Juliana Taiwo-Obalonye, Abuja, and Adewale Sanyaolu
The Federal Government yesterday signed a new 6-year electricity roadmap agreement with German-based Siemens to end by 2025.
The power deal which would be executed in three phases is structured under a Government-to-Government framework intended to eliminate middlemen involvement in an attempt to achieve value for money for Nigerians.
The agreement which also covers spares stipulates that all products to used in the project execution must be of highest quality German and European standards and competitively priced too.
This was even as President Muhammmadu Buhari at the signing ceremony urged Siemens, the Transmission Company of Nigeria and the Electricity Regulator to work towards achieving 7,000 megawatts of reliable power supply by 2021 and 11,000 megawatts by 2023 – in phases 1 and 2 respectively.
Buhari said he expects that with the new agreement, Nigeria would attain 25,000 megawatts by 2025 when the contract will end.
The deal is a product of meeting President Buhari held with German Chancellor, Angela Merkel on August 31, 2018, in Abuja.
He said: “We all know how critical electricity is to the development of any community or indeed any nation. And in Nigeria, whilst 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.
“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 13,000 megawatts of power generation capacity, only an average of 4,000 megawatts reliably reaches consumers.
“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.
“Our goal is simply to deliver electricity to Nigerian businesses and homes.
“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.” Buhari said
In his response, Global Chief Executive Officer of Siemens, Joe Kaeser, noted that a Letter of Agreement on the Nigerian Electrification Roadmap was submitted to President Buhari last November.
Kaeser, said the road map will enable the country achieve 7000 MW capacity of power in the first phase of the project, with up to 11,000 and 25,000 megawatts in second and third phases respectively.
Meanwhile, the Director General of Bureau for Public Enterprises (BPE), Alex Okoh, while fielding questions from State House Correspondents, described the partnership as credible.
He said what has been done so far was the technical evaluation from both the transmission and distribution to know what the gaps are in terms of the technical infrastructure to improve transmission and distribution capacity.
“If you look at the amount of losses being experienced in the entire power sector, they are really huge. We are talking about double digits losses of between 30 percent and in some DISCOS almost 70 percent ATC and C losses.
Commenting on yesterday’s power deal between the Federal Government and Siemens, Managing Director of Financial Derivatives Limited, Mr. Bismark Rewane and Associate Professor of Energy and Electricity Law, University of Lagos, Dr.Yemi Oke, said government should make details of the deal clearer to Nigerians.
They both contended that Nigerians deserve to know what component of the investment by Siemens would be borne by the citizens and Government respectively
Rewane said Government to Government transactions with a private sector in the middle raises a lot of questions that often need answers.
On the other hand, he said the solution to Nigeria’s power sector crises requires the private sector to bring on board fresh investments, adding that without a cost reflective tariff no new investment will come on stream. Rewane said power sector should not run on emergency situations but on normal business module that will take into consideration all cost including cost per mega watt that would be incurred along the value chain, adding that the country must also know the alternative solution that we have so that we can compare to solar, hydro and all other forms of energy sources.
Also commenting Oke corroborated Rewane’s assertion, on the imperative of a cost -reflective tariff, without which, it would only be in a matter of time before the country returns to the same level where it has always been in the power sector.