Nigeria President Muhammadu Buhari has kicked off the next phase of a deal with Siemens AG to upgrade the nation’s dilapidated power infrastructure.
The government of Africa’s largest economy and the German engineering firm signed an agreement last July to rehabilitate and then expand the country’s electricity grid. Only about 60% of residents have access to power and even those who do are plagued by regular blackouts.
Nigeria has more than 13,000 megawatts of installed electricity generation capacity but only 7,500 megawatts of that is available and less than 4,000 megawatts is dispatched to the grid each day. The partnership with Siemens will modernize the existing network before enlarging it until the country can produce and distribute 25,000 megawatts.
The project will be financed by concessionary loans covered by Euler Hermes Group SAS, a large provider of credit insurance, the statement said. The government will “on-lend” the funding to the shareholders of Nigeria’s power distribution companies and Siemens will have sole responsibility for selecting its contractors, it said.
The PPI journey started on August 31, 2018, when Chancellor Angela Merkel visited Nigeria and met with President Buhari, along with the Global CEO of Siemens. Nigeria and Germany then agreed to explore cooperation in some areas, including Power.
The PPI has the goal modernizing and increasing the national electricity grid capacity from about 5,000MW currently to 25000MW over three phases.
The PPI also has four objectives which include delivering improved power supply nationwide, providing training and capacity building for Nigerian youths, creating economic opportunities for Nigerian engineering companies, and stimulating inflow of additional investment into the power sector.