Nigeria: Agreement Signed with a German company to boost electricity supply

President Buhari, Vice-President Yemi Osinbajo, Officer of Siemens, Joe Kaeser and others in Abuja
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Nigeria has signed an agreement on the electricity road map with a German-based company, Siemens.

The deal was signed on Monday at the Presidential Villa, Abuja.

Director-General of the Bureau of Public Enterprises, Alex Okoh signed on behalf of Nigeria while the Chief Executive Officer of Siemens, Joe Kaeser signed on behalf of his company.

The deal is the product of a meeting between President Muhammadu Buhari and German Chancellor, Angela Merkel last year.

In his remarks at the signing ceremony the Nigerian leader said that the agreement would help fix the power sector in Nigeria, thus enhancing economic development.

I recall my meeting in late August, last year, with Chancellor Merkel here in Abuja, when both our Governments committed to future cooperation to support economic growth and development in Nigeria. We were clear that fixing the power sector was a key priority for this administration.

“It was during that event that Mr Joe Kaeser, CEO of Siemens AG committed to working with Nigeria to develop a feasible roadmap to modernise our electricity grid with support from the German Government.

“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, industrialization and poverty alleviation.

Good Opportunity

He said previous administrations have made futile attempts in the past to fix the problem, but the opportunity from Germany through Siemens is a good one that can provide the needed solution.

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 centers 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 privatized,” he said.

The President, who appreciated the contributions of the private sector, however, gave distribution companies a target of between 7000 and 11,000 megawatts by 2023.

He said: “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 modernize the electricity grid.

“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.”

President Buhari said the agreement would be structured strictly under a government to government framework, stressing that no middlemen would be involved, in order to achieve its goals.

“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,” he said.

On his part, the Chief Executive Officer, CEO of Siemens, Mr. Joe Kaeser said the signing of the agreement was a milestone in the relationship between Nigeria and Germany.

“The journey to this landmark started in August 2018 when the German Chancellor and the Nigerian President met to talk about the opportunities on how to strengthen our populations.

“The two leaders said the energy was top on their agenda of what they discussed and clearly without affordable, reliable and sustainable energy in supply, Nigeria cannot be able to achieve sustainable economic development.

“With this agreement and the support of the German government, Nigeria is stepping up to meet this challenge,” he said.

Kaeser thanked all power sector stakeholders and investors in Nigeria, for what he called their outstanding support.

The partnership on the road map for power generation will aid the activities of the Transmission Company of Nigeria (TCN) and the eleven DisCos within the country, including software maintenance and support for four years, with a source claiming the project can be compared to that of Egypt megaproject.

Vice President Yemi Osinbajo and the secretary to the Government of the Federation, Boss Mustapha were also present at the signing ceremony.

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