Nigeria’s Minister of Power, Mr. Bayo Adelabu, has disclosed that the federal government is planning to review the Siemens power deal with Nigeria, which was originally intended to substantially increase power supply from the current 4,000 megawatts (MW) to 25,000 MW by 2025.
In an interview with journalists on Monday, Adelabu cited changing circumstances since the contract’s signing as the reason for the review.
However, he noted that part of the agreement, specifically the importation of mobile stations and transformers, has been successfully executed, resulting in a boost to the Transmission Company of Nigeria’s (TCN) capacity by 1,300 MW.
The Siemens deal was initially structured as a three-phase project. Phase one aimed to enhance the country’s transmission capacity from 5,000 to 7,000 MW, phase two was set to increase it to 11,000 MW, and phase three intended to reach the ambitious 25,000 MW target within seven years.
However, Adelabu highlighted various challenges that have affected the project’s progress, including the impact of the COVID-19 pandemic, political transitions, regulatory reforms, and increased investments in the sector over the last five years.
Given these changing circumstances, the government is now conducting a comprehensive review of the project’s scope to align it with the current situation.
Adelabu also mentioned a pilot project as part of the agreement, which involved Siemens bringing 10 power mobile substations and 10 power transformers into the country to bolster transmission capacity.
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He expressed satisfaction that these transformers and mobile stations have arrived in Nigeria, with the commissioning process already underway. Once installation is completed, it is anticipated that the project will enhance transmission capacity by 1,300 MW.
Regarding the power sector’s achievements in the last decade, Adelabu emphasized that the primary goal of privatization, which was to increase energy access to households, small businesses, and industries, has not been fully realized.
He attributed this to various stakeholders not fulfilling their obligations, stating that the failure spans across the entire value chain.
Adelabu highlighted the challenges faced in metering households, businesses, and industries, with an approximate 8 million metering gap still existing.
He emphasized that metering is essential for accurate billing and collection, and these issues have contributed to liquidity challenges in the sector.
Addressing power outages, Adelabu acknowledged the aging infrastructure of the transmission system and noted that investments have been made in infrastructure improvements.
Despite the recent fire incident causing a collapse in the system, there had been a significant period of stability, with the last major collapse occurring over 400 days before the incident.
He expressed optimism that ongoing infrastructure investments will lead to more reliable power supply in the future.
