A status report of the Power Purchase Agreements and Gas Supply Agreements of electricity generation companies published by the Nigerian Electricity Regulatory Commission has indicated that 20 Gencos do not have active PPAs, while another 18 do not have GSAs.
PPAs are contracts between two parties in which one party generates electricity and the other purchases the electricity. It represents agreements to purchase a certain amount of power for a certain price and for a certain amount of time, thus reducing variability of costs and profits.
On the other hand, a GSA is usually a binding mutual agreement to sell and purchase stated volumes of gas at agreed times and places and for an agreed price between gas producers or suppliers and Gencos.
Providing details as to why the Gencos do not have GSAs or PPAs, the report stated that the total installed generation capacity of the Gencos was 12,019.20MW, but the Gencos have not activated their GSAs and PPAs with the Nigerian Bulk Electricity Trading Plc (NBET) because they do not have payment guarantees from the federal government through the NBET.