The Federal Government has signed a six-year electricity roadmap agreement with a German company, Siemens AG, to enhance the nation’s electricity generation from the current 4,000 megawatts to 11,000 megawatts in 2023. The deal was signed by President Muhammadu Buhari and Mr. Joe Kaeser, the global Chief Executive Officer of Siemens AG. The power deal, which comes under the Nigerian Electrification Roadmap, is structured to be executed in three phases. 

The first phase will ensure the delivery of 7,000 megawatts of electricity by 2021. The second phase with 2023 deadline is expected to increase electricity supply to 11,000megawatts, while the third phase will increase electricity supply to 25,000 megawatts in 2025. The deal also covers the delivery of software maintenance for four years that will be comparable to Egypt’s power project that was executed by Siemens, a feat which reportedly put that country’s power generation by 40 per cent capacity through the connection of 14.4 gigawatts to its national grid.

The power deal will also boost the activities of the Transmission Company of Nigeria (TCN) and the Distribution Companies (Discos). According to President Buhari, the government expectation is that by 2025, Nigeria would attain about 25,000megawatts which will more than quadruple the current average electricity transmission of 4,000megawatts. The power supply deal with Siemens is believed to have been deliberated upon during the visit of the German Chancellor, Angela Merkel, in August last year.

This agreement is perhaps the most comprehensive of all previous deals between the Nigerian government and any foreign investor in the power sector.  To ensure that the deal is seamlessly delivered, the agreement stipulates that the project will be executed by Nigeria and Germany without the involvement of middlemen.

We welcome the initiative and believe that it will help to fix the sector. The importance of electricity to the development of the country cannot be over-emphasised.  We urge the management of Siemens and the Federal Government to ensure that the work is duly executed. An enhanced power supply would lead to creation of more jobs as well as boost economic development.

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No doubt, electricity is at the heart of any development effort. Without it, nothing meaningful can be achieved. Sadly, in spite of huge investments in the sector, the nation’s power supply is still epileptic. The erratic power supply has dampened the initial enthusiasm that greeted the privatisation of the Power Holding Company of Nigeria (PHCN) that led to the emergence of the Discos in November 2013. Until now, the country has been struggling to transmit more than 4,000megawatts. Government only achieved a peak power supply of 5,222megawatts last November through the Payment Assurance Facility (PAF).

It lasted for less than 24 hours because of constraints at the transmission and distribution systems. Government acknowledged the need to upgrade the sub-transmission and distribution system. It explained that its initial reluctance to intervene was because the distribution sector was already privatised. While we welcome the new power deal, we also advise the government to explore other sources of power generation. These include hydro, solar, wind and coal.

More emphasis should be placed on renewable energy. It is unfortunate that the Mambilla hydro power project located in Taraba State, which has the potential to supply over 3,000megawatts on completion, is seemingly abandoned. Many of the state-funded Independent Power Projects (IPPs) had been abandoned because of one spurious reason or the other.

We also believe that the private sector should be allowed to invest more in the sector. Government should bear in mind that without a cost reflective tariff, no new investors will come on board.

It bears repeating that the challenge of the power sector has become so intractable. It has also forced many firms to either shut down or relocate to other West African countries. The World Bank recently rated Nigeria very low on the Ease of Doing Business due to unstable power supply. Therefore, we urge both the Federal Government and Siemens to demonstrate utmost commitment to the power deal and ensure that the target of generating 25,000megawatts in 2025 is achieved.