FEC Approves N8.64bn to Fund 1st Phase Siemens Power Deal
The Federal Executive Council (FEC) has ratified President Muhammadu Buhari’s anticipatory approval for the release of N8,648,081,465 to fund phase one of the Nigeria-Germany electricity deal. The fund, which is an offshore loan facility of €15.21 million, an equivalent of N6,940,081,465.20, and N1.708 billion onshore fund, is the counterpart funding of the first phase of the end-to-end grid modernisation and expansion programme in the power sector.
The loan will be drawn from a German consortium with a guarantee provided by the German government through Euler Hermes to finance Nigeria’s power expansion programme.
According to the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, FEC’s approval followed the presentation of a memorandum of understanding (MoU) by the Ministry of Finance and Ministry of Power.
In July 2019, the federal government and Siemens signed an agreement on Nigerian electrification roadmap as a follow-up to a meeting between Buhari and the German Chancellor, Ms. Angela Merkel, on August 31, 2018.
Under the scheme, Nigeria is partnering Siemens AG for Nigeria’s electrification project, which has three phases with the overall goal of achieving 25,000 megawatts of electricity in 2025.
Ahmed stated that the anticipatory counterpart funding for the first phase of the project, just approved, would be used to finance 23 transmission initiatives and 175 separate transformative projects in the distribution subsector.
The minister, who said the facility would also support the operations of the Nigerian Electricity Regulatory Commission (NERC), added that after obtaining the loan from Germany, the federal government will relend it to electricity distribution companies (Discos) as a convertible loan facility to the Discos.
The main objective of the PPI initiated by Mr. President and his German counterpart when they met in Abuja on 31st August 2018 and committed to jointly increase the capacity of the Nigerian electricity grid from the current capacity of 5,000 megawatts to 25,000 megawatts over a three-phased programme ending in 2025.
In a tweet, Mr Sale Mamman, the Minister of Power, said; “with the 1st Phase of the PPI about to kick off, the Nigerian Power Sector is gearing to give Nigerians reliable, stable and affordable electricity supply”.