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Nigeria-Siemens electricity deal to gulp over N1.15 trillion across four states

The electricity deal signed between the federal government of Nigeria and German-based company, Siemen, may cost Nigeria about €3.11 billion or N1.15 trillion across four major states.

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Buhari signs Siemen's deal, Nigeria-Siemens electricity deal, Power: FG signifies financial commitment to Siemens agreement, Nigeria denies plan to hand over electricity distribution to Siemens

In order to execute the recent electricity deal signed by the Federal Government of Nigeria and German-based company, Siemen, Nigeria may spend about €3.11 billion or N1.15 trillion across four major states.

According to the Technical and Commercial Proposal obtained, the Nigerian electrification project which has three phases and is aimed at achieving 25,000 megawatts of electricity in the country by 2025 will require more than N1.15 trillion to execute.

The details: According to the information contained in the technical proposal, the budgetary price for the transmission assets upgrade, which includes 11 containerised substations and 10 mobile substations is €330 million or N113.42 billion.

  • Similarly, the cost of the distribution assets upgrade was estimated at €250 million (N85.92 billion). The upgrade would include products and systems for 14 stations and upgrade of 26 substations.
  • According to the proposal, the power system simulation which would entail new software licences for the Transmission Company of Nigeria (TCN) was put at €192,000; software M&S for TCN (€182,000); training and technical services support for TCN (€1.35 million); new software licences for 11 distribution companies (€1.41 million); software M&S for Discos (€848,000) and training and technical services support for Discos (€1.81 million).
  • Lastly, the cost of system development studies for 25,000MW transmission, sub-transmission and distribution grid capacity was put at €1 million.

The Back Story: President Muhammadu Buhari signed the Nigerian Electrification Roadmap which was presented by Siemens in November 2018. The deal was facilitated by the German Chancellor, Angela Merkel last year, in August.

  • The deal was signed in Abuja with the Global Chief Executive Officer of Siemens, Joe Kaeser. The agreement came months after the leading supplier of systems for power generation held several meetings and consultation across Nigeria.
  • Speaking about the roadmap deal, President Buhari said, “we are making an important move towards addressing Nigeria’s electricity challenge. Our goal is a simple one: to deliver more electricity to Nigerian businesses and homes.”

Execution Phases: According to the proposal, the second phase of the project execution is targeted at increasing the grid capacity from 7,000MW (expected to be achieved in phase 1) to 11,000MW.

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Basically, for the new power generation to support central and northern regions, it was revealed in the proposal that “The Nigerian National Petroleum Corporation is already in the process of developing the Ajaokuta-Kaduna-Kano Pipeline Project and the establishment of power plants in Abuja, Kaduna, and Kano states.”

In order to achieve this, Siemens and other participants will focus on transmission and distribution assets upgrade including the North East Transmission Infrastructure Projects 2; supervisory control and data acquisition for Discos; 40MW embedded power project in Abuja, and gas processing projects to ensure fuel availability.

It was further disclosed that: “Siemens proposes a gas processing facility for 300 million standard cubic feet per day from existing flare gas assets for the generation of about 1,200MW of electricity within 36-48 months.

“The 40MW embedded power project was estimated to cost $770 — $815 per kilowatt, depending on the scope of supply and location, among others, amounting to about $31.68m (N9.72bn).”

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The third phase according to the proposal would focus on additional transmission and distribution assets upgrade and large-scale power project in order to increase the grid capacity from 11,000MW to 25,000MW.

The projects will be executed in four states in Nigeria. The proposed projects are 1,350MW in Abuja; 1,350MW, Kaduna; 1,350MW in Kano, and 450MW in Lagos (Agura).

The budgetary cost of the Abuja, Kaduna and Kano projects is an average of €700/kW, while that of Lagos is €600/kW, amounting to about €3.11 billion ( N1.07 trillion).

In the meantime, it was stated that the current estimations are still subject to changes based on additional information on the specific projects, location, financing and contractual terms and conditions.

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[READ MORE: President Buhari signs Siemens electricity deal]

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Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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Companies

Multiverse forecasts N39.5 million profit in Q1 2021

The management of Multiverse Plc has projected a revenue of N76 million and a profit of N39.5 million in Q1 2021.

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Multiverse Mining and Exploration Plc has projected that in the first quarter of 2021, the mining and exploration company will generate N76 million in revenue, and post a profit of N39.5 million.

These projections were made by the company in a recent earnings forecast issued by the Management, and signed by the Corporate Secretaries of the company.

Key highlights of the earnings forecast for Q1 2021

  • Total revenue is projected at N76 million.
  • Turnover from agency sale is projected at N1 million.
  • Agency cost is s projected at N850 thousand.
  • Total expenses are projected at N7.8 million.
  • Operating Profit is projected at N67.3 million.
  • EBIT (Earnings Before Interest and Taxation) is projected at N67.3 million.
  • Interest Expense is projected at N27.8 million.
  • Profit after tax is projected at N39.5 million.

Key assumptions made to support the earnings forecast and projection of the company

The earnings forecast was made on the ground that there won’t be any significant change in the economic policies of the Federal Government, while the monetary policies of the CBN would not be altered significantly.

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The company also maintained that there would not be any industrial unrest that would affect its production and sales volume, while the profit of the company would not be pressured by rising costs of inputs, as prices of materials used in production shall be stable in the period under review.

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Companies

GCR affirms Dangote Cement issuer ratings of AA+(NG) and A1+(NG)

Global Credit Ratings has affirmed Dangote Cement issuer ratings of AA+(NG) and A1+(NG).

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Dangote Cement Plc has announced that Global Credit Ratings has affirmed the cement manufacturer a long-term and short-term national scale issuer ratings of AA+ (NG) and A1+(NG) respectively.

According to the press release issued by the company, the rating which maintains a stable outlook on Dangote Cement would expire by November 2021.

In line with this, GCR reviewed existing bonds of the company and assigned the N100bn Series 1 Fixed Rate Bond of Dangote Cement a rating of AA+.

Why this matters

  • The ratings reflect Dangote Cement Plc’s status as Africa’s leading integrated cement manufacturer with a group-wide installed capacity of 45.6 million metric tonnes per annum across ten countries.
  • The stable outlook which was maintained by GCR reflects the extensive distribution network, significant scale economies and position as the largest corporations on the Nigerian Stock Exchange, with sound access to capital.
  • It is important to note that a rebound is expected within 18-24 months, on the back of strong base domestic demand.

What they are saying

Michel Puchercos, Chief Executive Officer, said:

  • Dangote Cement has shown great resilience in 2020 despite the COVID-19 pandemic and a challenging environment. The Group continues to report strong cash generation while maintaining strong financial discipline. As Africa’s leading cement producer, we are committed to maximizing shareholder value creation.”

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Coronavirus

Governor Sanwo-Olu says 24,000 students yet to resume in public schools

24,000 students in public schools are yet to return back after the reopening of schools, according to Governor Sanwo-Olu.

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The Lagos State Governor, Babajide Sanwo-Olu, has revealed that about 24,000 students in public schools are yet to come back after the reopening of schools following last year’s lockdown necessitated by the first wave of Covid-19 across the country.

This is as the governor said that resumption of school activities Monday, January 20, 2021, was a difficult decision to make in light of the second wave of Covid-19.

This disclosure was made by the governor while peaking during a press conference on Covid-19 update at the Lagos House, Ikeja on Tuesday.

Sanwo-Olu assured that it was the best decision for the children’s safety and long-term development, especially the most vulnerable ones.

What the Lagos State Governor is saying

Sanwo-Olu in his statement said, “Last year after the first lockdown and kids have to come back to school, we are still looking for about 24,000 of them that have not come back to school. So, there is a challenge if you keep them out for that long and their parents or guardians now turn them to other things instead of ensuring that they have time to come back for learning even if it is twice or thrice a week.

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“At least they have been registered since the beginning of a session and they can be monitored. If not, they will just be roaming the streets and become endangered. We have seen incidents of child abuse and all unprintable things that are being done to these children. So, we believe to a large extent that schools sometimes happen to be the safe haven for them. We have done the roster in which we ensure they keep social distance and we are monitoring,” he said.

What you should know

  • It can be recalled that public and private schools below the tertiary level in Lagos State, On Monday, January 18, 2021, reopened for academic activities despite opposition from some stakeholders due to the second wave of coronavirus pandemic in the state.
  • Following the surge in the number of infections in the state, which is the epicentre of the disease in the country, there were complaints about the state of preparedness of the schools, especially the public ones, in adhering to the strict Covid-19 protocols and guidelines.

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