The Federal Government of Nigeria has revealed that the Siemens $2 billion power deal, under the Presidential Power Initiative (PPI), will save the nation over $1 billion annually.
The nation, according to the Minister of Finance, Zainab Ahmed, loses over $1 billion annually due to technical and commercial inefficiencies along the electrification value chain. She said: “The PPI will help eliminate these inefficiencies and unlock economic value for the country.”
Recall that it was reported that the Federal Government has approved the sum of N8.64 billion as part of counterpart funding for the Presidential Power Initiative (PPI), which is also known as the Siemens Project.
Tolu Ogunlesi, a media aide to President Muhammadu Buhari had said that the approval of Phase 1 of the PPI includes projects in transmission, distribution, metering, simulation & training.
He said, “This Phase 1 focused on “quick-win” measures to increase the end-to-end operational capacity of Nigeria’s electricity grid to 7 GW. Transmission projects proposed under Phase 1 include 132/33 kV Mobile Substations; 132/33 kV(60 MVA) Transformers, and Containerized GIS Substations.”
Structure of the PPI funding:
- 85% from a consortium of banks, guaranteed by the German government through credit insurance firm, Euler Hermes.
- 15 % of FG’s counterpart funding.
- 2–3 years moratorium.
- 10–12 years repayment, at concessionary interest rates.
Saleh Mamman, Minister of Power, said, “This significant, timely and high-level intervention between President Buhari and Chancellor Merkel addresses critical infrastructure deficits in the value chain and helps reposition the power sector to become more attractive, viable and investable.”
The PPI project aims to upgrade the electricity network to achieve an operational capacity of 25,000 megawatts (MW) from the current average of around 4,500 MW, through a series of projects spanning three phases.
Siemens will begin pre-engineering works for the transmission, distribution and meter data management systems (MDMS) infrastructure across the country, to enable the development of a functional, efficient and reliable electricity grid system. Comprehensive studies and power system analysis software for the Nigerian utilities are also included.
The phase 1 of the PPI will focus on essential and quick-win measures to increase the system`s operational capacity to 7,000 MW and to significantly reduce the ATC&C financial losses. As part of Phase 1, Siemens will provide general technical training on core competency areas as well as training for employees of Nigeria’s 11 electricity distribution companies, the Transmission Company of Nigeria, and regulators, on all the equipment and software being provided by Siemens. It also includes the upgrading of 105 substations, construction of 70 new substations, installation of 35 new power transformers, laying of 5,109 kilometres of distribution lines and installation of 3,765 distribution transformers in different parts of Nigeria.
The phase 2 will target the remaining network bottlenecks to enable full use of existing generation and distribution capacities, bringing the systems operational capacity to 11,000 MW.
Meanwhile, the phase 3 will develop the system up to 25,000 MW in the long-term. This includes upgrades and expansions in both generation, transmission and distribution.
Despite more than 8,000 MW of operational power generation capacity in the country, only an average of 4,500 MW reliably reaches consumers. This inadequate power supply results in regular brownouts and blackouts and has restrained Nigeria’s economic development. Raising Nigeria’s operational electricity capacity to 25,000 MW will power various industries and businesses, as well as significantly improve access and reliability of power supply to the Nigerian people.