The Federal Executive Council on Wednesday approved a total of N8.6billion for the funding of the electricity deal with German power firm, Siemens AG.
President Muhammadu Buhari presided over the meeting, which was held virtually at the State House, Abuja.
The money had a €15.21 million ( or N6.9bn) offshore component and another N1.708bn, totalling N8.6bn.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, who spoke with State House Correspondents after the meeting, said she jointly presented the memo on the issue with the Minister of Power, Saleh Mamma, to the FEC.
She said the money was part of Nigeria’s counterpart funding of the bilateral deal with a consortium of German firms and guaranteed by the German Government through Euler Hermes.
It is to finance the implementation of the end- to-end grid modernisation and expansion programme of the power sector in Nigeria, as spelt out in the Nigeria Electricity Road Map.
Recall that in December 2019, the Nigerian Government already allocated N61bn to the programme.
This came after Nigeria and Siemens signed an understanding on the road map in July of the same year.
It also came out of an understanding reached between Buhari and German Chancellor, Angela Merkel, during their August 31, 2018 meeting in Abuja.
The target of the programme, which has three phases, is for Nigeria to achieve the distribution of 25,000 megawatts of electricity by 2025.
The minister spoke more, “So, today at council, we discussed the stage one of phase one of this project under presidential power initiative. This project is designed to include 23 transmission initiatives as well as 175 separate transformative projects in the electricity distribution franchises that we have in the country.
“The project will also support the regulator, Nigerian Electricity Regulatory Commission (NERC), to transit towards a programme of improving metering in the electricity industry in the country.
“Let me remind us as citizens that Mr President and his German counterpart met in Abuja in 31st August 2018 and committed to jointly increase the capacity of the Nigerian electricity grid from current capacity of 5,000 megawatts to 25,000 megawatts over a three-phase programme.
“After this meeting, a MoU was executed on the 23rd of July, 2019 between the Nigerian Government and the Siemens AG with the German Government support.
“The MoU is designed to deliver this end-to-end modernisation programme, which we are calling the presidential power initiative. The objective of this presidential power initiative is to address the intractable problems that have bedevilled the Nigerian power industry, over a period of years.
“The project will be implemented in three phases and the subject of our memo today is phase one. The facility for this programme is to be sourced from the German consortium and it would be guaranteed by the German government through Euler Hermes, covering 85 per cent of the project cost.
“It is a highly concessional facility with two to three years’ moratorium, 12 years’ loan repayment period…the Federal Government is to provide 15 per cent counterpart funding as its contribution towards the project.”
Ahmed added, “We have a provision in the 2020 appropriation revised for the government’s counterpart funding.
“The federal government is taking the loan from the German government with the plan to on-lend this particular loan to the distributing network. So, it’s a convertible loan facility to the DISCOs and we will be working with the DISCOs to restructure an appropriate loan agreement as soon as we are able to close out on this initial phase of the process. And council approved and ratified Mr President’s approval.”