Siemens extends completion of Nigeria’s power project to 2030, cites ‘high prices’

Siemens Energy says plans to complete the revamping of Nigeria’s power infrastructure will take an additional five years than originally planned due to delays caused by the coronavirus pandemic (COVID-19).

Oladayo Orolu, head of business development and government relations at Siemens Energy, spoke on Monday in an interview with Bloomberg.

In July 2019, the federal government signed a power project deal with the German engineering firm to deliver 7,000 megawatts (MW) of electricity to the national grid by 2021, and 11,000 megawatts by 2023 — in phases one and two of the initiative, respectively.

The deal was under the presidential power initiative (PPI), a power upgrade and modernisation programme between the Nigerian government and Siemens with the support of the German government.

A year later, the federal government approved the payment of €15.21 million and N1.708 billion as counterpart funding for the project.

In December 2021, the federal executive council (FEC) also approved $1.9 million and €62.9 million for phase one of the project which sought to modernise, rehabilitate, and expand the national grid.

Abubakar Aliyu, the former minister of power, had said the three-phased project would expand Nigeria’s electricity to 25,000MW when completed, and “commence in the first quarter of 2022”.

But the project has since been behind schedule.

Providing updates during the Bloomberg interview, Orolu said the deal to rehabilitate and expand the country’s electricity grid by 2025, will now be concluded in 2030.

“The three-phase project was set back by delays in starting the first phase,” he said.

“When we conceptualised this project in 2018, our plan was within two years we should be done with phase one, but then COVID happened,  disrupting supply chains, which meant getting raw materials took longer than before.”

Orolu also said “cost overruns also affected the project’s completion, as we expected electricity output to increase by an additional 2,000 megawatts at the completion of phase one by 2025”.

“We currently have 5000, we are looking at taking that to 7,000,” he added.

“Prices are not at the same level they used to be. In 2020, phase one was projected to cost about €2 billion.

“Some raw material components costs have been doubled, some are still close to where they used to be, some are just marginally higher.”

Meanwhile, former President Muhammadu Buhari, in October 2022, said 20 power transformers and mobile stations will be delivered from Germany and installed in the country by May 2023.