Nigeria To Review $2bn Siemens Deal, Says Power Minister Adelabu

Nigeria’s Minister of Power, Mr Bayo Adelabu, on Monday night, said the federal government was set to review the Siemens power deal with Nigeria, which would have seen the incremental rise in supply from the current 4,000mw to 25,000mw by 2025.

Speaking ARISE News, Adelabu argued that the prevailing conditions when the contract was signed had changed and would be requiring a review.

However, he stated that part of the agreement which requires the importation of mobile stations and transformers had been fulfilled, and will raise the capacity of the Transmission Company of Nigeria (TCN) by 1,300mw.

“We went into talks with the German government to support us technically, to improve power infrastructure in Nigeria, to increase energy access to households, businesses and industries. And we agreed that it was going to be a three-phase project.

“Phase one was agreed to improve the country’s transmission capacity from 5,000 to 7000mw. Phase two was to take it to 11,000mw, while phase three will take it to 25,000mw over a period of seven years.

“But then we know that the project has suffered a lot of challenges and number one was the COVID-19 pandemic which delayed the project.

“And we also had a political transition during this period. We had lots of regulatory reforms and there have been lots and lots of activities in terms of new investments into the sector in the last five years.

“So, the situation is no longer the same as we had in 2018. So, what we are doing is to actually have a holistic review of the entire scope of this project and try to amend it to suit the current situation.

“But I must mention that as part of these three phases of the project, we agreed on the pilot project that was to actually exhibit the impact of the government-to-government cooperation on the Siemens project. The pilot project was to allow Siemens to bring into the country 10 power mobile substations and 10 power transformers to be installed to actually reduce the gap in the transmission capacity.

“I’m happy to tell you that this time, transformers have arrived the country, mobile stations have also arrived the country. The process of commissioning has started, and we will soon start installation of these transformers.

“I believe that by the time we’re done with the installation of these 10 transformers and substations, we expect that it will improve our transmission capacity by 1,300mw,” he added.

In terms of achievements of the power sector in the last 10 years, he explained that if it has to do with the objectives and intentions of government that actually led to privatization, which is increasing energy access to various households, to small businesses and to industries, not much had been achieved.

While blaming the failure on the entire value chain, Adelabu noted that major stakeholders have not fulfilled their part of the bargain.

“It is actually not the fault of one set of stakeholders, it is actually the fault of everybody. For the private sector stakeholders, I will say that a lot of them have not kept to the terms and conditions of the privatisation. There’s also technical capacity of the majority of operators in the industry.

“I will also say that there are very important investments in improving the infrastructure for power sector. We also agreed on possibility of reducing the ATC&C losses by the sector distribution companies.

“We have not seen this come to what we agreed.  In terms of metering gap, we have not been able to close the metering gap for households, for businesses and for industries.

“Today, we still have close to 8 million metering gap and if you don’t meter, you cannot measure, if you don’t measure, you cannot bill, if you don’t bill, you cannot collect and collection has been very poor. But the name of this game is liquidity,” he argued.

Speaking on incessant power collapses, the minister said there had been a long period of respite before the last incident triggered by a fire incident.

“I can tell you that before the collapse that we experienced last month, which was due to the fire outbreak in one of our major injection substations, the last time the transmission witnessed collapse was in June 2022, which was almost over 400 days before the last collapse.

“I will agree with you that the transmission infrastructure is old.  The substations are weak and the lines are weak. But the government has continued to invest in infrastructure improvements in the last few years. We will start seeing the impact on this, going forward,” he stressed.

Emmanuel Addeh, James Emejo and Funmi Ogundare

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