AfDB pledges $200m support for coal-to-power projects
AFRICAN Development Bank (AfDB) has pledged to commit $200 million as partial risk guarantee for the country’s power industry. The funding will support government’s efforts to promote investment in coal powered plants.
Industry analysts think that this is a significant development, considering that the World Bank had hitherto demurred from lending financial support to investments in coal power technology because it is not clean energy.
Managing Director of the Nigeria Bulk Electricity Trading (NBET) Plc, Rumundaka Wonodi, last week described the AfDB gesture as a welcome development and as “an African solution to an African challenge.”
Wonodi told journalists shortly after the meeting of NBET’s board at the weekend that AfDB recognised Africa’s challenges in growing her electricity and thus came up with such support to enable her produce electricity from various sources.
“It is a 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 and 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 of 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,” said Wonodi.
The Nigerian government supports coal-to-power projects such as the 500 megawatts (MW) One Nation Energy Platform, 1000MW Atlas Petroleum and 1200MW Zuma Power.
Also speaking on the status of NBET’s statutory request for bank guarantees from electricity distribution companies for sale of electricity in the Transitional Electricity Market (TEM), Wonodi said that eight out of the 11 distribution companies had posted Letters of Credit (LC) to them.
He 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.”
Wonodi noted that with the development and subsequent ‘shadow trading’ practice between the NBET, Market Operator and the Nigerian Electricity Regulatory Commission (NERC) to test the market’s readiness for TEM, the market can comfortably take up contract trading with the hope of overcoming some initial challenges before attaining a good level of stability.