Nigeria, Siemens Seal Deal to Deliver 11,000MW in 2023

Omololu Ogunmade in Abuja

President Muhammadu Buhari and the global Chief Executive Officer of a German company, Siemens AG, Joe Kaeser, yesterday signed an agreement to nearly triple Nigeria’s electricity generation from the average 4,000 megawatts to 11,000 megawatts in 2023.
The agreement, under the Nigerian Electrification Roadmap, will ensure the delivery of 7,000 megawatts of electricity in the first phase of the project in 2021.

The second phase of the agreement, which has 2023 timeline, will raise electricity supply to 11,000 megawatts.
The agreement was the fallout of the decision reached by both Buhari and German Chancellor, Angela Merkel, when she visited Nigeria on August 31, 2018. Following the visit, a Letter of Agreement on Nigerian Electrification Roadmap was submitted to The Presidency in November last year.

Before the letter of agreement was signed yesterday, several meetings involving Nigeria’s distribution companies (Discos), stakeholders in the power sector and the federal government had been held with the focus on key areas where the help of the German company would be needed to boost the activities of both the Transmission Company of Nigeria and Discos.

Such key areas will include software maintenance for four years that will be comparable to Egypt’s power project said to have been handled by Siemens and which helped in raising the North African country’s power generation by 40 per cent capacity through the connection of 14.4 gigawatts to the Egyptian national grid.
At the agreement signing ceremony in Abuja, Buhari told his guest that notwithstanding Nigeria’s capacity to generate over 13,000 megawatts of power, only an average of 4,000 megawatts get to consumers.

He tasked the new partners to change the narrative by ensuring the delivery of 7,000 megawatts of electricity in what he termed as phase one of the project in 2021 and 11,000 megawatts in its phase two by 2023.
According to him, when this is done, the difficulty which characterises the distribution and transmission of power in Nigeria would have been fixed and the country would thereafter proceed to what he termed the third phase of the agreement to deliver 25,000 megawatts of electricity.

“Our goal is simply to deliver electricity to Nigerian businesses and homes. My challenge to Siemens, our partner investors in the distribution companies, the Transmission Company of Nigeria and the electricity regulator is to work hard to achieve 7,000 megawatts of reliable power supply by 2021 and 11,000 megawatts by 2023 – in phases 1 and 2 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 25,000 megawatts,” Buhari said.
Buhari added that achieving such feats has become imperative in view of the huge importance of power to the development of any society, noting that Nigeria is blessed with the natural resources needed to achieve a reliable and qualitative power supply that can enhance economic growth and industrial development.

The president said various attempts to resolve Nigeria’s electricity crises in the past had ended in a fiasco, including the recent privatisation of the power and distribution companies. But he said the failures of the past notwithstanding; this current move was an opportunity to finally tackle the power sector crisis.

“Now, we have an excellent opportunity to address this challenge. This government’s priority was to stabilise the power generation and gas supply sector through the Payment Assurance Facility, which led to a peak power supply of 5,222 MW. Nonetheless, the constraints remained at the transmission and distribution systems.

“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.
“Whilst it was evident that more 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,” Buhari stated.
He said with the federal government’s commitment to the development of Mambilla Hydroelectric as well as various solar projects being executed in different parts of the country, “the long-term power generation capacity will ensure adequate energy mix and sustainability in the appropriate balance between urban and rural electrification.”

He added that the federal government’s plan is to ensure that the project is exclusively pursued between Nigeria and Germany without the involvement of any middleman and with the overall objective of delivering quality services to Nigerians.
The president said all products needed for the realisation of the goals and objectives of the partnership must be of German and European standards.

According to him, even though the full realisation of the objectives of the partnership will not entirely eliminate Nigeria’s electricity challenges, it will significantly address the country’s age-long power crisis, create jobs, boost investment and promote economic progress.

“Our intention is 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. We also insist that all products be manufactured to high quality German and European standards and competitively priced.

“This project will not be the solution to all our problems in the power sector. However, I am confident that it has the potential to address a significant amount of the challenges we have faced for decades.
“It is our hope that as the power situation improves, we will improve investor confidence, create jobs, reduce the cost of doing business and encourage more economic growth in Nigeria,” the president stated.

In his remarks, Kaeser assured the president that the roadmap would assist Nigeria in delivering the capacity to achieve the first phase, second phase and third phase of the initiative.
He also said he felt honoured by the agreement, promising that he would ensure that the deal is successful and helps to move Nigeria to industrial level.

“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 Siemen as a company.
“I’m 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 the big success of Nigeria, Siemen and our partners in the country.”

Fielding questions from journalists after the event, the Director General of Bureau for Public Enterprises (BPE), Alex Okoh, said the agreement had become compelling in view of the huge losses being recorded in the power sector.
According to him, such losses are not sustainable, and hence, the necessity for technical infrastructure to improve the transmission and distribution capacity of the power sector.

He said: “If you look at the amount of losses that is being experienced in the entire power sector, they are huge. We are talking about double digit losses between 30 per cent and in some Discos, almost 70 per cent ATC and C losses.
“So, that is a strong signal that the way the market is currently structured is not sustainable and if we don’t improve the critical infrastructure in terms of the winning capacity of TCN and also the distribution capacity of the Discos, then this kind of situation will persist for a long time.

“That is why we welcome this intervention and we believe that within the timelines that have been directed by Mr. President, we will be able to significantly improve power supply in the country.”