The total funding requirement for the first phase of the Presidential Power Initiative is €2.3bn (N991.99bn at the official exchange rate of N431.3/€), figures obtained from the Federal Government showed.
PPI is an initiative of the Federal Government conceived during a meeting between Nigeria’s President, Major General Muhammadu Buhari (retd.), and German Chancellor, Angela Merkel, on August 31, 2018.
It was conceived as a three-phase initiative to rehabilitate and expand Nigeria’s electricity grid through improved generation, transmission, and distribution
The Federal Government had to establish a special purpose vehicle, the FGN Power Company, to own and execute the PPI.
Data obtained in Abuja on Friday from the PPI Financing Structure document, put together by the FGN Power Company, showed that about 60 per cent of the €2.3bn would come from a consortium of German banks, while other financial institutions would provide the balance.
The document read in part, “The total project cost for PPI Phase 1 is estimated at €2.3bn in which about 60 per cent of the funds will come from the consortium of German banks to cover the offshore project cost.
The financing for the offshore project will be sourced from German banks at a concessionary rate, which will be covered up to 90 to 95 per cent by the Euler Hermes Aktiengesellschaft (German Export Credit Agency).
“The remaining 40 per cent of funding for the transmission and distribution onshore works will be sourced from other financiers.”
It added, “FGN Power Company has already commenced engagement with the development finance institutions for mutual collaborations on the required onshore funding.”
The company named some the DFIs to include the African Development Bank, Afrexim Bank, French Development Agency, as well as the European Investment Bank.
Nigeria’s power grid has been characterized by frequent collapse lately, plunging the country into darkness repeatedly.
The national electricity grid has collapsed about five times this year, twice in March and twice in April, before it recorded another collapse early this month (June).
To avert this and ramp up national power generation above the persistent average of 3,500 megawatts, the government in partnership with Germany came up with the PPI.
“The PPI is a government-to-government initiative, Nigeria and German government. It is being deployed in phases and we are now in phase one, to raise power generation to 7,000MW,” the Minister of Power, Aliyu Abubakar, stated at the recent Power Dialogue in Abuja.
He added, “We are taking up the transmission and distribution parts in phase one. So the distribution part is involved. We have a lot of transformers in it. The transformers are over 2,800 which are to be deployed nationwide.”
In the document obtained by our correspondent, the FGN Power Company said the PPI would modernize and upgrade power transmission and distribution infrastructure across the country by 2025.
“By investing billions of dollars into grid infrastructure, data systems, and skilled operators, the PPI will improve power delivery and spur economic growth,” it stated.
The company added, “During Phase I, the PPI will focus on ‘quick-win’ measures to increase end-to-end operational capacity to 7GW (seven gigawatts). By the end of the PPI, the grid will reach 25GW capacity, therefore quadrupling today’s capacity.
“Given the existing challenge of capacity misalignment of the electricity grid, the PPI is undoubtedly an ambitious and challenging undertaking. As such, it needs careful shepherding and government-wide coordination.”
The firm stated that FGN Power Company was founded to fill that role to safeguard the success of the PPI.
This, it said, would be done by screening and selecting vendors, managing projects and coordinating stakeholders to ensure that the PPI projects finished with efficiency and optimize available capacity.