By Nick Tattersall
LAGOS (Reuters) - Nigeria is close to agreeing a framework to make private power generation for the national grid commercially viable, potentially unlocking billions of dollars of investment and helping end chronic power shortages.
Finance Minister Olusegun Aganga said a presidential task force had met with independent power producers in the capital Abuja on Friday and had agreed to establish a new power purchase agreement within six weeks.
The aim of the agreement is to guarantee that independent power producers (IPPs) will be able to sell power to a credit-worthy single off-taker, which will sell electricity on to distribution companies and in turn repay the IPPs.
The current intermediary, the Power Holding Company of Nigeria (PHCN), is not regarded as a credit-worthy buyer of power partly because it is failing to collect its own bills efficiently from consumers and partly because it is selling power at government-subsidised rather than market rates.
That means private companies wanting to build power plants in Nigeria are unable to find the funding to do so because they cannot guarantee that PHCN will have the capacity to repay them.
Reuters Africa
