Nigeria will shell out more than N1 trillion to get the electricity project between Nigeria and German Siemens AG completed. This is barring fluctuations in the foreign exchange market. The six-year deal signed in July will upgrade the nation’s electricity capability to 25, 000 mega watts from the miserly 5-7, 000 depending on who you are speaking to.
The project without middle men is phased into three, with completion date put at 2025. The agreement was consummated on July 22, 2019, as the Federal Government and Siemens signed a Letter of Agreement on the Nigeria Electrification Roadmap which resulted from the meeting between President Muhammadu Buhari and the German Chancellor, Angela Merkel, on August 31, 2018 in Abuja.
While Siemens will generate 11, 000 MW, the rest will come from current efforts by governments energy mix and GENCOs. Punch reporting says that President Buhari at the signing ceremony revealed it was evident that more work needed to be done to upgrade the transmission and distribution system, adding that the government was initially reluctant to intervene as the distribution sector had already been privatised.
According to the Technical and Commercial Proposal dated May 7, 2019, phase 1 of the project seeks to increase power delivered by additional 2,000MW, significantly reduce Aggregate Technical, Commercial and Collection losses and achieve improved grid stability and reliability.
The document revealed that the scope of work for the first phase would entail transmission assets upgrade, distribution assets upgrade, grid automation, national metering infrastructure, power system simulation and general technical training.
The budgetary price for the transmission assets upgrade, which includes 11 containerised substations and 10 mobile substations, was put at €330m (about N113.42bn).
The cost of the distribution assets upgrade was estimated at €250m (N85.92bn). The upgrade would include products and systems for 14 stations and upgrade of 26 substations.
According to the document, the power system simulation would entail new software licences for the Transmission Company of Nigeria (€192,000); software M&S for TCN (€182,000); training and technical services support for TCN (€1.35m); new software licences for 11 distribution companies (€1.41m); software M&S for Discos (€848,000) and training and technical services support for Discos (€1.81m).
The cost of system development studies for 25,000MW transmission, sub-transmission and distribution grid capacity was put at €1m.
The budgetary prices for the grid automation, national metering infrastructure and the general technical training were not stated.
“The quantity and prices are all ex-work factory and are subject to change after detailed project scoping and design. Budget prices contained here exclude the following: i. Taxes, duties and other logistics costs ii. Project management costs iii. Costs of rights of way, Environmental and Social Impact Assessment, Environmental Impact Assessment, and other required licences or permits,” the document said.