Internal politics and a lack of urgency by the Federal Government seem to be standing in the way of a power deal with Siemens that has the potential of solving Nigeria’s protracted power supply crisis.
The project, yet to take off almost five months after the memorandum of understanding (MoU) was signed between the company and the government of Nigeria, is supposed to see electricity supply in Nigeria move up to 25,000 megawatts per day by the year 2023, but looks set to be delayed beyond the completion date.
The development is a dampener for millions of households and businesses in Nigeria that had anticipated the deal to put paid to Nigeria’s long struggle to keep the lights on in Africa’s biggest economy.
The delay, according to a source close to the Ministry of Power, who spoke with BusinessDay, is because, after the death of former Chief of Staff to the President, Abba Kyari, the board members for the project had to begin to re-examine the whole process of what the late Kyari had concluded.
Aside this delay, the unnecessary bureaucratic process that characterises the Nigerian Civil Service is also a major contributing factor.
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President Muhammadu Buhari signed the agreement with Siemens, represented by Joe Kaeser, the CEO, in Abuja since May 2020.
German Chancellor Angela Merkel had tapped Siemens to help Nigeria develop a roadmap “to resolve existing challenges in the power sector and expand the capacity for future power needs” after a meeting the German leader had with the Nigeria President.
The plan has three phases, ultimately targeting 25,000mw of operational capacity long term from 7,000mw and 11,000mw to be achieved by 2021 and 2023, respectively, through the first two phases.
Poor electricity is a barrier to economic prosperity and development in Nigeria. The per capita electricity consumption is only just 144.48kW, compared with South Africa with 4,196.40kWh and Brazil with 2,607.37kWh, according to the World Bank.
Nigerians were hopeful when the MoU was signed between the Federal Government and Siemens because of the impact it would have on the economy.
Nigeria’s shortage of reliable power supply is a constraint on the country’s economic growth. Despite having a population of approximately 200 million, Nigeria has an installed capacity of 12,500mw and a meagre available generating capacity hovering around 7,000mw. That compares with South Africa’s generating capacity of 40,000mw.
The issuance of a letter of contractual agreement was expected to have followed almost immediately after the approval of the pre-engineering contract, which was ratified by the Federal Executive Council (FEC) sometime in July last year, the sources said.
The scope of pre-engineering contract includes Power System Simulation and Training and System Development Studies that would be considering the 25,000mw scenario of the Presidential Power Initiatives (PPI), in relation to existing grid network infrastructure from distribution to transmission and generation. But work on these things cannot happen now until the letter is issued.
The approval of pre-engineering itself guarantees the commencement of preliminary activities for the implementation of phase one of the project, but the company handling the project has been able to move forward because it has been waiting to hear from the government.
Such activities include the pre-engineering and concessionary financing aspects of the Presidential Power Initiative (PPI). PPI is a power infrastructure upgrade and modernisation programme agreed to by the Federal Government and Siemens AG of Germany, with the support of the German Government. The ultimate goal of the initiative, according to the government, is to modernise and increase the Nigerian electricity grid capacity from its current capacity of about 5,000mw to 25,000mmw.
