Nigeria Advances Siemens Power Agreement to Enhance Grid Capacity

Nigeria has successfully completed the pilot phase of a power agreement with Siemens, aimed at boosting power distribution capacity. The project had faced delays due to financing and regulatory hurdles, but recent developments promise to enhance electricity supply through new substations and improved grid infrastructure.

Nigeria has completed the pilot phase of a power agreement it signed with German company Siemens to boost its power distribution capacity, a government official said at an energy conference on Tuesday.

Though Nigeria has the infrastructure to generate about 13,000 megawatts of power, its creaking grid can only distribute a third of it, forcing businesses and households to run costly fuel generators. In 2019, it signed an agreement with Siemens to finance and rehabilitate electricity transmission lines and power distribution substations to improve supply.

However, the project has stalled due to financing, regulatory hurdles and logistical constraints until another agreement was signed five months ago in Germany between President Tinubu of Nigeria and German chancellor Olaf Scholz to accelerate the programme. In the last three months, six projects to help the grid distribute an additional 335 megawatts capacity have been commissioned under a proof of concept phase of the programme.

"The integration of these projects marks a significant milestone in Nigeria's quest to enhance its energy infrastructure," said Adedayo Olowoniyi, an aide to Nigeria's Minister of Power, who represented him at the Energy Access Investment Forum 2024, in Lagos. The Siemens power agreement was supposed to achieve 7,000 megawatts of reliable power supply by 2021 and 11,000 megawatts by 2023 but that ambition was not realised.

"Teams have encountered various obstacles from logistical complexities in project coordination to navigating regulatory frameworks," Olowoniyi said. With the success of the pilot phase, the government says it is proceeding with the first phase of rehabilitating about 15 brownfield power substations and building 22 greenfield substations to drive electrification.

The financing is expected to come from German banks as a loan to the Nigerian government which would be recovered from higher tariff charged to homes and businesses, whose power supply would be enhanced. But the government's efforts to raise electricity tariff has drawn the ire of labour unions.

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