government has continued to implement the road map to power sector reform and we have a very strong board that is providing guidance, it is a big task but we feel we are very well prepared for it.
Speaking on the challenges of going into TEM, he said, “One of the challenges is that nobody has actually operated this our market according to contract but in the last two months, our contract management team is been working with the regulator and other stakeholders in the market including the Market Operator under what we call the ‘shadow trading’ to see how things will pan out now that we have entered into the transitional electricity market.
“The challenge is what we have been synthesizing that is going to actually happen but we have done it very well that we think that there will be some shaky periods but we will definitely get to an even level very soon. One of the things is that there are issues regarding how the tariff is been implemented around the country by each of the distribution companies and some of the distribution companies are still having challenges being able to meter customers and be able to extend service to people. And there are also in cases where you have the consumers push back when they feel the tariff has gone much higher than where it needed to be, those are the issues from the distribution end but for us where we are, we also face vandalism from gas pipeline vandalism because when it happens, generation companies do not generate enough power to go to distribution companies and then cannot be able to light up homes.
“And you find out that consumers feel very aggrieved by the fact that they have to pay some charges and the power is not coming as promised but it is not with anybody within the sector but the vandals that continue to deprive Nigerians of adequate power.
On how market fared with 100% revenue remittance within the last tow months of TEM, he explained “Like in the beginning of the TEM, that is why we have these bank guarantees from the distribution companies saying to us that they commit to making their payments and if they do not, we fall back on these guarantees, we expect that market should go the way it should go.”

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