President Buhari Directs Kick-Off of PPI; Approves Funding

President Muhammadu Buhari has directed the Ministries of Power and Finance, and the Bureau of Public Enterprise (BPE) to conclude the engagement with Siemens AG to commence the pre-engineering and concessionary financing aspects of the Presidential Power Initiative.

The Presidential Power Initiative (PPI) is a power infrastructure upgrade and modernization Programme agreed to by Federal Government of Nigeria and Siemens AG of Germany, with the support of the German Government.

Under the PPI, the Federal Government will on behalf of the other shareholders in the Electricity Distribution Companies invest in infrastructure upgrades in the form of improved payment systems, distribution substations, transformers, protection devices, smart meters, transmission lines, etc.

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.

All items to be purchased were provided by the DisCos and Transmission Company of Nigeria and they will be vetted by a professional Project Management Office.

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 the Federal Government will on-lend as a convertible loan to the other shareholders in the DisCos.

President Buhari has approved the release of funding for the first part of Phase 1 of the PPI, to kick-off the pre-engineering and concession financing workstreams.

To ensure fairness and transparency of the intervention, the President has also directed that the Federal Government engage the International Finance Corporation (‘IFC’) to assist in developing the commercial structure of the intervention under this Presidential Power Initiative (PPI), as well as in undertaking an independent company valuation of the DisCos.

The President has also directed that to ensure value for money and preserve the integrity & transparency of the procurement process under the Govt-to-Govt framework, Siemens AG shall be solely responsible for nominating its EPC partners to perform all onshore works; NO middlemen.

“Our goal is simply to deliver electricity to Nigerian businesses and homes… Our intention is to ensure that our cooperation is structured under a Govt-to-Govt framework. No middlemen will be involved, so that we can achieve value for money for Nigerians.” — President Buhari

The PPI journey started on August 31, 2018, when Chancellor Angela Merkel visited Nigeria and met with President Buhari.

Chancellor brought along with her a business delegation that included the Global CEO of Siemens. Nigeria and Germany agreed to explore cooperation in a number of areas, including Power.

The Presidential Power Initiative (PPI):

a. Will deliver improved power supply nationwide, with attendant results in job creation, investor confidence, cost and ease of doing business and economic growth.

b. Will provide training and capacity building for thousands of young Nigerians (non-graduates, students and graduates)

c. Will create economic opportunities for Nigerian engineering companies that will serve as local vendors for the provision of manpower and equipment.

d. Will stimulate/encourage inflow of additional investment into the power sector.

The ultimate goal of the PPI is to modernize and increase the Nigerian electricity grid capacity from about 5 GW currently to 25 GW, over three phases.

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