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Finance - September 3, 2019

Nigeria Engages Siemens to Assist in Rebuilding Power Grid

The Nigerian government has engaged electrification, automation and digital giants, Siemens, to rebuild the country’s power grid to give the economy a push.

Nigerian President Muhammadu Buhari plan had met with Siemens CEO Joe Kaeser in July met in Abuja, Nigeria’s capital, with the result a strategy that the former said could almost triple the country’s “reliable” power supply over the next few years.

“My challenge to Siemens, our partner investors in the Distribution Companies, the Transmission Company of Nigeria and the Electricity Regulator, is to work hard to achieve 7,000 megawatts of reliable power supply by 2021 and 11,000 megawatts by 2023,” said Buhari in a statement on July 22, after he announced his government signed a six-year deal with Siemens. Terms of the deal were not immediately disclosed.

Buhari and German Chancellor Angela Merkel in August 2018 had discussed the framework of the deal, which includes a goal of 25 GW of power generation capacity by 2024. “We all know how critical electricity is to the development of any community or indeed any nation,” Buhari said at a news conference after the deal was confirmed. “And whilst we are blessed to have significant natural gas, hydro and solar resources for power generation, we are still on the journey to achieving reliable, affordable and quality electricity supply necessary for economic growth, industrialization and poverty alleviation.”

Kaeser, in an interview with DW Akademie, a German news outlet, said, “[President Buhari] made it very clear in his speech that he wants to get this done now, together with reliable engineering partners—European and German engineering style. And I personally promised to him that we are going to make this work.”

Nigeria’s government-owned grid is operated by the Transmission Company of Nigeria (TCN), which has said the country’s challenges include gas constraints, low load demand by DisCos (the country’s 11 power distribution companies), limited transmission line capacity, a large metering gap, electricity theft, and high technical and commercial losses, among others. The government has acknowledged that only about 4 GW of generation is available on average, though the country has about 13 GW of generation capacity.

Analysts have said the country needs as much as 76 GW of power to serve the entire population. Estimates are that as much as 70% of the country’s population of more than 190 million people do not have access to electricity, and many homes and businesses currently run on diesel- or gas-fueled generators.

Nigeria’s power grid has been plagued by outages for years, with much of the nation’s transmission and distribution infrastructure in need of repair. A new deal with Siemens is designed to increase the reliability of the electricity supply.

Nigeria’s power sector was privatized in November 2013, in hopes of attracting investment to shore up the electricity infrastructure, but problems have persisted. Various reports have said the power grid has sustained more than 100 full or partial collapses in the past six years The widespread use of generators has created pollution problems in the region; Schneider Electric described the situation as “the alarming reality of mass generator dependency.”

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