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PHCN Sale: BPE Releases Power Purchase Agreement
In line with the revised transaction timeline for the
privatisation of the successor companies created from the Power
Holding Company of Nigeria (PHCN), the Bureau of Public
Enterprises has released the industry agreements. They are the
draft Power Purchase Agreement (PPA) and the draft Vesting
Contract.
The PPA is executed between power generators and the power
off-taker. For now, the off-taker is the
Nigeria Bulk Electricity Trading (NEBT) Plc.
NEBT is also known as the Bulk Trader.
The Vesting Contract is executed between the Bulk Trader and the
Power Distribution Companies. It is a mechanism that is used
during the transition period in the electricity industry reform
to ensure that the available power is shared equitably among the
Distribution Companies.
Recall that on August 16, 2011, President Goodluck Jonathan had
approved the pioneer Board of the Bulk Trader and also named Mr.
Rumundaka Wonodi, as its pioneer Chief Executive Officer. The
Minister of Finance is the Chairman of the Board of NEBT. The
Board of NEBT was inaugurated on Tuesday, August 23, 2011 by the
President.
Meanwhile, the Nigerian Electricity Regulatory Commission (NERC)
has released the revised version of the Multi-Year Tariff Order
(MYTO 2.) The document is available on the website of the
electricity regulator.
It is apt to point out that the divestiture strategy for the
privatization of the distribution companies will be built around
the MYTO. MYTO 2 will stipulate the annual investment
requirement, allowable operational expenditure, approved rate of
return on equity and other allowable expenses for each
distribution company.
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