Worried by the inability of stakeholders in the power sector in Nigeria to package bankable power purchase agreement, Siemens Financial Services (SFS) has decided to come to the rescue of potential investors to enable them access financial assistance.
SFS was introduced into Nigerian market recently when Siemens Nigeria Limited hosted a project financing forum in Lagos.
As the financial adviser to the operating units of the Siemens Group, it outlines the various commercial tools it has developed to provide financial aid to qualified power projects in the Sub-Saharan African Region.
Development Funding Investment (DFI) was presented as a new initiative Siemens is employing as a market growth agent to drive the progress of power projects on the African continent. With direct foreign investment (DFI), Siemens desires to get involved at the early stages of independent power project (IPP) developments and collaborates with project developers to create a structure that makes them eligible for the funding provided in this scheme.
A key cog in the wheel of the power project development process is the negotiation of bankable power purchasing agreements (PPAs) between an IPP developer, the Bulk Trader and the DISCOs. Unfortunately, the only PPA successfully signed since the privatization of Nigeria’s Power Sector till date is Azura which Siemens is a part of.
At the Financing Forum, a panel was called to discuss the challenges with securing viable PPAs in the country’s current economic climate. The panel discussion titled “Expediting the Power Purchase Agreement Process” involved major players in the Nigeria Electricity Supply Industry and included Shu’aibu Abubakar of the Nigeria Electricity Regulatory Commission (NERC),
Mike Uzoigwe of Sahara Energy (SE) and Nosa Igbinedion of Eko Electricity Distribution Company (EKEDC).
Feelers from the panel discussion indicated that the regulatory agencies are struggling to come up with a structured solution to quicken the PPA processes.
The last panel session was with some banks addressing their roles in financing power projects. According to them, one of the major issues impeding their funding of power projects was that, in the current market and economic structure, investors are hesitant and don’t necessarily see On-grid IPP projects currently as being bankable.
They insisted that until there is a clear roadmap and action put in place by the government to undertake the reform of the power sector in order to expand supply, and address chronic issues hampering improvement in this area, there will be no encouragement for the private sector to inject funds.
It was concluded that if the federal government will focus on addressing gas pipeline vandalism and gas supply constraints, power theft, lack of power marketing and customer engagement, vandalism, generation, transmission and distribution capacities, Nigeria will be able to deliver a higher mega watt capacity to consumers nationwide.
“At Siemens, we recognise the importance of stable electricity for the improvement of the Nigerian economy; we also appreciate the challenges that are being faced by stakeholders in meeting the nation’s objectives to resolve these problems. As such, Siemens remains committed to providing innovative services and solutions that answer the needs of the nation’s energy demands”, a statement from the organization said.
Olusola Bello
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
