Buhari pushes ahead with Nigeria-Siemens electricity deal
Close to a year after the Nigerian government signed a deal with Siemens AG, President Muhammadu Buhari has approved the release of funding for the first part of an initiative aimed at ramping up electricity generation in the country.
Buhari also directed the Ministries of Power, the Ministry of Finance, and the Bureau of Public Enterprise to conclude the engagement with Siemens to commence the pre-engineering and concessionary financing aspects of the Presidential Power Initiative.
The Presidential Power Initiative is a power infrastructure upgrade and modernisation programme agreed to by the Nigerian government and Siemens of Germany, with the support of the German government.
On July 22, 2019, the Federal Government and Siemens signed a Letter of Agreement on the Nigeria Electrification Roadmap, which resulted from the meeting between Buhari and the German Chancellor, Angela Merkel, on August 31, 2018 in Abuja.
The project aims to achieve 25,000 megawatts of electricity in the country by 2025.
The Nigerian government said it would, on behalf of the other shareholders in the electricity distribution companies, invest in infrastructure upgrades in the form of improved payment systems, distribution substations, transformers, protection devices, smart meters, and transmission lines, among others.
It said in a statement on Wednesday that all DisCos had, directly and through the BPE, been diligently carried along over the last 15 months to understand in detail the challenges in the electricity systems.
It said all items to be purchased were provided by the DisCos and the Transmission Company of Nigeria and would be vetted by a professional Project Management Office.
According to the statement, the funding for the PPI will be secured under concessionary terms (up to 3-year moratorium and 12-year repayment at concessionary interest rates) through the German Euler Hermes cover, which the Nigerian government will on-lend as a convertible loan to the other shareholders in the DisCos.
It said, “President Muhammadu Buhari has approved the release of funding for the first part of the PPI, to kick-off the pre-engineering and concession financing work streams.
“To ensure fairness and transparency of the intervention, the President has also directed that the government engage the International Finance Corporation to assist in developing the commercial structure of the intervention under this Presidential Power Initiative, as well as in undertaking an independent company valuation of the DisCos.”
Buhari also directed that to ensure value for money and preserve the integrity and transparency of the procurement process under the government-to-government framework, Siemens would be solely responsible for nominating its engineering, procurement and construction partners to perform all onshore works.
“Our goal is simply to deliver electricity to Nigerian businesses and homes… Our intention is to ensure that our cooperation is structured under a government-to-government framework. No middlemen will be involved, so that we can achieve value for money for Nigerians,” the government said.
It said the initiative would deliver improved power supply nationwide, with attendant results in job creation, investor confidence, cost and ease of doing business and economic growth.
