Siemens Energy, has promised that its response to the ongoing war in Ukraine, will not impact the company’s obligations under the Presidential Power Initiative, PPI.
Under the PPI, the target of the government is to increase power supply to 7,000 Megawatt, MW by December 2022, from the current average of 5,000MW, with an additional increase to 11,000MW and 25,000MW thereafter, with FGN Power Company and Siemens Energy as the driver and contractor, respectively.
This informed the recent repositioning of the project and the Federal Executive Council (FEC) approval of the procurement of Mobile Units (Transmission Substations and Power Transformers) for early works of Phase 1 of PPI and the Contract award for the Procurement of Ten (10) mobile transformers and award of Ten (10) mobile substations to Siemens last December.
Vanguard had on Monday noted that the ongoing war in Ukraine has culminated in the shutdown of Siemens manufacturing plants, thus affecting the production and shipment of the PPI components.
But in a statement obtained by Vanguard, Siemens Energy, stated that as a contractor, it remains committed to the completion of the important project.
Specifically, it stated: “Siemens Energy stopped all new business in and with Russia when the war began. The fighting has now lasted for over two months and there is no sign of a quick stop so far.
“We are currently reviewing our Russian business. We are doing this with all due care, thoroughly analyzing the implications for all concerned. If we withdraw from Russia, we will do so in an orderly manner and with a clear plan – we also have this obligation to our 1,000 employees. Whatever actions we may take, will have no impact on our obligations under the Presidential Power Initiative in Nigeria.”
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In another report obtained from its website, the company, stated that, “PPI) is a strategic and systematic approach to solving Nigeria’s perennial problems of unreliable and inadequate electricity supply. Even with an installed power generation capacity of ~14GW, there’s less than 5GW of operational capacity in the nation’s grid, thereby putting the majority of the 200m population at the mercy of more expensive and polluting alternative generation sources.
Nigeria, Africa’s largest economy and most populous nation, has seen its economic growth stunted by the lack of reliable and quality electricity supply. World Bank’s Africa’s Infrastructure Diagnostics and McKinsey report estimated annual losses due to power supply challenges at 4-7% of GDP, or around US$29bn. The challenges to the power sector include high operational and commercial losses of above 50%, as well as low billing and collections of distributed power by the Discos, leading to financial problems for the entire value chain. Aside from economic losses, the government subsidizes market shortfalls to the tune of US$1bn annually from the meager public finance.
“The visit of German Chancellor, Angela Merkel to Nigeria’s President Muhammadu Buhari on August 31, 2018, provided the platform for what is now known as the Presidential Power Initiative. In Chancellor Merkel’s entourage was the then President/CEO of Siemens AG, Mr. Joe Kaeser. At the business roundtable inside the Presidential Villa, Joe Kaeser gave a brief insight on Siemens’ deep technical experience in helping Nigeria solve the power sector challenges. The Egypt Mega-Project was a good reference – where Siemens had just completed a 14.4GW Power project fully synchronized to the grid in a record time of 27 months. President Buhari immediately directed the Chief of Staff, late Mallam Abba Kyari to coordinate with Siemens to find sustainable solutions to the power sector challenges. And so began a challenging but fulfilling journey of finding the right solutions and structure to tackling the problems.
“After a series of workshops, meetings, assessments, reviews, discussions and evaluations, an Implementation Agreement was signed for the Nigeria Electrification Project, now named the Presidential Power Initiative, between the Federal Government of Nigeria represented by the Bureau of Public Enterprises and Siemens AG on July 19, 2019. The PPI is structured in 3 Phases – (i) quick fixes in the transmission and distribution grid network to increase operational capacity from 5GW to 7GW; (ii) additional upgrade of the grid from 7GW to 11GW; and (iii) upgrade of the grid from 11GW to 25GW including building power generation plants.