Minister silent on SIEMENS deal, two years after launch

NIGERIA’S Minister of Power Abubakar Aliyu has remained silent on the completion dates for the SIEMENS deal, as concerns of ambiguity still becloud the project two years after launch, The ICIR has learnt.

In a statement to mark 50 days in office, the minister failed to give specific updates and the set completion date for the project touted to be strategic in revamping Nigeria’s power infrastructure fortune.

The minister’s silence follows   two years after Muhammadu Buhari, the German government and a German company, SIEMENS AG, launched a  25,000 megawatts Presidential Power Initiative, PPI, to revamp Nigeria’s

Findings, however, revealed that work is yet to take off at any power station under phase one of the project, which is  expected to raise the electricity grid to 7,000MW by the end of the year, despite the agreement entered into by the parties.

“SIEMENS Nigeria and the federal government in 2020 entered into a power infrastructure revamp agreement. It is a government to government agreement,” he stated, without giving any specific progress report on the project.

The deal with Siemens aims to increase Nigeria’s electricity generation to 25,000 megawatts (MW) in six years.

Findings show the $2 billion power project is structured in three phases; to take Nigeria’s operational capacity of the grid from less than 5,000MW to 7000MW by 2021; increase the capacity to 11,000MW by 2023 and achieve total operational generation and national grid capacity to 25,000MW by 2025, and it is expected to save Nigeria over $1bn annually.

However,  the project has mainly been described as a flop two years after the Memorandum of understanding, MoU, signed by the parties.

Abubakar, it would be recalled replaced the former Minister of Power Mamman Saleh, whom President Buhari recently axed due to poor performance.

The minister who now takes charge of driving Nigeria’s Power Ministry with enabling policies highlighted several sectoral challenges confronting the power sector, assuring the government’s determination to provide solutions to them.

He noted that the Ministry is working towards improving services in terms of hours of supply, billing transparency and accuracy, and broader access to electricity.

The minister said:” The Ministry is intensifying performance monitoring of the licensees and the licensing regime, especially their revised Performance Improvement Plan,(PIP) to have a better understanding of why some critical stakeholders are performing below expectation,”

It would be noted that despite the ambiguity that characterised the SIEMENS power deal, President Buhari also failed to give updates to this all-important project in his independence day celebration speech.

Nigeria’s power system is currently suffering from an imbalance between power generation and demand. Despite more than 8000megawatts of operational power generation capacity in the country, only an average of 4,500 megawatts reaches consumers.

To address the concern, SIEMENS and the Nigerian Government signed an implementation agreement for the Nigeria Electrification Roadmap in July 2019 to secure a reliable and affordable electricity supply.

Industry watchers say the Nigerian government’s silence on the SIEMENS deal adversely affects Nigeria’s power sector reforms and credible electricity market growth.

Commenting on the feasibility of the project timeline, President of the Nigerian Consumer Protection Network (NCPN),  Kunle Kola Olubiyo, said the timeline given to the project was political, noting that, currently, everything is on the paperwork stage.

Speaking about the project delay, Olubiyo said, “We have seen a good intention, but everything is on paperwork, and the information we have now is that the German company is saying the COVID-19 is affecting the bringing down of transformers and their personnel from Germany.”

An Associate Consultant for the British Department for International Development, DFID Celestine Okeke, spoke to The ICIR.

“Let me ask you first question, was the SIEMENS deal spearheaded by the federal government or the former Chief of Staff to the president. He led the conversation, and since his demise, there have not been serious updates on the project.

“The SIEMENS deal should have been led by the Federal Ministry of power and not the Chief of Staff to the president. I think the project is dead; if not, let the Buhari government come and tell us the status. You know how the country is always vested with political interest, and that is why we don’t make meaningful progress on it.”






     

     

    Despite the government’s silence on the project, findings show that President Muhammadu Buhari has directed funding release for the initial commencement of the project.

    President Muhammadu Buhari has directed the Federal Ministry of Finance, Budget and Planning to release the country’s share of funding to Germany-based Siemens AG in the electricity deal agreed in July 2019, setting up the nation’s power distribution infrastructure for a new lease of life.

    A letter from the Ministry of Finance to the Ministry of Power, dated April 28, 2020, revealed that Finance Ministry would pay from the Signature Bonus Account the negotiated sum of 15, 206,166 euros (offshore works) and N1.7billion (onshore works), which has been approved as Nigeria’s 15 per cent counterpart funding for the concessionary loan.

    The letter also revealed that the president had also directed that the relevant agencies immediately conclude the necessary procurement and contracting processes to kick-off Phase 1 of the project. The Finance Ministry should establish and capitalise on a project SPV to engage Siemens to commence the pre-engineering and financing workstreams.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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