By Johnbosco Agbakwuru

THE Federal Executive Council, FEC, yesterday ratified the President’s anticipatory approval for the release of 15.21 million Euros offshore and N1.708 billion onshore counterpart funding for the power deal with Siemens AG, signed by the Nigerian and German governments last year.

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, disclosed this while briefing State House correspondents at the end of the 10th  virtual FEC meeting presided over by President Muhammadu Buhari, and coordinated at the Council Chamber, Presidential Villa, Abuja.

Mrs. Ahmed said the memo seeking ratification was jointly presented by her  and the Minister of Power, Saleh Mamma.

She explained that the money was for the counterpart funding for the bilateral agreement from German Consortium, guaranteed by the German government through Euler Hermes, to finance the implementation of the end-to-end grid modernization and expansion programme of the project.

Recall that the Federal Government had in December 2019, allocated N61 billion for the Nigeria Electrification Road map which will be developed in partnership with Siemens AG.

In July 2019, the government and Siemens signed a Letter of Agreement on the Nigeria Electrification Road map after President Buhari and the German Chancellor, Angela Merkel, met on August 31, 2018, in Abuja.

Nigeria is expected to spend about €3.11 billion or N1.15 trillion across four major states. The Nigerian electrification project has three phases and it aims at achieving 25,000 megawatts of electricity in the country by 2025.

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Power projects in the budget include the 3,050-megawatts Mambilla hydropower plant in Taraba State, for which N2 billion counterpart-fund was set aside.

Others are 2x60MVA 132/33kV substation at Gwaram in Jigawa State (N717 million); 215MW power station in Kaduna (N190m); and Kashambilla transmission in Taraba State (N506 million).

The Finance Minister said the amount was for first phase of the three-phase project designed to include 23 transmission initiatives as well as 175 separate transformative projects.

Mrs. Ahmed said:  “So today (yesterday) at council, we discussed the stage one of phase one of this project under presidential power initiative.

‘’This project is designed to include 23 transmission initiatives as well as 175 separate transformative projects in the electricity distribution franchises that we have in the country.

“The project will also support the regulator, Nigerian Electricity Regulatory Commission, NERC, to transition towards a programme of improving metering in the electricity industry in the country.

“Let me remind us as citizens that Mr. President and his German counterpart met in Abuja on August 31, 2018, and committed to jointly increase the capacity of the Nigerian electricity grid from current capacity of 5,000 megawatts to 25,000 megawatts over a three-phased programme.

“After this meeting, an MOU was executed on July 23, 2019, between the Nigerian Government and Siemens AG with the German government’s support.

“The MOU is designed to deliver this end-to-end modernization programme which we are calling the presidential power initiative. The objective of this presidential power initiative is to address the intractable problems that have bedeviled the Nigerian power industry over the years.

“The project will be implemented in three phases and the subject of our memo today is phase one.  The facility for this programme is to be sourced from the German consortium and it would be guaranteed by the German government through Euler Hermes, covering 85 percent of the project cost.

‘’The highly concessional facility comes with two to three years moratorium, 12 years loan repayment period with an interest rate of liabor plus one percent to libor plus 1.2 percent. And also the Federal Government is to provide 15 percent counterpart funding as its contribution towards the project.”

“We have a provision in the 2020 appropriation revised for the government’s counterpart funding.  The federal government is taking the loan from the German government, with the plan to on-lend this particular loan to the distributing network.

‘’So, it’s a convertible loan facility to the DISCOs and we will be working with the DISCOs to restructure an appropriate loan agreement as soon as we are able to close out on this initial phase of the process. And Council approved and ratified Mr. President’s approval.”

Vanguard