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30 days to Buhari’s exit, Nigeria-Siemens 7,000MW deal elusive

With just 30 days to the end of the second and final tenure of President Muhammadu Buhari on May 29, the Siemens Presidential Power Initiative…

With just 30 days to the end of the second and final tenure of President Muhammadu Buhari on May 29, the Siemens Presidential Power Initiative (PPI) to raise the national electricity grid to 7,000 megawatts (MW) by 2021 in the first phase has failed and a further plan to reach 11,000MW this year is at stake.

Daily Trust Saturday recalls that when the idea of the projected was announced, millions of Nigerians had a sigh of relief, considering that it was like a bilateral project between the governments of Nigeria and Germany.

After the signing of the agreement, some observers noted that the Siemens project might likely demystify the jinx in the Nigerian electricity sector, considering that the company had a reputation and had delivered similar or bigger projects around the world.

But in the course of doing this story, pundits in the power sector told our reporter that while there might be blame game on why the project could not be delivered as expected, the Nigerian factor, where forces from within could have sabotaged the project, should not be ruled out.

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Although officials argue that a lot of work is ongoing behind the scene, Nigerians who spoke on the situation said they were yet to see any impact of the Siemens deal on the grid, except the 60MVA power transformer delivered to Apo transmission substation in Abuja and energised recently.

Nigerians have been grappling with power outages for decades, a development that makes the business environment unfriendly and job creation nearly a nightmare.

Governments, over the years, had invested trillions of naira in the power sector, but it is very unlikely to see any part of the country that records 24-hour electricity supply.

This has also affected foreign direct investment, impoverished small and medium scale industries and households relying on power generating sets to operate their gadgets.

Minister of Power, Engr. Abubakar D. Aliyu and officials of FGN Power Company, inspecting installation of 60MVA transformer at Apo substation under PPI phase 1 in December 2022

 

Project on course, Apo transformer ready – FGN Power

Officials of the FGN Power, a special purpose vehicle implementing the Siemens PPI, said the project was on course with several transformers being installed at transmission substations.

The chief technical officer, Idowu Oyebanjo, an engineer, in a response to Daily Trust Saturday’s enquiry, noted that one of such transformers was recently energised (put to use) at the Apo transmission substation in Abuja.

Oyebanjo said the Protection, Control and Metering (PC&M) crew from the Transmission Company of Nigeria (TCN) gave clearance for the FGN Power co-engineers to “carry out the energisation of the 60MVA, 133/33kV power transformer at the Apo TS.”

Commenting on the project’s success, he said, “This speaks positively to the hard work of all of you on this platform and those of our senior management who have worked hard behind the scenes to get us this far.”

In September 2022, the managing director of FGN Power Co, Kenny Anuwe, restated the PPI vision to drive transmission and distribution capacity to 25,000MW by 2025.

Anuwe, who spoke in Lagos during the Nigeria Energy Conference and Exhibitions, said the company was set to commission the first set of the power equipment that had already arrived in the country.

He had mentioned that the transformers would be commissioned in Lagos and another in Abuja, which would deliver the initial 7,000MW target.

“The federal government is determined to make a difference in the lives and livelihood of Nigerians, and with the pace of work being put in the project so far, I think we would exceed 7,000MW. But this is our first objective; and we are not taking our eyes off that ball.

“We want to hit that target and exceed it; and that is a confirmation that improvement in electricity supply is absolutely doable,” Anuwe said.

How Nigeria, Germany started PPI

President Buhari had had a meeting with the German chancellor, Angela Merkel in August 2019 and initiated the deal, which is to overhaul and increase the operational transmission and distribution capacity of the grid.

According to Siemens in 2019, the scope includes rehabilitation, upgrades and expansion of transmission and distribution networks and power generation to be delivered in three phases.

The first phase was to raise power supply 7,000MW by 2021; and then raise it to 11,000MW this year and increase it to 25,000MW from 2025.

In 2021, the federal government and Siemens AG (Germany) signed a six-year roadmap agreement to develop the power sector in Nigeria, with a target of 11,000MW by 2023.

The German company, Siemens AG, had its global chief executive officer, Mr Joe Kaeser sign the Memorandum of Understanding along with President Buhari at the State House in Abuja.

However, there have been mixed reactions from stakeholders in the sector since the agreement, concerning the performance of the project. For instance, the timeline for the delivery of the first 7,000 mw, which is 2021, had elapsed.

Loads of complicated deals 

This is not the first time Siemens got a power project contract in Nigeria.

Siemens Nigeria got contracts for the installation of the Supervisory Control and Data Acquisition (SCADA) three times for the national grid under the defunct Power Holding Company of Nigeria (PHCN) and presently, Transmission Company of Nigeria, but officials said the projects were not delivered.

An insider at Siemens who was privy to SCADA contracts confirmed the incomplete execution of the projects due to management issues at the TCN, lack of capacity of company staff and unavailability of the fibre optics and other core infrastructure for the communication backbone.

“A lot of things contributed, but basically, communication is one key. And there is the human element because the TCN was grossly understaffed in terms of capable hands for SCADA,” the official noted.

Running against time

Soon after the launch of the latest power project, nothing much was heard about it for over one year as officials said the pre-engineering contract with Siemens of Germany was approved in 2021. The pre-engineering process involves officials of the Nigerian Electricity Regulatory Commission (NERC), the Nigerian Electricity Management Services Agency (NEMSA) and the 11 distribution companies (DisCos) and Siemens.

By April 2022, the federal government launched a document for power distribution projects under the PPI. Speaking at the launch of the six-volume document, the Minister of Power, Abubakar D. Aliyu, an engineer, also announced the conclusion of the pre-engineering activities for the PPI distribution work package.

The minister said, “We now have the playbook for the Engineering, Procurement and Construction (EPC) that will form the bedrock of their implementation arrangements.”

Between July and September last year, the minister of power and some top government officials separately inspected power transformers being constructed by Siemens at its various factories in Trento, Italy and in Dresden, Germany.

The officials said the 60MVA and 100MVA power transformers passed the Factory Acceptance Test (FAT).

According to the project scope for the transmission segment, there are 10 units of 60MVA, 132/33kV mobile substation transformers; seven units of 60MVA, 132/33kV substation transformers and three units of 100MVA, 132/33kV transformers. Under the PPI, it is expected that 1,320MVA of bulk power transmission capacity would be added to the national grid network to ensure that consumers benefit from increased power supply.

In December 2022, the minister said 20 transformers were ready for delivery and were already arriving.

He said, “Through the agreement with Siemens, orders had been made for the purchase of 10 morbid power transformers and 10 mobile substations. The 10 transformers to be situated across the country have started arriving.”

A 60MVA power transformer was then delivered to the Apo transmission substation in December. However, there has been no report of key activities at the distribution segment of the initiative after the launch of the power distribution package implementation document.

Nigerian officials at the Siemens’ Transformer Manufacturing Factory in Trento, Italy for Factory Acceptance Test (FAT) for 10 transformers in February 2023

 

 

No impact yet after 4 years, timelines shifted – Experts

Commenting on the PPI, the executive director and chief executive officer of Power Up, Adetayo Adegbemle, said the project had been shrouded in mystery since it was conceived in 2019.

Worried about the delays and the various reasons being given, Adegbemle said, “It was first blamed on COVID-19 pandemic, then the Russia-Ukraine war.

“This is a project that was started without a substantial memorandum of understanding and no clearly defined project scope.”

The power sector analyst noted that although a lot of ‘mega transformers’ had been delivered to the TCN, funded by the World Bank, they were no Siemens-PPI deliveries but mistaken by power consumers for such as they await to see improved electricity supply.

The Power Up head doubts if the first of the project, which is just at a crawl, can create a significant impact on the national grid, and called on the administration to evaluate it.

He said, “The first 10 transformers for the TCN are not even completely in Nigeria yet, not to mention installing them. I am not expecting any miracle within these last 60 days of President Buhari.

“The incoming administration is expected to first suspend this unsustainable waste of the scarce national resources and revert all implementation back to the TCN structure, which has shown seriousness to rescue the transmission infrastructure by their project implementations in the last few months.”

Corroborating other views about the historic issues with Siemens on project delivery, Adegbemle said, “Talking about the scope, it is also now understood that Siemens has bulked in the scope, claiming that their job is only to provide OEMs, and does not include installations of transformers.”

Also speaking, the president, Nigeria Consumer Protection Network (NCPN), Kunle Olubiyo, said there were high expectations for the PPI projects “but after about four years in the pipeline, the PPI has remained low in terms of practically tangible deliverables and low in terms of project’s execution.

“In real terms, the PPI has not recorded any meaningful impact and does not make any meaning to the citizenry. There has been what looks like incessant shifts in project’s goal post and project’s actionable timelines.”

Olubiyo blamed the monopolistic nature of the transaction by Siemens, saying, “The project by itself is a monopolistic equipment supplies deal struck by Siemens A.G of Germany, with attendant counterpart funding expected to be provided by the Nigerian government. The project, therefore, is not a charity as perceived; it is purely a foreign loan from Germany granted to Nigeria through Siemens of Germany.”

For the incoming government, Olubiyo advised, “Having witnessed about four years of delay, the credit facility attached to this project needs to be restructured with the project’s cost, actionables, deliverables and timelines. A project review in line with the foregoing should be embarked upon to capture the period of delay and non-performance.”

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