History was made Friday in Dubai, United Arab Emirates, as President Bola Tinubu and German Chancellor Olaf Scholz presided over the further signing of the Presidential Power Initiative (PPI) agreement between Nigeria and Germany designed to ultimately add 12,000mw of electricity to the national grid.
The agreement was signed on the sidelines of the United Nations Climate Conference (COP28) taking place at The Expo City in Dubai.
Managing Director of Nigeria’s Power Holding Company, Kenny Anue and the Managing Director (Africa) Siemens AG, Nadja Haakansson signed on behalf of Nigeria and the German firm, respectively.
Speaking on the agreement, Anue, harped on the commitment of Tinubu to the development of power infrastructure, noting that he had reiterated time and again that infrastructure development is critical to the ongoing reforms.
He stressed that electricity and financing were at the heart of the economic reform agenda of the administration, adding that the PPI, by design, encapsulates both elements with the support of partners, Siemens Energy and the financiers that are backed by the German government.
Addressing Tinubu, Anue said: “Mr. President, with your strong and dynamic leadership through the Minister of Power, we now seek to exploit or expedite what was already a worthwhile programme in the presidential power initiative through this accelerated agreement today (Friday).
“Some of the things that have been achieved, erstwhile by the federal government, have been the establishment of the FGN Power Company as the special purpose vehicle for the implementation of the project.”
He said the German government had nominated the mandated lead arrangers and financiers, adding that Siemens Energy had also successfully delivered 10 units of power transformers and 10 units of mobile substations.
Also speaking, Chairman of Siemens Energy Supervisory Board, Joe Kaeser, traced the history of the initial agreement to the government of former President Muhammadu Buhari in 2018, expressing delight that both parties have now been able to drive the process forward.
He said: “I’m particularly happy to be here tonight to witness the signing of the Presidential Initiative for Power, because in 2018 the former President Buhari wanted me to come to Abuja and explain to him what we did in Egypt.
“And I said Mr. President, Egypt has 80 million (people) and we could use 14 gigawatts and Nigeria has 200 million people. So, we could actually need more gigawatts.
“Now, after five years, I’m really happy that this agreement that has the spirit of supplying energy to the greater good of Nigerian people has been taken to a new level. Thank you very much for doing that. And as we say in Germany, good things take time as we have seen tonight.”
Commenting on the project, the Minister of Power, Adebayo Adelabu, said the target of the PPI was to add 12,000mw of electricity to the national grid.
According to him, with the signing Friday, the process will now proceed apace to ensure constant supply of electricity to Nigerians.
He said: “Of course, we knew that there were a lot of delays between 2018 and now. That we have not really made significant achievements in terms of proceeding with the contract signed in 2018 because of a lot of factors, some were natural, some human, some were processes.
“We also had COVID in 2020 which made the execution of the project slow. But now, it shows that we are now ready to move forward with the Siemens projects.
“It shows a commitment between governments of both countries to proceed with this project, which we believe will go a long way in improving the performance of the power sector in Nigeria.
“This is an agreement that has to do with end-to-end fixing in terms of grid stabilisation of the entire transmission grid in the Nigerian power sector, which will eventually improve the power supply in terms of regularity, in terms of functionality and in terms of affordability in the years to come.
“We’re very happy that we’re able to sign this agreement tonight. And in the next couple of months we will witness a lot of activities on the Presidential Power Initiatives project.”
On the financial implications, the Minister revealed that the project is to be financed under the Government Export Credit Facility that is being provided by a couple of German banks to Nigeria.
According to Adelabu: “The original agreement we had was for $2.3 billion. But what we have up to date, just in the region of $60 million, which has to do with the importation of the 10 transformers and the 10 power mobile substations, which Siemens have delivered to the country.
“They have been commissioned and we are in the process of installation of these transformers. So far, it has cost us $60 million dollars.”
Meanwhile, players in the energy sector have lamented that despite Nigeria’s enormous natural and human resources, it’s unable to supply electricity to over half of its population and clean up the downstream of its oil and gas industry.
The stakeholders spoke at the 2023 World Energy Day celebration organised by the Nigerian Association of Energy Economics (NAEE) and Society of Petroleum Engineers (SPE) in Abuja, themed: “Energising Nigeria’s Future: Bridging Energy Aspirations and Realities.”
President of NAEE, Prof. Yinka Omorogbe, who advocated an excellent energy mix as essential to energising Nigeria, argued that the country must deal with its present day harsh realities in the energy sector to make any progress.
“And the present day reality is that half of Nigeria does not have any electricity at all. We have a poor system when it comes to downstream products. We are a significant producer and a major downstream products importer.
“If you now go into clean cooking, you will find out that only about 20 per cent of Nigeria is utilising clean cooking fuel,” she lamented.
According to the NAEE president, what this meant was that there was a significant deficit in terms of energy supply in the country. However, she added that it also represented a great opportunity for investors who are interested in growing the sector.
The NAEE president added that there was room to make Nigeria a favourable investment destination, especially in the push for Compressed Natural Gas (CNG) and the Liquefied Petroleum Gas (LPG).
Also speaking, the Executive Secretary of the Petroleum Technology Development Fund (PTDF), Ahmed Aminu, said this year’s theme spoke directly to the call of the country’s shared global challenges and opportunities.
The executive secretary argued that CNG holds the potential to revolutionise not just the transportation sector, but the way people think and utilise energy resources.
In a keynote address, the Director of Programmes, Clean Tech Hub Nigeria, Doosughun Takur, emphasised the importance of moving away from fossil fuels to gas, and then transition to full renewable energy.
She argued that Nigeria has the world’s largest energy access deficit, with over 90 million people lacking access to electricity, meaning that the country has one of the worst performing national grids in Africa.
“It is therefore the largest importer of petrol and diesel generators in sub-Saharan Africa. The country accounts for three million out of 6.5 million generators used in sub-Saharan Africa and individuals and businesses spend $22 billion annually to fuel these generators.
“This has occurred despite the reform and privatisation of the national electricity supply industry in 2005 and 2013, and despite trillions of naira having been poured into the power sector since 2005. The result is that, based on World Bank estimates, the private sector loses $29 billion annually due to unreliable power supply,” she added.
She listed the many challenges that limit the expansion of electricity access and the increase in renewable energy in the energy mix to include corruption in the use of public funds for power sector reform.
Others, she said, include lack of adequate gas supply for generation, inadequate infrastructure for transmission, electricity theft and insufficient meters for distribution.
Deji Elumoye and Emmanuel Addeh in Abuja