The Federal Government of Nigeria, on the 26th of July, signed an agreement with the German company, Siemens, to help the nation’s power sector.
The agreement tagged the ”Electrification Road Map” is aimed at resolving existing challenges in the power sector and expanding the capacity for future power needs.
Giving clarifications and details of the agreement, George Etomi, a Director at Nigeria’s biggest DisCo, the Eko Electricity Distribution Company (EKEDC) said the agreement with Siemens will play a part in repositioning the Nigerian power sector.
In an interview on CNBC Africa’s ‘Beyond Markets’, anchored by Esther Awoniyi, Etomi gave a breakdown of how the deal will benefit every stakeholder in the power industry.
When quizzed on the 6-year plan arrangement of the Siemens deal, Etomi said there is no 6-year plan and what is being reported about the number of years is misinformation.
He said the deal came on the back of several consultations by President Muhammadu Buhari with German Chancellor, Angela Merkel when she visited Nigeria.
Etomi said; ”Consultation started October last year when the Presidency was visited. The German govt agreed to do it through an export credit facility.”
Noting that the deal would basically have its focus on beating the bottlenecks on the value chain, through paying better attention to transmission and distribution, he said the current power sector in Nigeria is facing lots of issues.
Some of the problems outlined by Etomi are; the presence of antiquated transmission cables, problems of the value chain, lack of cost-reflective tariff, etc.
Etomi further said there haven’t been required improvements in distribution companies.
”Currently, installed capacity in DiSCOS generates 6000-7000 but the level that is being distributed is 3000-4000 Megawatts. However, our target is to get a consistent value of 5,000 Megawatts.
”We also need to have better injection substations, feeders to aid the distribution of power.
The legal luminary cum-power sector expert said cash from Siemens will be instrumental in rejigging the sector.
”Cash will be made available with Siemens in the picture. Equipment will be of international standard because we look at strengthening and performance evaluation, which DISCos do before. The EKEDC knows where our problems are.
”We need an upward review of tariffs, and this is what we want the market regulators to understand because we can’t maintain, with the tariffs being down.
”We explained to Siemens and they actually did explain to regulators. The regulators said they are working on a tariff model and the vulnerable sectors will be looked towards.
He said the plan must be hastened as Nigerians have considered other sources of power generation for their source of livelihood.
”This lengthened plan has actually forced the vulnerable businesses to other sources of power supply,” he said.
Etomi said the EKEDC and other electricity distribution companies have what it takes to drive Nigeria’s power generation but there are huge costs to be incurred.
”We’ve been able to study this for 5 years of privatisation and once the Siemens deal comes through, we will hit the ground running.”