By Ogechi Okorie
Abuja (Precise Post) – President Muhammadu Buhari’s anticipatory approval for the release of N8,648,081,465 to fund phase one of the Nigeria-Germany electricity deal was Wednesday ratified by the Federal Executive Council (FEC).
The fund, which is an offshore loan facility of €15.21 million, an equivalent of N6,940,081,465.20, and N1.708 billion onshore fund, is meant for counterpart funding “of the end-to-end grid modernisation and expansion programme” in the power sector.
The approval, which was a sequel to the 2018 power deal between Nigeria and Siemens AG of Germany followed the agreement signed between the two parties.
The loan will be drawn from a German consortium with a guarantee provided by the German government through Euler Hermes to finance Nigeria’s power expansion programme.
Briefing reporters after the FEC meeting in the State House, Abuja, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said FEC’s approval followed the presentation of a memorandum of understanding (MoU) by both the finance ministry and the Ministry of Power.
Earlier in July 2019, the federal government and Siemens had signed a letter of agreement on Nigerian electrification roadmap as a follow-up to a meeting between Buhari and the German Chancellor, Ms. Angela Merkel, on August 31, 2018.
Under the scheme, Nigeria is partnering Siemens AG for Nigeria’s electrification project, which has three phases with the overall goal of achieving 25,000 megawatts of electricity in 2025.
According to Ahmed, the anticipatory counterpart funding for the first phase of the project, approved yesterday, would be used to finance 23 transmission initiatives and 175 separate transformative projects.
According to her, the loan is concessional, with two to three years’ moratorium, 12 years of repayment period and 15 per cent of counterpart funding to be provided by the federal government as captured in the revised 2020 budget.
The minister, who said the facility would support the operations of the Nigerian Electricity Regulatory Commission (NERC), added that after obtaining the loan from Germany, the federal government will “unlend” it to electricity distribution companies (Discos) as a convertible loan facility to the Discos
