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FEC approves N8.64bn for Siemens’ power project

Presidency: Why Nigeria can’t back out of Azura-Edo IPP

The Federal Executive Council (FEC) has approved the release of N8.64 billion for the counterpart funding of the power deal with Siemens AG contract signed by the Nigerian and German governments last year. Briefing newsmen after the 10th virtual Council meeting chaired by President Muhammadu Buhari yesterday, Minister of Fi-nance, Budget and National Planning, Mrs. Zainab Ahmed, disclosed that the Council ratified the President’s anticipatory approval for the release of £15.21 million (N6,940,081,465.20) offshore and N1.708 billion onshore, totalling N8,648,081,465.2. The minister said the memo seeking the ratification was jointly presented with her Power Ministry counterpart, Saleh Mamma. It was for the counter part funding for the bilateral agreement with German Consortium guaranteed by the German government through Euler Hermes to finance the implementation of the end-to-end grid modernization and expansion programme of the project.

The Federal Government had, in December 2019, allocated N61 billion for the Nigeria Electrification Road Map which will be developed in partnership with Siemens AG. In July 2019, the government and Siemens signed a Letter of Agreement on the Nigeria Electrification Road Map after President Buhari and the German Chancellor, Angela Merkel, met on August 31, 2018, in Abuja. Nigeria is expected to spend about £3.11 billion or N1.15 trillion across four major states. The Nigerian electrification project has three phases and it aims at achieving 25,000 megawatts of electricity in the country by 2025. Power projects in the budget include the 3,050-megawatts Mambilla hydropower plant in Taraba State, for which N2 billion counterpart-fund was set aside.

Others are 2x60MVA 132/33kV substation at Gwaram in Jigawa State (N717 million); 215MW power station in Kaduna (N190 million); and Kashambilla transmission in Taraba (N506 million). Ahmed said the amount was earmarked for first phase of the three-phase project designed to include 23 transmission initiatives as well as 175 separate transformative projects. She said: “So at Council, we discussed the stage one of phase one of this project under presidential power initiative.

This project is designed to include 23 transmission initiatives as well as 175 separate transformative projects in the electricity distribution franchises that we have in the country. “The project will also support the regulator, Nigerian Electricity Regulatory Commission (NERC), to transition towards a programme of improving metering in the electricity industry in the country.

“The facility for this programme is to be sourced from the German consortium and it would be guaranteed by the German government through Euler Hermes covering 85 per cent of the project cost, the highly concessional facility with two to three years moratorium, 12 years loan repayment period with an interest rate of liabor plus one per cent to liabor plus 1.2 per cent. And also the Federal Government is to provide 15 per cent counterpart funding as its contribution towards the project. “We have a provision in the 2020 appropriation revised for the government’s counterpart funding.

“The Federal Government is taking the loan from the German government with the plan to onlend this particular loan to the distributing network. So, it’s a convertible loan facility to the DisCos and we will be working with the DisCos to restructure an appropriate loan agreement as soon as we are able to close out on this initial phase of the process. And council approved and ratified Mr. President’s approval.”

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