Siemens deal shows signs of failing despite FG’s financial commitments

NIGERIA’s Siemens AG deal is showing signs of failure despite the federal government’s ‘counterpart’ financial commitments on the to the deal.

Like several other power projects in the past with signatures of failures, the Siemens deal, although promising at the beginning, currently shows serious signs of collapse.


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Background

In 2019, the then president,  Muhammadu Buhari signed an agreement with a German technology company, Siemens AG to “drastically” improve Nigeria’s power supply by 11,000 megawatts by 2023.

According to the deal, Phase 1 will be completed in two years and Phase 2 in 2023.

The deal was an outcome of the German Chancellor Angela Merkel’s meeting with Buhari on August 31, 2018.

Buhari, after the deal was signed said,”in partnership with the German Government and Siemens AG, we are making an important move forward in addressing Nigeria’s electricity challenge. Our goal is a simple one: to deliver more electricity to Nigerian businesses and homes.”

He challenged Siemens and other partners to work hard in achieving “7,000 megawatts (MW) of reliable power supply by 2021 and 11,000 megawatts by 2023 – in phases 1 and 2 respectively”.

According to the Nigeria Electricity System Operator (NESO), the highest megawatts generation as of July 20, 2019, was 5,016.50 Megawatts while the lowest was 3,139.80 Megawatts.

This amounts to an average of 4,078 megawatts of power supply as of July 20. Pr66 Buhari as of then said only an average of 4,000 megawatts reliably reaches consumers.

“Despite over 13,000 megawatts of power generation capacity, only an average of 4,000 megawatts reliably reaches consumers,” he said.

“This Government’s priority was to stabilise the power generation and gas supply sector through the Payment Assurance Facility, which led to a peak power supply of 5,222 megawatts,” he added.

Failures, and inconsistencies despite financial commitments

Despite huge investment commitments made in this project by the government, the Nigerian power sector has been on a downward spiral, producing less than projected megawatts of power.

For instance, the System Operator from Grid Performance Dashboard of 18 February 2024 is 4000.70 megawatts peak, and off-peak generation same day is 3,434.97 megawatts. These figures fall shy of the targeted 11,000 megawatts for 2023.

Investments commitments on the project by FG on the Siemens deal

The ICIR has earlier reported that in July 2020, Buhari had approved the payment of €15.21million and N1.708billion as counterpart funding for the Presidential Power Initiative (PPI)-initiated under President Muhammadu Buhari to support the Siemens AG deal.

The former  Minister of Finance, Zainab Ahmed, had said $ 1.9 million would be used for payment of transactions advisors and third-party consultants for the Siemens AG deal.

Nigeria, Germany's Siemens sign agreement to increase power supply
President Muhammadu Buhari in an handshake with Joe Kaeser, President of Siemens. Photo credit: Twitter/@bashirahmaad.

Ahmed also explained that €62million would be used for the procurement of mobile equipment and transformers for the transmission of power across the country.

She said, “The second approval that we got from Council today is still relating to the PPI power project and the memo was seeking the approval of Council for the award of contracts for the procurement of mobile equipment for the transmission power component of the project.

“So, 10 mobile equipment and 10 transformers in favour of Siemens AG. The projected progress for the sector wasn’t met, as the 2023 target was to improve power to N11,000 megawatts,” she added.

Presidency silent on progress report request by ICIR

The ICIR reached out to the Presidential Spokesperson, Ajuri Ngelale to give a progress report on the project, despite the President visiting Germany in 2023. However, the Presidential spokesperson did not respond to calls and text messages seeking a response.

The ICIR confirmed that some transformers are coming into the country as a result of the Siemens deal, however, the general progress report on the deal remains elusive, findings have shown.

Siemens deal showing signs of failed power projects like the Mambilla project

The Mambilla project was initially awarded in 2003 to Sunrise Power and Transmission Limited, the proposed 3,050-megawatt plant in Mambilla, Taraba state, is expected to be the largest power-generating installation in Nigeria and one of Africa’s largest hydroelectric power stations.

However, the project has been the subject of decades of legal dispute between the company and the Nigerian government.

In 2008, the late President Umaru Yar’Adua, who succeeded Olusegun Obasanjo, terminated the project.






     

     

    Just recently, the Federal High Court in Abuja ordered the remand of a former Minister of Power and Steel, Olu Agunloye, in the Kuje Correctional Service over an alleged $6bn fraud in connection to the Mambilla Hydroelectric Power Station.

    Agunloye served as minister between 1999 and 2003 under the administration of  Obasanjo.

    The Economic and Financial Crimes Commission arraigned Agunloye before a judge, J.O. Onwuegbuzie on Wednesday, where he pleaded not guilty to the charges read to him.

    The judge, however, ordered that the embattled former minister be remanded in Kuje Correctional Service pending the hearing of his bail application.

    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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