FEC okays release of N8.64b counterpart fund for Siemens electricity deal

The Federal Executive Council (FEC) on Wednesday ratified the President’s anticipatory approval for the release of N8,648,081,465.2 towards the counterpart funding for the power deal with Siemens AG, signed by the Nigerian and German governments.

The counterpart fund for Siemens is made up of €15.21 million (N6,940,081,465.20) and N1.708 billion onshore components.

Briefing State House correspondents after the 10th virtual meeting of the council presided over by President Muhammadu Buhari, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said that the memo seeking the ratification was jointly presented with her Power ministry counterpart, Saleh Mamma.

She explained that the money is for the counterpart funding for the bilateral credit facility from German Consortium guaranteed by the German government through Euler Hermes to finance the implementation of the end to end grid modernization and expansion programme of the project.

Ahmed said the amount is for the first phase of the three-phase project designed to include 23 transmission initiatives as well as 175 separate transformative projects.

She said: “So today at the council, we discussed stage one of phase one of this project under presidential power initiative. This project is designed to include 23 transmission initiatives as well as 175 separate transformative projects in the electricity distribution franchises that we have in the country

“The project will also support the regulator, Nigerian Electricity Regulatory Commission (NERC), to transition towards a programme of improving metering in the electricity industry in the country

“Let me remind us as citizens that Mr President and his German counterpart met in Abuja in 31st August 2018 and committed to jointly increase the capacity of the Nigerian electricity grid from the current capacity of 5,000 megawatts to 25,000 megawatts over a three-phased Programme

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

“The MOU is designed to deliver this end to end modernization programme which we are calling the presidential power initiative. The objective of this presidential power initiative is to address the intractable problems that have bedevilled 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 this programme is to be sourced from the German consortium and it would be guaranteed by the German government through Euler Hermes covering 85 per cent of the project cost, the highly concessional facility with two to three years moratorium, 12 years loan repayment period with an interest rate of LIBOR plus one per cent to LIBOR plus 1.2 per cent. And also the Federal Government is to provide 15 per cent counterpart funding as its contribution towards the project

“We have a provision in the 2020 appropriation revised 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. And the council approved and ratified Mr President’s approval.”

The Federal Government had in December 2019, allocated N61 billion for the Nigeria Electrification Road map which will be developed in partnership with Siemens AG.

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

Nigeria is expected to spend about €3.11 billion or N1.15 trillion across four major states. The Nigerian electrification project has three phases and it aims at achieving 25,000 megawatts of electricity in the country by 2025.

Power projects in the budget include the 3,050-megawatts Mambilla hydropower plant in Taraba State, for which N2 billion counterpart-fund was set aside. Others are 2x60MVA 132/33kV substation at Gwaram in Jigawa State (N717 million); 215MW power station in Kaduna (N190m); and Kashambilla transmission in Taraba (N506 million).

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FEC also approved the ratification of Air transport agreement between Nigeria and the United States of America, USA.

The Minister of Information and Culture, Alhaji Lai Mohammed, who disclosed this to correspondents, explained that air transport bilateral agreement is to strengthen economic, social and cultural ties between the two countries.

Mohammed, who stood in for the Minister of Aviation, Senator Hadi Sirika, said: “The Aviation Minister presented a memo today (Wednesday) on the approval for ratification of the air transport agreement between the Federal Government of Nigeria and the United States of America.

“The minister sought the council’s approval for ratification of the air transport agreement between USA and Nigeria

“You will recall that both the United States and Nigeria are parties to the Chicago Convention on the 7th of December, 1994. Article 6 of the convention actually urges parties to sign air services agreement with member states to improve social, political and economic ties.

“The US has ratified its own and Mr President and council graciously accepted today to also ratify this agreement. So, today, Mr President signed valid agreement of Air transport service between Nigeria and the US with the attendant benefits for both countries, especially as Nigeria is working towards having its own full national airline.

“So, we will now take advantage of this air transport bilateral agreement to strengthen economic, social and cultural ties between the two countries.”

The council also approved a memo urging President Buhari to ratify the Investment Promotion and Protection Agreement aimed at granting more protection to Nigerian investors.

This comes as the Federal Government in the revised National Forest Policy has suspended exploitation of charcoal in the country.

The Minister of Industry, Trade and Investment, Niyi Adebayo, in his remarks at the briefing. explained that the Investment Promotion and Protection Agreement will protect Nigerian investors when they invest abroad and to give Nigeria more protection when other investors come into the country.

Adebayo said, “The Ministry of Industry, Trade and Investment presented a memo to Council today, seeking Council’s approval for Mr President to ratify the Investment Promotion and Protection Agreement, which we signed in 2016 between Nigeria and Singapore on the one hand, and Nigeria and the Kingdom of Morocco on the other hand.

“In 2016, the Attorney-General of the Federation came up with a new model of Investment Promotion and Protection Agreement and that year Nigeria signed based on that new model between Nigeria and Morocco, and Nigeria and Singapore.

“The whole idea was to grant more protection to Nigerian investors when they invest abroad and to give Nigeria more protection when other investors come into Nigeria.

“Basically, those were what we were in FEC for and the Council graciously approved that Mr President should ratify and the Attorney-General will present to Mr President for his ratification and the agreement will come into effect thereafter.”

Also briefing, the Minister of Environment, Mohammed Mahmoud said that the council approved a new National Forest Policy to protect the nation’s forest and to create more jobs.

He said, “The new National Forest Policy is a revised policy. The old one was formulated in 2006. Why a new one? We realized that the old one is not catering to the current situation at hand. Forestry is a big sector of the economy. It provides a lot of employment opportunities, reduces poverty, provides means of livelihood and foreign exchange from the export of wood

“Without sustainable forest management, you cannot have all of these benefits

“We also know that right now particularly with the issue of climate change, the forest is a big part of climate change mitigation. The more forest we have, the more cover we seek. It means taking the emission out of our planet and stabilizing the temperature of the planet and the catastrophic effects of climate change

“So, we have revised it and produced a new one. And we believe this will go a long way in regenerating employment which is an issue at hand. Youth and women are vulnerable in rural areas; they usually bear the brunt of this issue of deforestation. The more we populate our forest with trees, the better for the people not just in the rural areas but even the economy

“Currently, we have suspended the export of forest products because we do not have enough control under the old policy. So, we have suspended that. Charcoal exploitation has been banned completely. These are some of the things that are causing degradation of our land

“When you lose the forest, it’s not just forest that you are losing; you are also losing the land because the land will be eroded. It may not support agriculture, thereby foodstuff becomes very expensive. The people around that forest area become unemployed. Poverty will increase in the long-run

“This is a policy that we feel will go a long way in safeguarding the economy and the planet at the same time, both human capital, and physical environment. It’s a collaboration between the federal government, state government, local government, non-governmental organization, CBOs, the private sector, and international organizations. This is something that all hands must be on deck.”

He said that tree planting campaign has already started unofficially with millions of trees being planted, adding, “But we will be seeking the President’s indulgence to flag off symbolically, national tree planting this year. We expect in one day everybody will plant at least one tree.”

The Minister further said that national tree planting should be something perpetual that should no longer be a yearly or monthly thing.

“This is basically what forest policy that we have just presented is all about. We have it approved today. We thank Mr President and the council for approving the policy.”

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