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Electricity Transformers, Submarines Nigeria Bought On Borrowed $2.3bn Arrives

Published

8 months ago

April 8, 2024

A total of $2.3bn invested on electricity transformers and submarines would indeed improve Nigeria’s power supply, the snag however is that it is borrowed money

The electricity transformers and substations under reference came via a Siemens power project which Nigeria renewed a few years ago with the German government.

The Honourable Minister of Power, Adebayo Adelabu, who announced the arrival of the materials yesterday, pinned the initial delay in delivering to the COVID-19 pandemic and death of former Chief of Staff to former President Muhammadu Buhari, Abba Kyari,

“In 2018, the Nigerian government signed a memorandum of understanding with the German government for the presidential power initiatives, also known as the Siemens contracts. The German government agreed to lend Nigeria $2.3bn and employ Siemens to transform Nigeria’s transmission and distribution sector.

“However, due to COVID-19, significant progress has yet to be made in implementing these projects. Unfortunately, the late Chief of Staff to the President, Malam Abba Kyari, the foremost champion of the project, passed away.

“After that, an election occurred, and a new government took over. Between 2018 and 2023, there were no significant developments concerning the agreements,” a statement made available to The PUNCH on Sunday by Adelabu’s media aide, Bolaji Tunji, quoted him as saying at a briefing on Friday.

The Eagle reports that Nigeria’s total debt as of the end of September 2023 stood at N87.91tn, data from the Debt Management Office showed.

Total external debt was N31.98tn ($41.59bn) while total domestic debt of N55.93tn.

There are also reports that between January 2022 and September 2023, the Federal Government had grown its foreign loan profile by $3.20bn from $38.39bn to $41.59bn.

Notwithstanding the Siemen’s electricity transformers and submarines power project, the Honourable minister informed was supposed to proceed in two phases.

“In November 2023, during the visit of the German Chancellor to Nigeria, one of the issues discussed was the need to continue with the project. Recently, there was an African Business Summit in Germany, which was attended by the President, and I was privileged to accompany him to the summit.

“During the summit, we had extensive conversations with our German counterparts regarding a project, and we were both convinced that it would benefit both countries to proceed with an MOU. We agreed to sign an acceleration agreement to kick-start the project again.

“In December 2023, at COP 28 in Dubai, an affiliation agreement was signed between the federal government, the German government, Siemens Energy, and FGN Power Company Limited. Following this, we commenced the project analysis, and I am pleased to inform you that we are almost through with the project’s pilot phase.

“The pilot phase involved the offshore importation of ten power transformers and ten mobile substations to be used as a Proof of Concept for these projects. All these items have arrived in the country,” the minister stated.

Informing that five out of the 10 electricity transformers had been installed at various locations across the country, awaiting commissioning, Adelabu added that the next phases included transforming the transmission segment or network by expanding the transmission capacity and strengthening transmission itself to avoid recurrent grid collapse.

This, he said, would involve upgrading about 14 existing power transmission substations as well as the establishment of 22 new transmission substations.

“It’s going to involve the installation of new transmission power lines, the reconducting of some lines, and the conduct of some existing power lines, totaling almost 14,000 kilometers as the transmission segments. The same thing applies to the distribution segments, whereby our existing injection substations will be enhanced in the distribution companies.

There would also be replacements and upgrades of 33KV and 11KV electric transformers, numbering about 6,000, the minister informed, adding that the ministry would also reconduct and install new lines, totaling almost 22,000km..