In a move aimed at ensuring that Nigerians enjoy uninterrupted power supply, President Muhammadu Buhari has directed the Ministries of Power, Finance, and the Bureau of Public Enterprise (BPE) to seal the deal between the country and Siemens AG.
This directive was issued via the Presidency’s Twitter handle on Wednesday and will kick-start the pre-engineering and concessionary financing aspects of the Presidential Power Initiative (PPI).
“Our goal is simply to deliver electricity to Nigerian businesses and homes. We intend 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,” President Buhari said.
Recall that a PPI power infrastructure upgrade and modernization program was agreed to by the Federal Government and Siemens AG of Germany, with the support of the German Government. The ultimate goal of the initiative, according to the federal government, is to modernize and increase the Nigerian electricity grid capacity from its current capacity of about 5 GW to 25 GW, over three phases.
Under the arrangement, Nigeria on behalf of the other shareholders in the Electricity Distribution Companies (DisCos), will invest in infrastructure upgrades in the form of improved payment systems, distribution substations, transformers, protection devices, smart meters, and transmission lines among others.
The PPI journey started on August 31, 2018, when Chancellor Angela Merkel visited Nigeria and met with President Buhari. Then the Chancellor brought along with her a business delegation that included the Global CEO of Siemens. Nigeria and Germany agreed to explore cooperation in several areas, including Power.
The funding for the PPI will be secured under concessionary terms (up to 3-year moratorium and 12-year repayment at concessionary interest rates) through the German Euler Hermes cover, which Nigeria will on-lend as a convertible loan to the other shareholders in the DisCos.
According to the statement, President Buhari has approved the release of funding for the first part of Phase 1 of the PPI, to kick-off the pre-engineering and concession financing workstreams.
“To ensure fairness and transparency of the intervention, the President has also directed that the nation engage the International Finance Corporation (‘IFC’) to assist in developing the commercial structure of the intervention” the tweet reads.
