The Federal government, yesterday, granted ‘anticipatory approval’ of 18.94 million Euros (N8.648,081,465.2) as counterpart fund for a revamp contract that will enable Munich-based Siemens overhaul the country’s obsolescent power infrastructure.
The project reached its pre-engineering and concessionary funding phase in May.
Zainab Ahmed, the Finance, Budget and National Planning Minister, told newsmen after a meeting of the Federal Executive Council on Wednesday that the ratification was a product of a memorandum she tabled alongside her Power counterpart, Saleh Mamman.
“Mr President and his German counterpart met in Abuja on August 31, 2018 and committed to jointly increase the capacity of the Nigeria’s electricity grid from current capacity of 5,000MW to 25,000MW over a three-phased programme,” Mrs Ahmed said.
The fund, representing 15 per cent of project cost, will be complemented by an 85 per cent balance to be provided by Euler Hermes Group SAS, a credit insurance solutions provider.
The balance will be backed by Germany via a concessionary arrangement with a three-year repayment holiday and a repayment duration of 12 years at “an interest rate of Libor-plus 1% to Libor-plus 1.2%.”
With completion timed for 2025 when the Nigerian government sees on-grid transmission capacity attaining 25,000 megawatts, the sweeping revamp is planned to span all segments of the power value chain.
Nigeria’s installed capacity is 13,000 megawatts out which an average of 3,500 megawatts is distributed daily due to poor distribution infrastructure.
Meanwhile, Siemens said in a statement on Wednesday it had received the Nigerian government’s approval of the pre-engineering contract to begin the augmentation of Nigeria’s transmission, generation and distribution network.
“The Federal Government is taking the loan from the German government with the plan to on-lend this particular loan to the distributing networks.
“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,” Ahmed said.