The Nigerian Bulk Electricity Trading (NBET) has signed an agreement with Zuma Power to purchase power from the proposed 1200MW Itobe coal-fired power plant in Nigeria.
Under the power purchase agreement (PPA), NBET will purchase power for 20 years from the 300MW first phase of the power plant to be built in Kogi State.
Construction of the unit 1 is scheduled to commence in the first quarter of 2016 with planned completion in 30 months.
The Guardian Nigeria? cited NBET managing director Dr Rumundaka Wonodi as saying: "The PPA pricing is based on the Multi-Year-Tariff-Order (MYTO) generation tariff as approved by the regulator, the Nigerian Electricity Regulatory Commission (NERC)."
The $5bn power station is designed to generate electricity using coal which is sourced from deposits in Itobe, Kogi State.
The PPA is expected to generate $12bn in revenue over the next 20 years in the region.
Zuma Energy Nigeria chairman Dr Innocent Ezuma said: "The PPA is a power purchase agreement, which is required for the project to reach financial close, because the PPA is the only source of revenue for the project.
"The decision of NERC to sub-divide the license of 1200MW into four has necessitated this speedy attainment of the execution of the PPA."
Wonodi was reported by Leadership Newspapers as saying: Wonodi said, "The development of the PPA is a major milestone for the NBET because with this we have a coal thermal PPA for the industry so that other coal projects will have a template they can borrow from and which we can use to conclude agreements with them very quickly."