Fg/siemens power deal alone is no fix for Nigeria’s broken electricity market
The deal Nigeria signed with Siemens, a leading German power solutions provider, last month could double Nigeria’s current installed generation output of around 12,000MW after 2023 and improve distribution and transmission assets.
Siemens will build new power plants and try to resolve gas constraints to existing power plants by seeking to tap into the AKK pipeline for fuel supply so abandoned turbines can be restarted, according to the agreement.
Businessday analysis of the comprehensive plan, however, shows the deal will fall short of fixing the broken electricity market.
A copy of the Technical and
Commercial proposal of the Electrification Roadmap for Nigeria prepared by Siemens, obtained by Businessday, reads like a catalogue of technical hardware.
The proposal is premised on fixing broken transmission and distribution infrastructure necessary to allow free flow of electricity along transmission lines, including rehabilitating defective connections of key substations to the existing control centre in order to improve the operation of the transmission network.
The plan is divided in three phases. The first phase focuses on improvements that are visible, have immediate benefits, and can be delivered quickly after the project begins. It involves measures to increase the system’s endto-end operational capacity from around 5GW currently to 7GW by fixing 132/33Kv interface between the Transmission Company of Nigeria (TCN) and distribution utilities in 15 locations, including Lagos, Abuja, Port Harcourt, and Cross River.
The second phase targets remaining network bottlenecks to enable full use of existing generation and “last mile” distribution capacities, bringing the system’s operational capacity to 11GW, while Phase 3 involves developing the system up to 25GW capacity in the long term, with appropriate upgrades and expansions in generation, transmission and distribution.
A review of the document suggests the company is focusing on solutions it can sell to Nigeria in terms of network infrastructure and technology because it does not address key industry challenges, especially fixing the market where only a quarter of market invoices get settled and huge debts remain unresolved.
“The Siemens deal looks good but the market and tariff issues have to be fixed first before it can work,” said Chuks Nwani, an energy lawyer based in Lagos.
Nwani, who said he had proposed similar plans, said the government needed to create a separate instrument to warehouse current debts, until the market corrects within five years after progressive tariffs reviews and new investments into the sector.
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