Nigeria To Release $800m For Power Infrastructure Upgrades Under Siemens Project

The federal government at the weekend said it was concluding plans to release $800 million under the Presidential Power Initiative (PPI) to significantly enhance the government’s efforts at revamping the country’s power supply nationwide.

Specifically, the Minister of Power, Chief Adebayo Adelabu stated that the funds will be utilised for the construction of electricity substations and distribution lines under the PPI scheme also known as the Siemens project.

Adelabu, according to a statement from the ministry, spoke during a facility tour of TBEA Southern Power Transmission and Distribution Industry in Beijing, China, while  attending the China-Africa Cooperation Summit.

The PPI deal with the German Government aims to modernise, rehabilitate and expand the national grid by investing in the electricity value chain, including generation, transmission and distribution systems of the power sector.

“The money will ensure the construction of substations for Lot 2 as well as  substations and distribution lines for Lot 3 at a cost of $400 million each. Lot 2 covers Benin, Port Harcourt as well as Enugu Distribution Companies’ (Discos) franchise areas, while Lot 3 covers Abuja, Kaduna, Jos  and Kano Discos franchise areas,” the statement added.

Now long delayed, in July 2019, the federal government signed the power project deal with the German engineering firm, Siemens to deliver 7,000 megawatts of electricity to the national grid by 2021, and 11,000 megawatts by 2023 — in phases one and two of the initiative, respectively.

A year later, the federal government approved the payment of €15.21 million and N1.708 billion as counterpart funding for the project. In December 2021, the Federal Executive Council (FEC) also approved $1.9 million and €62.9 million for phase one of the project.

The planned $800m financing by the federal government in the three-phased project which is meant to expand Nigeria’s electricity to 25,000MW when completed, is believed to be another part  payment  of the counterpart funding by Nigeria.

Besides, Adelabu stated that more than 59 per cent of industries in Nigeria are off the national electricity grid because they do not see the grid as a reliable and dependable source of power supply.

 He lamented the rejection of load supply by Discos in the country, noting that for instance, just last Friday over when generation peaked at 5,170 megawatts, it had to be ramped down by 1,400 megawatts due to the inability of the Discos to pick the supply.

“This is really regrettable considering that government is on course to increase generation to 6,000 megawatts by the end of the year,” Adelabu was quoted as saying.

At a separate interactive session with TBEA’s management, Adelabu assured of the federal government’s commitment towards working with world class organisations like TBEA to achieve the vision of President Bola Tinubu for the power sector.

He stressed that this was especially in areas of transmission and distribution of the entire power sector value chain as well as Nigeria’s renewable energy segment.

Adelabu highlighted the fragility of the transmission and distribution infrastructure which he said  have become old and dilapidated as partly responsible for the sector’s challenges.

“This has led to historical epileptic supply of power to households, industry and businesses. More than 59 per cent of industries in the Nigeria are off the grid. They do not see the national grid as reliable and dependable. So a lot of them now operate their own captive, self-generated power,” he stated.

Adelabu said the administration of Tinubu was determined to transform the power sector, adding that a lot of activities had started that are gradually bringing back confidence in the sector.

Acknowledging the different initiatives of the government, Adelabu went down memory lane, explaining that in 1984, about 40 years ago, Nigeria was able to generate 2,000 megawatts, but added that it it took the country over 35 years to add another 2,000 megawatts.

“When this administration came in last year, we met around 4 gigawatts (4,000 megawatts) of power but within a year, we were able to generate a milestone of 5,170 megawatts, adding about 1000 megawatts of power within the first year. It may look small, but compared to the history of the country, this is commendable.

“Our plan is that by the end of the year, we aim to achieve 6,000 megawatts of power through a combination of hydroelectric power plants and our gas-fired power plants. We are also targeting 30 gigawatts of power to be generated, transmitted and distributed by year 2030, out of which 30 per cent would be renewable energy”.

 The minister said the renewable energy segment will come from a combination of  hydroelectric power from small dams, solar energy sources and wind farms from onshore and offshore winds.

On the issue of the construction of the super-grid, the minister said the national grid in its present state cannot support the vision for the power sector.

“If we look at the strength, the capacity and the age of our existing network on the national grid, it cannot really support our vision for the power sector hence the need for the construction of the Western and Eastern super grid.

“Though we have been on this since my resumption, I can also tell you that the president is in full support of this because this will improve our transmission network, stabilise the grid and also expand the capacity and the flexibility of the national  grid,” Adelabu pointed out.

He said 90 per cent of the approval required was already in place and would be concluded soon.

Speaking earlier, President of TBEA, Huang Hanjie assured of the organisation’s continued support for Nigeria’s government vision for the power sector, disclosing that TBEA operates across 100 countries in the world and would be willing to share its experience in the provision of energy.

 He said TBEA was not new in Nigeria, adding that the company is presently  working with the Omotosho power plant in Ondo State, owned by the Niger Delta Power Holding (NDPHC).

Hanjie also commended the minister for what the statement described as the improvement in the power sector as evidenced in improved generation and transmission since his assumption of office.

While also acknowledging the short-term improvement to 6 gigawatts by December 2024 and 30 gigawatts by 2030, he said TBEA would be willing to work with the Nigerian government to achieve the vision and contribute to the ongoing efforts in the country.

On the proposed super-grid by the Nigerian government, he also indicated TBEA’s interest in participating by contributing its expertise to guarantee its success.

Emmanuel Addeh

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