Siemens Power Deal: President Muhammadu Buhari Commences Financial Aspects, Eliminates Middlemen.

by on May 27, 2020

President Muhammadu Buhari has directed the Ministries of Power, Finance, and the Bureau of Public Enterprise (BPE) to commence the pre-engineering and concessionary financing aspects of the Presidential Power Initiative with the Siemens Agency.

Details on this development was dished out by The Presidential Power Initiative (PPI) in a social media statement earlier today.

The PPI is a power infrastructure upgrade and modernization Programme agreed to by the Nigerian Government and the Siemens Agency of Germany, with the backing of the German Government.

Under the direction of the PPI, the Nigeria Government will on behalf of the other shareholders in the Electricity Distribution Cos. invest in infrastructure upgrades in the form of improved payment systems, distribution substations, transformers, protection devices, smart meters, transmission lines, etc.

President Muhammadu Buhari has to this effect, approved the release of funding for the first part of Phase 1 of the PPI, to kick-start the pre-engineering and concession financing workstreams.

The President has also directed that to ensure value for money and preserve the integrity and transparency of the procurement process under the joint government framework, the Siemens Agency will be solely responsible for nominating its EPC partners to perform all onshore works, eliminating middlemen completely.

“To ensure fairness and transparency of the intervention, the President has also directed that the Nigerian 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 Distribution Companies”, the statement continues.

“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 said.

The funding for the PPI will be secured under concessionary terms (up to 3-year moratorium and 12-year repayment at concessionary interest rates) through the German Euler Hermes cover, which the Nigerian Government will lend as a convertible loan to the other shareholders in the Distribution Companies.

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

The German Chancellor had 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) listed the following as it’s objectives:

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

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

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

Will stimulate/encourage inflow of additional investment into the power sector.
The ultimate goal of the #NigeriaPPI is to modernize and increase the Nigerian electricity grid capacity from about 5 GW currently to 25 GW, over three phases.

All Distribution Companies have, directly, and through the BPE, been diligently carried along over the last 15 months to understand in detail the challenges in the electricity systems.

All items to be purchased were provided by the Distribution Companies and Transmission Company of Nigeria(TCN), and they will be vetted by a professional Project Management Office.

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