FG Approves €15.21m, ₦1.708 billion for Preliminary Power Upgrade & Modernization Programme

The Federal Executive Council, FEC, yesterday 29th July 2020, approved the payment of €15.21 million and ₦1.708 billion for the counterpart funding for the Presidential Power Initiative which has been designed to modernize and upgrade power supply and generation in Nigeria. The Programme is a counterpart initiative between the Federal Government of Nigeria, Siemens AG of Germany, and the German Government. The approval ratifies the May 27th 2020 approval and directive by President Muhammadu Buhari to the Ministry of Finance, Budget and National Planning, and the Ministry of Power, to immediately commence the preliminary stages of the Programme, which are the pre-engineering and financing aspects of the Presidential Power Initiative (PPI).

President Muhammadu Buhari had in May this year, directed the Ministries of Power and Finance, as well as the Bureau of Public Enterprise (BPE) to conclude the engagement with Siemens AG to begin the pre-engineering and concessionary financing processes of the of the PPI.

The Honourable Minister of Power, Engineer Sale Mamman

The Presidential Power Initiative (PPI) is a power infrastructure upgrade and advancement Programme agreed to by the Federal Government of Nigeria and Siemens AG of Germany, with the support of the German Government. Under the PPI agreement, the Federal Government of Nigeria will on behalf of all stakeholders in Nigeria’s Electricity Distribution Companies, invest in infrastructure upgrades in the form of improved payment systems, distribution substations, transformers, protection devices, smart electricity meters, standard transmission lines, proper and safe transformer installation, and so on.

The Federal Government, while disclosing this in May, said she has been carrying the Distribution Companies along since March 2019 through the instrumentation of the BPE, for them to understand in details, the challenges in the electricity systems. The list of items that are to be procured were provided by the distribution companies and the Transmission Company of Nigeria, TCN. The items will be vetted by a professional Project Management Office.

The Federal Government also said back in May, that the funding for the PPI will be secured under concessionary terms which could take up to 3-year moratorium and 12-year repayment at the concessionary interest rates, via the German Euler Hermes cover which the Federal Government will on-lend as a convertible loan to the other shareholders in the Distribution Companies. It was then announced that the president had approved the release of funding for the first phase (Phase 1) of the PPI, to kick off the pre-engineering and concession financing preliminaries.

The Federal Government, through its press release in May, also said:

“To ensure fairness and transparency of the intervention, the President has also directed that the Federal Government engage the International Finance Corporation (‘IFC’) to assist in developing the commercial structure of the intervention under this Presidential Power Initiative (PPI), as well as in undertaking an independent company valuation of the DisCos.

“The President has also directed that to ensure value for money and preserve the integrity and transparency of the procurement process under the Govt-to-Govt framework, Siemens AG shall be solely responsible for nominating its EPC partners to perform all onshore works; NO middlemen.
“Our goal is simply to deliver electricity to Nigerian businesses and homes…. Our intention is to ensure that our cooperation is structured under a Govt-to-Govt framework. No middlemen will be involved, so that we can achieve value for money for Nigerians.” — President Buhari

“The PPI journey started on August 31, 2018, when Chancellor Angela Merkel visited Nigeria and met with President Buhari.

“Chancellor brought along with her a business delegation that included the Global CEO of Siemens. Nigeria and Germany agreed to explore cooperation in a number of areas, including Power.

“The Presidential Power Initiative (PPI):

a. Will deliver improved power supply nationwide, with attendant results in job creation, investor confidence, cost and ease of doing business and economic growth.

b. Will provide training and capacity building for thousands of young Nigerians (non-graduates, students & graduates).

c. Will create economic opportunities for Nigerian engineering companies that will serve as local vendors for the provision of manpower and equipment.

d. Will stimulate/encourage inflow of additional investment into the power sector. 

“The ultimate goal of the PPI is to modernize and increase the Nigerian electricity grid capacity from about 5 GW currently to 25 GW, over three phases.”””””

The power supply situation in Nigeria has been bedeviled with a lot of problems and controversies and Nigerians are hopeful that going by this firm will by this Federal Government to bring lasting solutions, will become a reality.

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