SECTOR INSIGHT 16/06/2022
Siemens Deal Ongoing With 7000mw Projects, Network Expansion — FG
THE Federal government has said the Siemens deal that it entered with the German government in 2020 is still on course and already bearing fruits.
Nigeria’s Minister of Power, Abubakar Aliyu, gave this information while giving updates on the deal at the NEXIER power dialogue held late Tuesday, June 14, 2022 in Abuja.
Aliyu said, “Recently, I travelled to Germany to inspect the manufacture and equipment we have made orders for as part of the deal. The equipment will be coming in from September, October, November and December.
“The equipment include 10 mobile sub-stations and 10 Unitra transformers. We have got approval from the Bureau for Public Enterprise (BPE) to proceed on necessary procurements and we are evaluating the offers, which will soon get to the Federal Executive Council for approval.
“A lot is being done also to raise the operational capacity of the Nigerian Electricity Supply Industry,” the minister said.
Recall that German company, SIEMENS AG, had launched a 25,000-megawatt Presidential Power Initiative (PPI) to revamp Nigeria’s power sector.
“Siemens Nigeria and the federal government in 2020 entered into a power infrastructure revamp agreement. It is a government to government agreement,” Aliyu stated.
The deal with Siemens, the minister explained, aims to increase Nigeria’s electricity generation to 25,000mw in six years.
The $2 billion Siemens deal is structured in three phases: to take the country’s grid operational capacity from less than 5,000mw to 7000mw by 2021; increase the capacity to 11,000mw by 2023 and achieve total operational generation and national grid capacity to 25,000mw by 2025. It is expected to save Nigeria over $1bn annually.
“I am pleased to announce that we have begun implementation of the Siemens PPI with the purchase of 10 mobile transformers and 10 sub-stations. The pre-engineering segment of the Presidential Power Initiative (PPI) contract is complete and we expect contract offers on 127 Transmission and Distribution projects (Brownfield and Greenfield) from Siemens,” Aliyu stated.
He also said that for better utilisation of energy generated on the national grid, the Federal government had many key grid initiatives, with more than N125.2 billion budgeted between 2015 and 2021 for TCN and Development Finance Funding through the World Bank, African Development Bank (AfDB), French Development Agency (AFD), Japanese International Cooperation Agency (JICA) and others of up to $1.7bn.
He added that the Central Bank of Nigeria (CBN) was also funding $250m for the rehabilitation of critical interfaces between transmission and distribution to increase and stabilize power delivery. Additionally, through the Siemens PPI, the Nigerian government is bringing $2bn or more to the transmission grid.
“This is almost $4 billion secured by this administration to augment the grid. It should be noted that many of these funds are being actively spent and the results will be felt over time. We are working tirelessly to ensure that all of these investments translate to incremental delivered power.
“There are 135 ongoing projects for transmission lines, sub-stations and other associated grid infrastructures. The TCN has completed 30 key sub-station projects and 12 important transmission lines,” he noted.
Aliyu listed some of the projects to include the resuscitation of the second Egbin-Ajah Transmission Line, the recently commissioned NDPHC Lafia 2X150mva & 2X60 /132/33/330kv transmission sub-station (under NIPP), the 330kv Quad Lines from Alaoji to Onitsha and Delta Power Station to Benin, as well as the Kano to Katsina 330kv line. There is also the Lagos/Ogun Transmission Infrastructure Project under JICA funding.
He also said that the Federal government, through the CBN intervention for Transmission-Distribution interfaces, had awarded more than 30 sub-station rehabilitation contracts and done 1,570mva transformer capacity upgrades, with 34 critical transformers to be installed or replaced.
“Our investments have improved stability of the grid through the efforts of our System Operator (under TCN). Under this administration, grid stability has drastically improved: in 2021 the nation had only two adverse grid events (partial or full collapses of the grid). Compare this to a peak of 42 events in 2010 and greater than 10 events every year before 2020,” he said.
In July 2020, President Muhammadu Buhari had approved the payment of €15.21m and N1.708bn as counterpart funding for the PPI.
The Minister of Finance, Zainab Ahmed, had said $1.9m would be used for payment of transactions advisors and third-party consultants for the power project.
Ahmed also explained that €62m would be used for the procurement of mobile equipment and transformers for the transmission of power across the country.
She said, “The second approval that we got from Council today is still relating to the PPI power project and the memo was seeking the approval of Council for the award of contracts for the procurement of mobile equipment for the transmission power component of the project.
“So, 10 mobile equipment and 10 transformers in favour of Siemens AG.
“The total cost of the procurement is in the sum of 62,949,447 euros, with a delivery period of 12 to 18 months, dependent on how we’re able to push because this equipment will be manufactured specifically for us.
“The focus is to be able to very quickly enhance the power availability and capacity in the country.
“With this particular approval, we’ll be able to expand from the current capacity of 5,000 megawatts to 7,000 megawatts.”
The Federal government said that besides the increase in power supply for about 40m Nigerians, the PPI would also create, at least, 11,000 direct and indirect jobs.