Nigeria's leading finance and market intelligence news report.

Planned 25,000 MW suffers setback over delay in award of letter of contractual agreement

The Federal Government’s plan to achieve 25,000 megawatts of electricity by 2025 is facing a setback due to the delay in the issuance of contractual agreement letter by the ministry of finance to Siemens Power, the company working on the Presidential Power Initiative (PPI).

This has also led to delay in the release of part of the Federal Government counterpart funding for the project which is estimated to be N8.64 billion. The letter for the contractual agreement is supposed to spell out terms, conditions and the scope of the project.

Unless this happens there would be no commencement of works by Siemens Power, an industry source told Businessday in Abuja.

What is holding back the letter according to industry sources could be the unnecessary bureaucratic processes between the ministry of finance, the presidency and ministry of power.

The issuance of 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) sometimes in July this year, the sources said.

READ ALSO: Food shocks, high energy cost to push prices higher in coming months

The scope of pre-engineering contract includes Power System Simulation and Training and System Development Studies that would be considering the 25,000megawatts 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.

According to Tolu Ogunlesi, a presidential aide in the Vice President’s office when he made public the approval of the pre-engineering contract, “This phase 1 focused on “quick-win” measures to increase the end-to-end operational capacity of Nigeria’s electricity grid to 7000 megawatts. Transmission projects proposed under phase 1 include 132/33 kV mobile substations; 132/33 kV (60 MVA) transformers, and containerised GIS substations.

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 5000 megawatts to 25000 megawatts.

Whatsapp mobile

Get real time updates directly on you device, subscribe now.