FG, Siemens sign electricity deal lasting till 2025

•Buhari sets targets of 7,000mw by 2021

The Federal Government and German-based Siemens have signed an electricity road map agreement that is expected to terminate in 2025.

The implementation of the agreement is in three phrases and it comes under a government-to-government arrangement, which eliminates middlemen involvement to guarantee more value.

Also guaranteed by the agreement is the quality of the products to be manufactured which must be of German and European standards with competitive prices.

The agreement is a by-product of the meeting President Buhari and German Chancellor, Angela Merkel on August 31, 2018, in Abuja.

Speaking at the signing ceremony at the presidential villa, Abuja, President Muhammad Buhari urged Siemens, the Transmission Company of Nigeria (TCN) and the Electricity Regulator to work hard to achieve 7,000 megawatts of reliable power supply by 2021 and 11,000 megawatts by 2023 – in phases 1 and 2 respectively and 25,000 megawatts by 2025 when the contract will end.

He said: “We all know how critical electricity is to the development of any community or indeed any nation. And in Nigeria, whilst we are blessed to have significant natural gas, hydro and solar resources for power generation, we are still on the journey to achieving reliable, affordable and quality electricity supply necessary for economic growth, industrialization and poverty alleviation.

“There have been many attempts at solving the electricity problem in our country. Previous Governments have explored State-funded solutions through the ill-prepared National Independent Power Projects. They also explored the installation of large emergency power projects. There was also the partial privatization of the power generation and distribution sectors.

“These various interventions to solving the electricity problem have yielded an imbalance between the amount of power generated and the amount available for consumers. Despite over 13,000 megawatts of power generation capacity, only an average of 4,000 megawatts reliably reaches consumers.

“Now, we have an excellent opportunity to address this challenge.

“This Government’s priority was to stabilise the power generation and gas supply sector through the Payment Assurance Facility, which led to a peak power supply of 5,222 MW. Nonetheless, the constraints remained at the transmission and distribution systems.

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“This is why I directed my team to ask Siemens and our Nigerian stakeholders to first focus on fixing the transmission and distribution infrastructure – especially around economic centres where jobs are created.

“Whilst it was evident that more needed to be done to upgrade the sub-transmission and distribution system, our Government was initially reluctant to intervene as the distribution sector is already privatised.

“I am therefore very pleased with the positive feedback from private-sector owners of the distribution companies, who have all endorsed Government’s intervention to engage Siemens on this end-to-end plan to modernise the electricity grid.

“Our goal is simply to deliver electricity to Nigerian businesses and homes. My challenge to Siemens, our partner investors in the Distribution Companies, the Transmission Company of Nigeria and the Electricity Regulator is to work hard to achieve 7,000 megawatts of reliable power supply by 2021 and 11,000 megawatts by 2023 – in phases 1 and 2 respectively.

“After these transmission and distribution system bottlenecks have been fixed, we will seek – in the third and final phase – to drive generation capacity and overall grid capacity to 25,000 megawatts.

“With our strong commitment to the development of Mambilla Hydroelectric and the various solar projects under development across the country, the long-term power generation capacity will ensure adequate energy mix and sustainability in the appropriate balance between urban and rural electrification.

“Our intention is to ensure that our cooperation is structured under a Government-to-Government framework. No middlemen will be involved so that we can achieve value for money for Nigerians. We also insist that all products be manufactured to high quality German and European standards and competitively priced.

“This project will not be the solution to ALL our problems in the power sector. However, I am confident that it has the potential to address a significant amount of the challenges we have faced for decades.”

The President was confident that there would be an improvement in investors confidence, more job opportunities and reduction of the cost of doing business when the power supply situation in the country improved.

The Global Chief Executive Officer of Siemens, Joe Kaeser, in his remark, said that a Letter of Agreement on the Nigerian Electrification Roadmap was submitted to President Buhari last year November.

He added that the road map will enable the country to deliver the country’s capacity of power in the first phase of 7,000, second phase up to 11,000 and third phase 25,000 megawatts.

According to him, “That will significantly enhance the country’s power supply and gets the country to the next industrial phase. We believe we will all very much benefit together, the people of Nigeria and of course Siemen as a company.

“I’m very honoured that we were able to sign this road map today in the presence of President and our partners. I will personally make sure that this will be the big success of Nigeria, Siemen and our partners in the country.”

On the cost of the project and how long it will last, Kaeser said: “We have really talked about solutions and how it can bring power to the people literally, from generation to transmission and effective distribution. Yes, we have been talking money at this time because this about a long term partnership and is a road map which we are going to work all the way till 2025.

“The first phase is supposed to be done by 2021, the second phase till end 2022 and the final phase by 2025.”

Also speaking, the Director-General of Bureau for Public Enterprises (BPE), Alex Okoh, said what has been done so far is the technical evaluation from both the transmission and distribution to know what the gaps are, to essentially understand what the gaps are in terms of the technical infrastructure to improve the transmission and distribution capacity.

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