October 5, 2021

$2.3bn power project under threat as FG, Siemens disagree over local content, automation, others

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By Udeme Akpan

The nation’s $2.3 billion Presidential Power Initiative, PPI, project, has come under threat, following a sharp disagreement between the Federal Government and Siemens Energy over local content, automation and counterpart funding.

Under the Memorandum of Understanding, MoU, signed between the government and its German ally, the initiative was originally conceived to supply 7,000 megawatts by December 2021, and additional 11,000MW and 25, 000MW by 2023 and 2025 respectively.

But investigation by Vanguard indicated that the project is still in its pre-engineering stage, because the Federal Government, which requested for 75 per cent local content, 40 per cent automation and 60 per cent human-driven operations, is not ready financially to make the counterpart funding available.

However, the German government, through Siemens Energy, which insisted on 50 per cent local content and 100 per cent automation, has demanded that the government pay a specified amount of counterpart funding as demanded by a consortium of global banks funding the project.

These and other topical issues are still being discussed by the government in order to pave way for eventual commencement of the project.

‘Why project is delayed’

Deputy Director, Press, Ministry of Power, Austin Asoluka, who requested a letter from Vanguard before responding, declined to comment on the project.

However, an impeccable source close to the project who pleaded anonymity attributed the delay mainly to the three issues as well as outbreak of the COVID-19 pandemic.

The official said: “Another major problem is the COVID-19 which has made the movement of personnel, goods and services largely impossible since December 2019.

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“The reality is that transformers, switch gears and lines are physical assets that require physical movement across continents and we do not have the luxury of time. The challenge is when COVID-19 will allow real movements. Yet, by means of innovative techniques and concepts, the goals will be achieved.

“No one knew that COVID-19 will swallow the entire 2020 from humanity, and we are largely in the pandemic era, with third waves appearing in many climes. Unfortunately, power system assets like transformers require a lead time of 12 to 18 months from the date of order to delivery.”

The official also noted that while working towards the implementation of the project, the government was also executing some schemes, which he referred to as, ‘quick wins’ to improve the overall experience of consumers in the Nigerian Electricity Supply Industry, NESI within the next six to nine months.

Siemens, others react

However, speaking in a telephone interview with Vanguard yesterday, Corporate Communications Manager, Siemens Energy, Titilola Taiwo, said: “A lot of work is currently ongoing behind the scenes. There is need for everyone to be patient as we are very committed to the execution of this important project.”

Commenting on the development, President, Nigeria Consumer Protection Network and member, Presidential Ad-hoc Committee on Review of Electricity Tariff in Nigeria (August, 2020 ), Kunle Olubiyo, said: “We have seen the good intention but everything is paperwork and the information we have now is that the German company is saying COVID-19 is affecting the bringing down of transformers and their personnel from Germany.”

Vanguard News Nigeria