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Siemens to upgrade 105 power substations, build 70 in new power deal

The new electricity deal between the Nigerian government, its German counterpart and Siemens AG, will see the upgrading of 105 power substations and the construction of 70 new ones, the Minister of Power, Mr. Sale Mamman has said.

Providing what he described as ‘key details’ of the Presidential Power Initiative (PPI) deal which has already into effect, the minister noted that the deal represents one of the largest and most transparent power sector investments in modern day Nigeria.

Listing the details under major infrastructural points, project timeline and expansion outcomes, Mamman explained that the deal for which the federal government made an initial N8.6 billion commitment penultimate week, would totally transform the sector.

The government added that aside the 105 sub-stations, to be upgraded and 70 new sub-stations to be built under the new arrangement, 35 power transformers will also be manufactured and installed.

It disclosed that 3,765 distribution transformers would be installed and 5,109 km distribution lines will be built with a potential generation capacity of over 13,000 mw as opposed to the current transmission of 4,500mw.

The minister explained that in the Phase one, 7gw is expected to be achieved between now and 2021, with the upgrading of transmission and distribution of the Transmission Company of Nigeria (TCN) and Distribution Companies (Discos) expected to contribute an additional 2gw.

For phase two, 11gw will be achieved between 2021-2023, with full use of existing generation and last mile distribution capacity.

According to Mamman, the phase three would see the achievement of 25gw between 2023-2025 with appropriate upgrades and expansion in generation, transmission and distribution.

Last week, the Federal Executive Council (FEC) had approved the payment of €15.21 million (N6,940,081,465.20) offshore and N1.708 billion onshore as part of Nigeria’s counterpart funding for the power deal signed in 2019.

The deal also involves Siemens’ support for the regulator, the Nigerian Electricity Regulatory Commission (NERC), towards improving metering in the electricity industry in the country.

It would see the financiers get up to a three-year moratorium with a 12-year repayment at concessionary interest rates.

While Siemens will singlehandedly pick the Engineering, Procurement and Construction (EPC) partners for the sake of transparency, according to the federal government, all items to be purchased would be provided by the Discos and TCN and would be vetted by a professional Project Management Office.

It will be backed through a German Euler Hermes cover, while the International Finance Corporation (IFC) will be engaged to assist in developing the commercial structure of the intervention, as well as in undertaking an independent company valuation of the Discos.