FEC Approves N8.64bn For Siemens Power Deal
The Federal Executive Council (FEC) on Wednesday approved the release of €15.21 million (N6,940,081,465.20) offshore and N1.708 billion onshore, totaling N8,648,081,465.2 towards the counterpart funding of phase one of the power deal with Siemens AG, signed by the Nigerian and German governments.
The Minister of Finance, Budget and National Planning Hajiya Zainab Ahmed, briefed State House correspondents at the end of the FEC meeting presided over by President Muhammadu Buhari.
The Minister said the memo seeking the ratification was jointly presented by her Power Ministry counterpart, Saleh Mamman.
The minister said the memo was endorsed towards the counterpart funding for the bilateral agreement from 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.
In 2019, the Federal Government and Siemens signed a Letter of Agreement on the Nigeria Electrification Road Map after President Buhari and German Chancellor, Angela Merkel, met on August 31, 2018, in Abuja.
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 3,0500 megawatts Mambilla hydropower plant in Taraba State, for which N2 billion counterpart fund was set aside.
The minister said, “So, today at the council, we discussed the stage one of phase one of this power 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 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.
“Let me remind us as citizens that Mr President and his German counterpart met in Abuja on 31st August 2018 and committed to jointly increase the capacity of the Nigeria electricity grid from current capacity of 5,000 megawatts to 25,000 megawatts over a three phase programme.
“After this meeting, an MOU was executed on 23rd of July, 2019 between the Nigeria Government and Siemens AG with the German Government support.
“The MOU is designed to deliver this end to end modernization programme which we are calling the presidential power initiative.
“The objective of this presidential power initiative is to address the intractable problems that have bedeviled the Nigerian power industry, over a period of years.
“The project will be implemented in three phases and the subject of our memo today is phase one.
“The facility for the programme is to be sourced from the German Consortium and it would be guaranteed by the German government through Euler Hermes covering 85 percent of the project cost, the highly concessional facility with two to three years moratorium, 12 years repayment period with an interest rate of liabor plus one percent to liabor plus 1.2 percent.
“And also, the Federal Government is to provide 15 percent 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 on-lend 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. “