FG gives nod to Phase 1 of Presidential Power Initiative funding

Adebayo Obajemu

The Federal Government has finally given approval for the release of part of counterpart funding for the Presidential Power Initiative (PPI), which is also known as the Siemens Project.

Tolu Ogunlesi, one of the media aides of President Muhammadu Buhari, has disclosed via his Twitter handle on Wednesday.

According to him, the approval of Phase 1 of the PPI includes projects in transmission, distribution, metering, simulation & training.

He said, “This Phase 1 focused on “quick-win” measures to increase the end-to-end operational capacity of Nigeria’s electricity grid to 7 GW. Transmission projects proposed under Phase 1 include 132/33 kV Mobile Substations; 132/33 kV(60 MVA) Transformers, and Containerized GIS Substations.”

Funding Structure

He stated that 85% of the funding will be from a consortium of banks, guaranteed by the German government through credit insurance firm, Euler Hermes.

15 % of FG’s counterpart funding.

2–3 years moratorium.

10–12 years repayment, at concessionary interest rates.

PPI is a power infrastructure upgrade and modernization Programme agreed to by the Federal Government and Siemens AG of Germany, with the support of the German Government. The ultimate goal of the initiative, according to the government, is to modernize and increase the Nigerian electricity grid capacity from its current capacity of about 5 GW to 25 GW, over three phases.

Under the PPI, Nigeria on behalf of the other shareholders in the Electricity Distribution Companies (DisCos), will invest in infrastructure upgrades in the form of improved payment systems, distribution substations, transformers, protection devices, smart meters, and transmission lines among others.

The President explained that all DisCos have, directly and through the BPE, been diligently carried along over the last 15 months to understand in detail the challenges in the electricity systems.

The funding for the PPI will be secured under concessionary terms (up to 3-year moratorium and 12-year repayment at concessionary interest rates) through the German Euler Hermes cover, which Nigeria will on-lend as a convertible loan to the other shareholders in the DisCos.