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🇳🇬 Nigeria /Energy & Infrastructure

Lagos adopts metered electricity payments, signs three IPP deals

From The Punch · (5m ago) English

Summarized and contextualized by DistantNews.

TLDR

  • The Lagos State Government has signed three Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs) to expand embedded electricity generation.
  • The agreements with Fenchurch Power, Mainland Power, and Viathan Engineering Limited aim to improve power supply to critical state infrastructure.
  • A key policy shift involves eliminating legacy payment structures like 'take or pay' and enforcing payment for metered supplies, reducing government costs.

Lagos State is taking a significant stride towards energy independence and improved power supply by formalizing agreements with three Independent Power Producers (IPPs). The signing of these Power Purchase Agreements (PPAs) marks a strategic shift towards a more competitive, market-driven electricity framework, focusing on expanding embedded generation to power critical state infrastructure. This move is expected to enhance reliability and efficiency in the state's power sector.

Fenchurch is a brand new contract for our major water facilities in Adiyan and Iju and its environment.

— Biodun OgunleyeCommissioner for Energy and Mineral Resources, describing the scope of the new agreement with Fenchurch Power.

Commissioner for Energy and Mineral Resources, Biodun Ogunleye, detailed the new framework, emphasizing a restructuring of the state's embedded power system. The agreements with Fenchurch Power, Mainland Power, and Viathan Engineering Limited are designed to align with current market conditions, with assets positioned to be anchor providers in their respective networks. This initiative aims to guarantee premium services to state facilities and strengthen decentralized power generation.

Mainland Power remains a “renewal that is now expected to grow to be a major embedded assets serving, the Ikeja, Ikeja GRA, Oshodi and Anthony.”

— Biodun OgunleyeCommissioner for Energy and Mineral Resources, explaining the expansion of Mainland Power's role.

A crucial aspect of this new policy is the elimination of inefficient legacy payment structures, such as 'take or pay' and 'deemed energy.' The government will now enforce payment based on actual metered supplies at delivery points, a move projected to significantly reduce the cost of governance. This fiscal prudence, coupled with the deliberate building of redundancy into infrastructure, ensures that government operations are not hampered by power supply disruptions.

Viathan’s assets are already being integrated into a wider network, stating that it “is already undergoing embedded assets conversation with Eko Disco and would continue to guarantee dedicated premium services to our facilities.”

— Biodun OgunleyeCommissioner for Energy and Mineral Resources, detailing the integration of Viathan's assets.

Looking ahead, Lagos anticipates a substantial increase in generation capacity, scaling up from under 60MW to potentially 200-400MW within two to three years. This expansion will be achieved through market competition rather than draining the state treasury, promising sustainable energy solutions for its citizens. The state's commitment to robust energy infrastructure is a testament to its forward-thinking approach to development and service delivery.

All agreements have been revised to reflect our transition to a market environment, and all assets are positioned to be the first anchor in the provision of generation services in the network where they are situated.

— Biodun OgunleyeCommissioner for Energy and Mineral Resources, explaining the alignment of agreements with market conditions.
DistantNews Editorial

Originally published by The Punch. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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