Nigeria signs 25,000MW six-year electricity deal with Siemens

 

Nigeria and electricity giant, Siemens, have signed a power deal that will lead to the production of 25,000 megawatts of electricity by 2025.

President Muhammadu Buhari gave the indication at the Presidential Villa on Monday during a meeting with the Siemens’s Global Chief Executive Officer, Mr Joe Kaeser.

He asked Siemens, the Transmission Company of Nigeria and the regulator to work hard to achieve 7,000mw and 11,000MW of reliable power supply by 2021 and 2023 in the first and second phases of the deal, respectively.

By 2025 when the contract will lapse, a total of 25,000MW is expected to have been met.

The deal came out of the August 31, 2018 meeting between the Nigerian President and the German Chancellor, Angela Merkel, in Abuja.

Buhari said on Monday, “We all know how critical electricity is to the development of any community or indeed any nation. “And in Nigeria, while 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, industrialisation 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 privatisation 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 13,000MW of power generation capacity, only an average of 4,000MW reliably reaches consumers. Now, we have an excellent opportunity to address this challenge.”

The President recalled that his administration’s priority was to stabilise the power generation and gas supply sectors through the Payment Assurance Facility, which led to a peak power supply of 5,222MW.

He, however, lamented that the transmission and distribution systems had remained major constraints.

He said, “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.

While it was evident that more (work) 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.”

The President also said, “Our goal is simply to deliver electricity to Nigerian businesses and homes. My challenge to Siemens, our partner investors in the distribution companies, the TCN and the electricity regulator is to work hard to achieve 7,000MW of reliable power supply by 2021 and 11,000mw by 2023 – in phases one and two, 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 25,000MW.”

On his part, Kaeser recalled that a Letter of Agreement on the Nigerian Electrification Road map was submitted to the Nigerian President in November, 2018.

He explained that the road map would deliver 7,000MW in the first phase, and in the second phase, up to 11,000MW.

He said, “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 Siemens as a company.

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

Picture caption:

President Buhari and the Global CEO of the Siemens, Joe Kaeser at the State House, Abuja