Nigeria Approves €15.21m, N1.708bn For Siemens Electricity Deal

As part of Nigeria's financial contribution to the Presidential Power Initiative which was signed with German company, Siemens AG, the Federal Executive Council has approved the payment of €15.21 million and N1.708 billion. The capital will go into the power upgrade of Nigeria's electricity distribution.

The Presidential Power Initiative is an electricity deal between the Nigerian government and Siemens, which is supported by the German government. It is known as the "Nigeria Electrification Road map" which was initially signed in July 2019 following a meeting between President Muhammadu Buhari and the German Chancellor, Angela Merkel on August 31, 2018, in Abuja.

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Part of the deal includes transmission, distribution, metering, simulation and training. It was stated that the transmission and distribution challenges in Nigeria's power sector will be fixed with the Electrification Road map. And the recent funds approved represent 15 percent of the total contract sum.

With the support of the German government, Euler Hermes Group will provide 85 percent of the contract on concessionary terms. In May 2020, President Muhammadu Buhari had approved the electricity funding deal with Siemens AG, "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." Presidency disclosed two months ago.

Concessionary Terms Of The Deal

AllNews had reported that part of the concessionary terms includes a “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.” And there will be a three-year moratorium."

The power project is currently in phase one, and according to the special assistant to the president on digital and new media, Tolu Ogunlesi, "This phase one focused on quick-win measures to increase the end-to-end operational capacity of Nigeria’s electricity grid to 7GW.

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"Transmission projects proposed under phase one include 132/33 kV mobile substations; 132/33 kV(60 MVA) transformers, and containerized GIS substations,” Ogunlesi wrote on his official Twitter account.

There are three phases of the Nigerian electrification project which aim at achieving 25,000 megawatts of electricity by 2025 in the country. The project is to be completed in 2025, while by next year ending, 7,000 megawatts (MW) of electricity is expected to be added to the national grid by Siemens.