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    Home » Siemens AG power project: key details emerge

    Siemens AG power project: key details emerge

    August 11, 2020
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    *Sale Mamman

    OpeOluwani Akintayo

    Lagos — Power Minister, Mr. Sale Mamman has revealed key details about the Siemens AG power deal, a project which saw the Federal Executive Council, FEC approve a part payment of €15.21 million (N6,940,081,465.20) offshore and N1.708 billion onshore in late July.

    In a release through the Ministry of Power Facebook account, the Presidential Power Initiative, PPI project, according to him, will witness upgrading of 105 power substations and construction of 70 new ones. Thirty-five power transformers will also be manufactured and installed.

    Added to the above, 3,765 distribution transformers would be installed and 5,109 km distribution lines built with a generation capacity of over 13,000 megawatts.

    In the phase one, 7gw is expected to be achieved between now and 2021, with the upgrading of transmission and distribution of the Transmission Company of Nigeria, TCN and Distribution Companies.

    Discos are expected to contribute an additional 2gw.

    For phase two, 11gw will be achieved between 2021-2023, with full use of existing generation and last-mile distribution capacity.

    According to Mamman, phase three would see the achievement of 25gw between 2023-2025 with appropriate upgrades and expansion in generation, transmission and distribution.

    The deal also involves Siemens’ support for the regulator, the Nigerian Electricity Regulatory Commission, NERC, towards improving metering.

    Financiers are expected to get up to a three-year moratorium with a 12-year repayment at concessionary interest rates.

    While Siemens will singlehandedly pick the Engineering, Procurement, and Construction, EPC partners for the sake of transparency, all items to be purchased would be provided by the Discos and the TCN. and would be vetted by a professional Project Management Office.

    It will be backed through a German Euler Hermes cover, while the International Finance Corporation, IFC will be engaged to assist in developing the commercial structure of the intervention, as well as in undertaking an independent company valuation of the Discos.

    The deal was signed by the Nigerian and German governments in 2019.

    In July 2019, the Federal Government and Siemens signed a Letter of Agreement on the Nigeria Electrification Road Map after the President and the German Chancellor, Angela Merkel met on August 31, 2018, in Abuja.

    “Mr. President and his German counterpart met in Abuja on August 31, 2018, and committed to jointly increase the capacity of Nigeria’s electricity grid from the current capacity of 5,000MW to 25,000MW over a three-phased programme”, the Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed had told State House correspondents at the end of a meeting in.

    “After this meeting, an MOU was executed on July 23, 2019, between the Nigerian government and Siemens AG with the German government support.

    “The MOU is designed to deliver this end to end modernisation programme which we are calling the presidential power initiative. The objective of this initiative is to address the intractable problems that have bedeviled the Nigerian power industry, over a period of years.

    “The project will be implemented in three phases and the subject of our memo today is phase one.”

    The facility for the programme would be sourced from the German consortium and it would be guaranteed by the German government through Euler Hermes covering 85 percent of the project cost, with two to three years moratorium, 12 years loan repayment period.

    “We have a provision in the 2020 revised appropriation for the government’s counterpart funding.

    “The Federal Government is taking the loan from the German government with the plan to on-lend this particular loan to the distributing network. So, it’s a convertible loan facility to the DISCOs and we will be working with the DISCOs to restructure an appropriate loan agreement as soon as we are able to close out on this initial phase of the process. Council approved and ratified Mr. President’s approval,” she said.

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