Rumundaka Wonodi is the Managing Director/CEO, Nigerian Bulk Electricity Trading Plc spoke at the WAPIC Finance & Investment Forum.
Let’s start with some background on the history of the Nigerian Bulk Electricity Trading Plc.
The Nigerian Bulk Electricity Trading (NBET) Plc aka the Bulk Trader is a wholly owned Federal Government of Nigeria (FGN) company established in line with the requirements of the Electric Power Sector Reform Act (EPSRA).
The Bulk Trader was incorporated on July 29 2010, and holds a Bulk Electricity purchase and resale license from the Nigerian Electricity Regulatory Commission (NERC).
NBET acts as a credible and creditworthy off-taker that guarantees payments to Independent Power Producers (IPPs) by mitigating sovereign risks that would impede private sector investments in power generation, while also acting as a Central Procurer/Load Aggregator to ensure a baseline supply to each Distribution Company (DisCo) so that each Disco is guaranteed a portion of NBET’s contracted supply.
Any specific projects that you are involved in currently that you are most excited about?
NBET in the near future will be debuting its standardized Form PPAs for Gas-fired, Solar-powered, and Coal-fired Power Plants. The standardized PPAs reflect lessons learned from NBET engagements with numerous developers and their financiers. NBET believes that this will reduce time spent on project development as well as shorten the time to financial close.
NBET is finalizing PPA negotiations with Seven (7) solar IPPs. The conclusion of the tariff and subsequent approval from the sector regulator (NERC) could bring about 300MW of renewable energy to the grid, a key step to diversifying the country’s energy mix.
NBET recently initialed the PPAs for Four (4) gas IPPs. One of the IPPs (Mobil QIPP) is currently waiting for approval of the PPA and the tariff by NERC. The others are concluding their gas discussions with their prospective gas suppliers and other outstanding project development documentation.
NBET is also concluding tariff discussions with the front runner coal project (Zuma Itobe 1). The PPA for the coal transaction has been initialled and the IPP is currently working with NBET and NERC to conclude its tariff.
What in your view are the main challenges to funding in this industry?
The main challenges to funding in this industry would be the limited Foreign Direct Investment (FDI) in the flow to the sector. Attracting FDI would remain a challenge if the Nigerian Electricity Supply Industry (NESI) has not proved its financial viability. However, putting in place Cost Reflective Tariffs (CRT) is a key part of achieving financial viability and efforts are being made to actualize this and even domestic involvement including debt finance.
What needs to be done to speed up the transition to Cost Reflective Tariffs?
In reference to the aforementioned challenge, we need more public enlightenment on the need for Cost Reflective Tariffs. The Discos have to sustain their engagements with their customers to gain their buy-in and trust. They also need to improve their service to increase customer satisfaction and willingness to accept the price increase. Further, this administration has been consistent on its messaging on the need for CRT.
You are part of a panel discussion on CRT during the Africa Power Finance & Investment Forum at WAPIC – what are you expecting from this discussion? What will be your message?
I would advocate transparency in the thought process and arrival of the new tariffs as well as the proposed innovative solutions through which it can be optimised. CRT requires Discos to be innovative in structuring and sourcing debt financing.
Message: CRTs are critical to unlocking an immense potential across the value chain from gas supply right through to end users and the Nigerian people. However, Discos must tread the fine line between CRT and affordability for sustainable tariffs.
How exciting is it to be part of the Nigerian power sector right at this moment?
I feel ecstatic because of the opportunity to be part of the unlocking leadership of the Power Sector in our country. We were created as part of the solution, and are working with all parties in the value chain, to resolve issues. Therefore, things can only get better from here.