At the Düsseldorf Schauspielhaus theater on Wednesday, September 8, German Chancellor, Angela Merkel and celebrated Nigerian author, Chimamanda Ngozi Adichie held a conversation before an audience.
Adichie, author of several international best sellers and generation-defining books spoke on feminism with the Chancellor, who for the first time in her 16-year reign as Chancellor admitted that she’s a feminist. That, however, wouldn’t have attracted the interest of many Nigerians until Adichie popped the question about Nigeria’s power project deal with German company, Siemens.
Adichie described Nigeria’s power challenges as one of the biggest problems in the country since independence and that has made Nigerians look forward to the deal with Siemens with positive anticipation. The deal had the full backing of the German government and Chancellor Merkel. However, since 2019, not much has been heard of the contract.
The author sought an update on the deal and added that she’s not holding the Chancellor responsible for the project but was curious as to why there’s been a level of quiescence after the buzz generated by the power project deal.
In her response, Merkel said; “I’ll make a point of going back and asking Siemens what happened. There are several reasons. One of the reasons is that there were problems to do with funding. Very often, when investments are supposed to take place, people ask about what ways of financing are available and we made a mistake a couple of years ago with this. People said that the minute you appear with your company and you don’t provide the right financing, you will easily get the job affected- at least, always have that financing aspect dealt with.
“We always make it a part of our approach these days. It might well be at the time as was case with the project in Ghana that the Nigerian government demanded too much local content. When you have a German investor saying I want to engage in the electricity production in Africa – in Nigeria or Ghana but I want to have… but the government says 50% of this is local content. It’s being produced in the country. Generally speaking, that’s the right approach but very often, the project fails as a consequence when you speak about Solar panels or gas power plants and you start by zero. There’s no industry basis in the country to start with 40 or 50% local content and without it, such a project can easily flounder.”
Merkel afterwards asked Adichie where the project was planned to take place and she said the Nigerian government didn’t reveal details of the location but it stated at the time that the power project would greatly increase Nigeria’s power generation capacity.
“I will get back to you. You will get your answer,” Merkel promised Adichie.
Nigeria-Siemens: Who’s Stalling On Installing Power?
In July 2019, the Nigerian government signed a power project deal with Siemens AG with a plan to increase Nigeria’s power generation capacity to 25,000MW in six years.
The power project was designed to happen in three phases; increasing power generation from 5,000MW to 7,000MW in 2021; increase the capacity by 4,000 MW to 11,000 MW in 2023; and achieve total operational power generation of 25,000MW by the year 2025.
Exactly a year after that agreement was signed, President Muhammadu Buhari approved €15.21m as counterpart funding for the Presidential Power Initiative. In July 2021, two years after the deal, Chief Executive Officer of Siemens Energy, Seun Suleiman explained that the project was in its pre-engineering phase and that would be completed in 10 months.
“The Presidential Power Initiative is going well. We are doing the pre-engineering. Pre-engineering is to design before you go to execution,” Suleiman said in July.
“We are not adding any generation capacity but we want to make sure that we fix the dilapidated transmission and distribution networks.
“We are doing the pre-engineering for the distribution network of this country. We have already got a letter of credit from the Federal Government to start it.
“The design is done in our head office. For the transmission scope, we were given initially 11 sites; they have added 22 sites.
“Execution is when you go to sites. But in the next three months, we want to start putting the proposal for phase one together, not when we finish the pre-engineering.
“So, if phase one goes into reality before the end of the current administration, it means we would have been able to move from 4,500MW to 7,000MW.”
Going by Suleiman’s statement, it’s an “if”, not a “when”.
Per what was projected at the signing of the deal, the PPI is expected to generate 11,000MW by the end of the Buhari administration in 2023. However, if the words of Suleiman and the explanation of Chancellor Merkel are anything to go by, that may not be feasible.
Saleh’s Sacking and a Struggling Sector
The Nigerian Presidency announced the sacking of the former Minister of Power, Mamman Saleh on the 1st of September and had him replaced immediately with Abubakar Aliu, the former Minister of State for Work. While the Presidency was quick to dismiss rumours that the Minister was sacked due to non-performance, it was the first of its kind in the six-year administration of the Nigerian President. The Minister of Agriculture, Sabo Nanono was also sacked and replaced by the President. The Presidency in a statement said the sack followed the ‘tradition of subjecting our projects and programs implementation to independent and critical self-review’ through sector reporting during Cabinet meetings and at retreats.”
Going by this statement, it’s an indication of the failure of the Minister of Power to impact positively on the power sector since he took charge more than two years ago. It’s however unclear if the Siemens deal and its slow pace is one of the reasons the Minister got a boot.
Nigeria has been dealing with power generation issues since it gained independence and there have been constant brickbats between power generation companies (GENCos) and power distribution companies (DISCos).
At the time the deal with Siemens was revealed, there were insinuations that the DISCos frowned at the deal because they were yet to get returns from their investment in the power sector.
In February 2020, DISCos in Nigeria under the aegis of the Association of Nigerian Electricity Distributors (ANED) said the Nigerian government is wrong to entrust the power sector to Siemens. In an interview with ThisDay, Sunday Oduntan, ANED’s Executive Director vowed at the time that the DISCos will not allow any company take over their $2.4bn assets in the power sector.
“And for the present administration to take Siemens to the bank is very unfortunate for Nigeria – the same Siemens that was involved in bribery scandal in Nigeria. We all know the antecedents of Siemens in Nigeria. Siemens was accused of corruption and was indicted,” Oduntan said at the time.
Despite the hard stance of the DISCos in the country, corruption in the sector has also become a onerous challenge, with several stakeholders in the sector urging the Nigerian government to review and audit the Distribution companies.
While the history of Siemens’ past activities in Nigeria also deserves a second look-in, there’s indeed an urgent need for an upgrade of the power sector.
According to estimates by the World Bank, 80million Nigerians still lack access to grid electricity, making Nigeria the country with the largest access deficit in the Sub-Sahara. Nigeria’s electrification project currently sits close to 60% and less than 40% of rural communities have power. The need for power can’t be overstated, but with this reality hovering over Nigeria’s head and the stipulated time looking impossible by the day, the Nigerian government will also do well to answer Chimamanda Ngozi Adichie’s question of concern; “what’s up with the Siemens deal?“
