Dateline: July 22, 2019. Event: Signing of the Implementation Agreement for Nigeria in Abuja. From left to right: Onyeche Tifase, CEO Siemens Nigeria, Alex A. Okoh, Director General of Bureau of Public Enterprises, Joe Kaeser, President and CEO of Siemens AG and Regine Hess, German deputy ambassador to Nigeria.
Renowned Nigerian author, Chimamanda Adichie, has taken the German Chancellor, Angela Merkel, to task over the Siemens-Nigeria Power project.
Chimamanda had asked Merkel about the President, Major General Muhammadu Buhari (retd) regime’s contract with Siemens to increase electricity in Nigeria.
Siemens is a German multinational conglomerate that has been active in Nigeria since the 1950s, and had established its first representative office in the country in 1970.
Chimamanda and Chancellor Merkel were the guest speakers at a panel held at the Düsseldorf’s Schauspielhaus theater earlier in the month, alongside journalists and entrepreneurs Miriam Meckel and Lea Steinacker.
Their discussion focused on their own commonalities and differences, particularly as women: Adichie, as a leading feminist author and thinker, and Merkel, as the world’s most powerful female political leader.
The two women also discussed several other topics, including the state of democracy, social media, and even fashion.
In an interesting turn, Chimamanda asked Merkel about the Nigeria-Siemens project that is meant to increase electricity generation in Nigeria.
In response, the Chancellor proceeded to explain German involvements in other countries, adding, “I will get back to you. You will get your answer,” Online publication, Open Country, states.
On August 31, 2018, in Abuja, the Presidential Power Initiative (formerly the Nigeria Electrification Roadmap) was formed between Nigeria and Germany during a visit by the German Chancellor, Angela Merkel and her business delegation which included Joe Kaeser, Siemens AG CEO.
The two nations agreed to explore cooperation in several areas. One such area of cooperation aims to resolve the challenges in the power sector and to expand the capacity for future power needs.
“Siemens will help to facilitate financing for the project through the German Export Credit Agency (Euler Hermes AG), other ECA’s, and other financing Agencies,” the company stated on its website.
Last October, it was reported that the deal could end the lack of reliable power supply throughout the country and thus end what is considered the biggest obstacle to rapid economic development.
The $2bn power project, tagged, Presidential Power Initiative, is structured in three phases; and it is expected to save Nigeria over $1bn annually.
Structurally, the PPI funding is in the form of 85 percent from a consortium of banks, guaranteed by the German government through credit insurance firm, Euler Hermes; 15 percent of Nigerian government’s counterpart funding; with between two- and three-year moratorium; and 10–12-year repayment, all at concessionary interest rates.
The Federal Government subsequently approved the sum of N8.64bn as part of counterpart funding for the PPI, which is also known as the Siemens Project.
According to Tolu Ogunlesi, a media aide to the President, the approval of Phase 1 of the PPI included projects on transmission, distribution, metering, simulation and training.
“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,” Ogunlesi had said.
Also, the Minister of Finance, Zainab Ahmed, had noted that, “Nigeria loses over $1bn annually due to technical and commercial inefficiencies along the electrification value chain; adding, “The PPI will help eliminate these inefficiencies and unlock economic value for the country.”
Also speaking about the project, then Minister of Power, Saleh Mamman, had 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 from the current average of around 4,500 MW, through a series of projects spanning three phases.
According to statistics from the World Bank, only about 50 percent of Nigerians have access to electricity, which is grossly unavailable on demand.
Essentially, Siemens is to upgrade additional 22 transmission substations in Nigeria, and the journey towards this deal began on August 31, 2018, when Merkel and her business delegation, including Siemens AG CEO Joe Kaeser, visited Nigeria to meet with President Buhari.
The plan involves a five-fold increase in national generating output, the revamping of the power distribution and transmission systems in a massive construction project that promotes local skills and sustainable technology, according to Siemens.
In July 2020, Siemens Nigeria officially received approval from the Federal Government of Nigeria for the pre-engineering phase of the expansion of Nigeria’s electricity capacity to 25,000MW from the current average of around 4,500MW.
The Federal Executive Council on July 29, 2020 approved the payment of €15.21m (N6,940,081,465.20) offshore and N1.708bn onshore as part of Nigeria’s counterpart funding for the power deal with Siemens AG, signed by the Nigerian and German governments in 2019.
The total amount approved was N8,648,081,465.2.
The council also ratified the air transport agreement between Nigeria and the United States at its virtual meeting presided over by the President.
The decisions were taken at the virtual meeting of the council presided over by the President.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, told State House correspondents at the end of the meeting that the council ratified the President’s anticipatory approval for the funding.
She said the ratification was done based on a memorandum she jointly presented with the Minister of Power, Saleh Mamman.
According to reports, this first step, to be completed in 2021, involves:
- The upgrade and expansion of transmission and distribution infrastructure – the Transmission Company of Nigeria and Distribution Companies.
- The improvement of access to affordable, efficient and reliable electricity.
- The support of industrial development and economic growth – there will be significant opportunities for Nigerian companies to provide local content in the areas of site surveys and soil investigation, civil works, the supply of smart meters, data centre hosting, power system modelling, to name but a few.
In an interview with The Africa Report last October, then MD of Siemens Nigeria, Onyeche Tifase, explained that the Nigerian Electricity Regulatory Commission will ensure that suppliers get the required value for the tariffs they are paying.