•Siemens shuts manufacturing plants

•Production of project components suffers setback

•Electricity generation drops by 12.4%

•Experts react as economy bleeds

By Udeme Akpan, Energy Editor

THERE are strong indications that the Federal Government may not meet set targets on the Presidential Power Initiative, PPI, due to the negative impact of the ongoing Ukraine-Russian war.

Under the PPI, the target of the government is to increase power supply to 7,000 Megawatt, MW by December 2022, from the current average of 5,000MW, with an additional increase to 11,000MW and 25,000MW thereafter, with FGN Power Company and Siemens as the driver and contractor, respectively.

This informed the recent repositioning of the project and the Federal Executive Council’s approval of the procurement of Mobile Units (Transmission Substations and Power Transformers) for early works of Phase 1 of PPI and the Contract award for the Procurement of 10 mobile transformers and award of 10 mobile substations to Siemens last December.

But investigations by Vanguard, weekend, confirmed that the ongoing war in Ukraine has culminated in the shutdown of Siemens manufacturing plants, thus affecting the production and shipment of the PPI components, including transformers, reactors, switch gears, protection, control and metering equipment to Nigeria.

The components were supposed to be produced in Ukraine because of lower costs and shipped to Nigeria in the first quarter (January-March), 2022 for utilization in the execution of over 200 power transmission and distribution projects.

The Managing Director, Siemens Energy Nigeria, Seun Suleiman, could not be reached for comments, but in a report, ‘on the war in Ukraine and on the situation in Russia’ obtained by Vanguard, the company, stated: “We join the international community in condemning the war in Ukraine and are focused on supporting our people and providing humanitarian aid.

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“Siemens will exit the Russian market as a result of the Ukraine war. The company has started proceedings to wind down its industrial operations and all industrial business activities.

“Siemens was one of the first companies to put all new business in and international deliveries to Russia on hold while it evaluated the situation to ensure the safety of its 3,000 employees in the country.

“After the start of the war, Siemens put all new business in and international deliveries to Russia and Belarus on hold. The comprehensive international sanctions, as well as current and potential countermeasures, impact the company’s business activities in Russia, particularly rail service and maintenance.”

Roland Busch, President and CEO of Siemens AG, also said: “We condemn the war in Ukraine and have decided to carry out an orderly process to wind down our industrial business activities in Russia. This was not an easy decision, given our duty of care for our employees and long-standing customer relationships, in a market where we have been active for almost 170 years.”

Electricity generation drops by 12.4%

Meanwhile, electricity generation has dropped by 12.4 percent to 3,344 megawatts, MW, from 3,819MW, recorded a week ago, according to Nigeria Electricity System Operator’s report, obtained by Vanguard.

This is very insignificant for transmission and distribution to meet the needs of consumers, especially because of the huge estimated population of over 200 million.

Economy bleeds – Experts

However, in an interview with Vanguard, President of Nigeria Consumer Protection Network, Kunle Kola-Olubiyo, said: “The cost variables, project consideration and project’s timelines have not been met by the parties. Due to a vitiating elements and discharge by frustrations occasioned by COVID 19 and now, the War in Ukraine, where some of the equipment production factory is domiciled.

“By implications, depending on the project moratorium, Nigeria may end up incurring huge foreign debts for equipment not supplied and projects not executed in the long due to project cost variations. The right thing to do in the prevailing circumstances is for the Government of Nigeria to activate a project’s agreement clusters bothering of Force majeure and call for a comprehensive project review.”

However, commenting on the nation’s poor power situation, Chief Executive officer, Centre for the Promotion of Private Enterprise, CPPE, Dr. Muda Yusuf, said inadequate power supply has culminated in consumers, including investors, investing funds to generate their independent electricity at higher costs.

Specifically, he said: “Escalating energy cost has both global and a domestic dimension. Diesel cost has spiked by about 200 percent in the last six months.  The prices of aviation fuel [Jet A1] and natural gas have similarly skyrocketed.

The crisis became exacerbated by the collapse of the national grid leading to a sharp drop in electricity supply from the grid and consequent load shedding. The situation became unbearable for both households and investors. There were series of blame games among players in the electricity supply chain – the DISCOs, the GENCOs, the Transmission Company of Nigeria, the gas suppliers and the power ministry.

“The consequences of these were the escalation of production and operating cost across all sectors. Cost of transportation, especially haulage cost similarly spiked because most haulage trucks are powered by diesel. Many businesses were not able to pass on the increase in energy costs to their consumers.

”Many investors have scaled down their operations, while several others have suspended operations.”

Similarly, the Managing Director, Ibom Power, Engr. Meyen Etukudo, attributed the problems in the power sector to the inability to put the right pegs in the right holes.

He said:  “There is no meaningful development in the sector due to obsolete and obnoxious policies. The moment the real professionals begin to take charge in the power sector, the difference will be clear.”

FGN Power reacts

The FGN Power Company did not respond to Vanguard, weekend, but recently, the Managing Director/CEO, FGN Power company, Kenny Anuwe had said “a unique end-to-end power project like the PPI will have notable impacts across the country for consumers.

”The PPI will deliver incremental power to Nigerians, improve investors’ confidence, create jobs, reduce the cost of doing business and enhance economic activities in Nigeria.”

Vanguard News Nigeria


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