The Federal Executive Council (FEC) has ratified an anticipatory approval for the release of 15.21 million euros and N1.708 billion as counterpart funding for a power deal with German firm, Siemens AG.
Finance, Budget and National Planning Minister Mrs. Zainab Ahmed told State House reporters at the end of the 10th virtual FEC meeting in Abuja on Wednesday that the releases are for onshore and offshore.
The Federal Government entered into the deal with the German government last year.
Mrs. Ahmed explained that the cash is the counterpart funding for the bilateral credit facility from German Consortium, guaranteed by the German government, through Euler Hermes, to finance the implementation of the end-to-end grid modernisation and expansion of the project.
In July 2019, the Federal Government and Siemens signed a Letter of Agreement on the Nigeria Electrification Road map after President Muhammadu Buhari and the German Chancellor, Angela Merkel met on August 31, 2018, in Abuja.
Nigeria is expected to spend about 3.11 billion euros or N1.15 trillion across four major states. The Nigerian electrification project has three phases with a target to achieve 25,000 megawatts of electricity by 2025.
The power projects included in the budget are: 3,050-megawatts Mambilla hydropower plant in Taraba State; for which N2 billion counterpart-fund was set aside; 2x60MVA 132/33kV substation at Gwaram in Jigawa State (N717 million); 215 megawatts power station in Kaduna (N190 million) and Kashambilla transmission in Taraba (N506 million).
The minister said the amount is for first phase of the three-phase project designed to include 23 transmission initiatives as well as 175 separate transformative projects.
She said: “At council today, 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 transit 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 in 31st August 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 the 23rd of July, 2019 between the Nigerian Government and the Siemens AG with the German Government support.
“The MoU is designed to deliver this end to end modernisation 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 a period of 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 per cent of the project cost, the highly concessional facility with two to three years moratorium, 12 years loan repayment period with an interest rate of libor plus one per cent to libor plus 1.2 per cent. And also the Federal Government is to provide 15 per cent counterpart funding as its contribution towards the project.
“We have a provision for the counterpart funding in the Revised 2020 Appropriation Act. 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.”