FG approves N263bn for power substations for Siemens project

The Federal Executive Council on Monday approved N262.75bn (€161.33) for the first phase of the Presidential Power Initiative, otherwise known as the Siemens Project.

The project involves the engineering, procurement, construction and financing for 330/132 KV and 132/33 KV substations in Onitsha, Offa, Abeokuta, Ayede and Sokoto.

The Minister of Power, Adebayo Adelabu, revealed this when he briefed State weHouse House Correspondents on the outcomes of Monday’s Federal Executive Council meeting at the Aso Rock Villa, Abuja.

Adelabu said Monday’s approval follows the 80 per cent completion of the project’s pilot phase.

On December 1, 2023, the Governments of Nigeria and Germany signed the Presidential Power Initiative agreement to inject 12,000 MegaWatts of electricity into the national grid.

The signing was presided over by the leaders of both countries, President Bola Tinubu of Nigerian and German Chancellor Olaf Scholz, on the sidelines of the United Nations Climate Change Summit, COP28, in Dubai, the United Arab Emirates.

Managing Director of the Federal Government of Nigeria Power Company, Kenny Anuwe and the Managing Director (Africa), Siemens AG, Nadja Haakansson signed the agreement. However, the contracts date back to the tenure of former President Muhammadu Buhari in 2018.

Adelabu stated, “There were two approvals for the Federal Ministry of Power. The first was an approval for the contract award for engineering, procurement, construction and financing for implementing the 330/132 KV and 132/33 KV substations upgrade under Phase I of the presidential initiative, popularly known as the Siemens project.

“Subsequent to the completion of the pilot phase of this project, the FEC at today’s meeting considered it necessary for us to move forward as promised by the President at a meeting he held with the President of the Republic of Germany last week.

“The cost of this first batch of phase one of the Siemens project approved this afternoon is €161.33 (N262.75bn).”

He said Phase I of the Siemens project relates to the transmission, upgrade and expansion, including 14 brownfield substations that need upgrade and revamping and 21 Greenfield substations, which are new substations to be built across the country to improve the transmission segment.

“The first batch of this Phase I project includes Onitsha, 330/133 KV substation under the Enugu electricity distribution company; two, Offa 132/33 KV substation under the Ibadan electricity company.

“There is the new Abeokuta 330/132 KV substation. We have Ayede 330/132 KV substation. And lastly, Sokoto 132/33 KV substation.

“Those are the five substations to be worked upon under the first batch of Phase I of the Siemens project. And we expect that this will further improve and stabilise the transmission segment of the power sector value chain in no distant future on completion,” the Power Minister explained.

Adelabu revealed that the second approval relates to the award of a contract to acquire an office complex for the Nigeria Electricity Liability Management Company, which we all know as NELMCO.

He said, “The office complex approved for outright purchase is at Plot 2148, Cadastra Zone A02 Wuse 1 District Abuja. The cost of this acquisition is N1.7bn, including 7.5 per cent VAT.

“We all know that NELMCO is the product of the Electricity Power Sector Reform Act of 2005 DPSRA, with a very specialised role to play in ensuring the success of the electricity sector reform.

“The company currently resides in this particular facility, but it is expedient that the property be acquired to avoid the escalating rent, which is increasing regularly due to inflation. So this offer of outright purchase was opted for, and this will also enable the company to meet up with its expanded mandate and increase staff strength to meet its obligation.”

The minister explained that the approval was timely, as the commercial terms agreed upon during the German President’s visit last week’s Wednesday were set to expire on December 28. This decision mitigates the risk of missing the deadline.

Furthermore, the minister highlighted the progress made on the project. He clarified that the current Phase is not the first but follows a pilot stage, which served as a proof of concept and demonstrated the project’s potential to resolve Nigeria’s energy crisis.

The agreement for this project was initially signed in 2018-2019 but faced delays due to the COVID-19 pandemic in 2020 and a subsequent transition period. These factors, he explained, hindered its launch until the new administration came into office.