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Economy & Politics

President Buhari directs Ministries of Power, Finance, BPE to seal Siemens deal

Presidency has approved the release of funding for the first part of Phase 1 of the PPI, to kick-off the pre-engineering and concession financing workstreams.

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Nigeria-Siemens power deal get N61 billion allocation 

President Muhammadu Buhari has directed the Ministries of Power, Finance, and the Bureau of Public Enterprise (BPE) to conclude the nation’s engagement with Siemens AG over regular power supply.

The directive, which was issued via the Presidency’s Twitter handle on Wednesday, was to start the pre-engineering & concessionary financing aspects of the Presidential Power Initiative (PPI).

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PPI is a power infrastructure upgrade and modernization Programme agreed to by the Federal Government and Siemens AG of Germany, with the support of the German Government. The ultimate goal of the initiative, according to the government, is to modernize and increase the Nigerian electricity grid capacity from its current capacity of  about 5 GW to 25 GW, over three phases.

How it works: Under the PPI, Nigeria on behalf of the other shareholders in the Electricity Distribution Companies (DisCos), will invest in infrastructure upgrades in the form of improved payment systems, distribution substations, transformers, protection devices, smart meters, and transmission lines among others.

The President explained that all DisCos have, directly and through the BPE, been diligently carried along over the last 15 months to understand in detail the challenges in the electricity systems.

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Funding: The funding for the PPI will be secured under concessionary terms (up to 3-year moratorium and 12-year repayment at concessionary interest rates) through the German Euler Hermes cover, which Nigeria will on-lend as a convertible loan to the other shareholders in the DisCos.

According to the statement, President Buhari has approved the release of funding for the first part of Phase 1 of the PPI, to kick-off the pre-engineering and concession financing workstreams.

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“To ensure fairness and transparency of the intervention, the President has also directed that the nation engage the International Finance Corporation (‘IFC’) to assist in developing the commercial structure of the intervention…

“The President has also directed that to ensure value for money and preserve the integrity & transparency of the procurement process under the Govt-to-Govt framework, Siemens AG shall be solely responsible for nominating its EPC partners to perform all onshore works; NO middlemen.

“Our goal is simply to deliver electricity to Nigerian businesses and homes… Our intention is to ensure that our cooperation is structured under a Govt-to-Govt framework. No middlemen will be involved, so that we can achieve value for money for Nigerians,” President Buhari added.

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The PPI journey started on August 31, 2018, when Chancellor Angela Merkel visited Nigeria and met with President Buhari. Then the Chancellor brought along with her a business delegation that included the Global CEO of Siemens.

Nigeria and Germany agreed to explore cooperation in a number of areas, including Power.

PPI was designed to deliver improved power supply nationwide, with attendant results in job creation, investor confidence, cost and ease of doing business and economic growth. The partnership is also  expected to guarantee training & capacity building for thousands of young Nigerians (non-graduates, students & graduates).

Other goals include the creation of economic opportunities for Nigerian engineering companies that will serve as local vendors for the provision of manpower and equipment. Overall, the partnership will guarantee inflow of additional investment into the power sector.

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Patricia

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper. The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference. The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

1 Comment

1 Comment

  1. Ekweanua kizito

    June 22, 2020 at 7:41 pm

    I really hope that this plan becomes successful,because Nigeria is far too old to be underdeveloped, the country needs to grow.

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Economy & Politics

Over 20% of N-Power beneficiaries are now business owners – FG

The Minister emphasized the President’s vision of lifting 100 million Nigerians out of poverty.

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Over 20% of N-Power beneficiaries are now business owners - FG

The Minister of Humanitarian Affairs, Disaster Management and Social Development, Sadiya Umar Farouq, has said that about 109,823 beneficiaries of the N-Power programme now have their own businesses.

This represents about 22% of the 500,000 Nigerians that have benefited from this programme since its inception.

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This was disclosed in a statement by the Minister’s Special Assistant on Strategic Communications, Mrs Halima Oyelade on Saturday, July 4, 2020. She said that the beneficiaries of Batch A and B of N-Power have established businesses in their communities.

READ MORE: Why Federal Government disengaged 2,525 N-Power beneficiaries

The Minister in the statement said, “Statistics like this gives me joy and once again, I want to say congratulations; I look forward to hearing amazing testimonies and meeting beneficiaries of this programme who will be doing great things in the future”.

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She emphasized President Muhammadu Buhari’s vision of lifting 100 million Nigerians out of poverty in the next 10 years by creating opportunities that would improve the productivity of Nigerian youths for entrepreneurship or employment.

Going further the minister said, “Thus, the need to find ways to engage them is of utmost importance. However, the commencement of the enrolment of Batch C was predicated on the need to give more Nigerian youths the opportunity to benefit. This is because, keeping only 500,000 beneficiaries for four years defeats the purpose of Mr President’s vision, hence the need to scale up and was in no way meant to be punitive.”

While acknowledging the beneficiaries’ contributions, Farouq said, ‘’You are our model N-Power beneficiaries. Please avail yourselves of all opportunities provided by government like interest-free loans and leverage on those opportunities while using N-Power as a stepping stone”.

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The minister said the ministry is working at resolving some of the challenges facing the programme which include delays in the payment of stipends, beneficiaries not showing up at their places of primary assignments and people accessing the programme while gainfully employed elsewhere.

The minister also assured beneficiaries that outstanding payments would be made and transition plans were ongoing and would be duly communicated to them on their platform.

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Some of the beneficiaries of the programme gave good testimonies about the impact of the programme in their lives and all expressed their gratitude to the Federal Government for the opportunity.

Nairametrics has reported the opening of application portal for batch C of the programme with effect from 11.45 pm on June 26, 2020. There have been over 3 million applicants that have shown interest in batch C of the programme in about a week.

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Economy & Politics

Nigeria’s debt rises to $79.5 billion, as debt to revenue ratio worsens

According to data obtained from DMO, $27.66 billion (N9.9 trillion) is the total external debt.

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Nigeria's Debt to revenue ratio, DMO suspends April 2020 FGN savings bond offer

Nigeria, Africa’s largest economy’s total public debt rose to $79.5 billion (N28.63 trillion) as of the first quarter of 2020, which is March 31, 2020. This represents a 15% increase from the figure that was recorded for the corresponding period in 2019, which was about $69.09 billion (N24.94 trillion).

This was disclosed in a latest publication by the Debt Management Office (DMO) on Friday June 3, 2020.

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Nigeria has seen its debt stock rise sharply in recent years as the country tries to fund infrastructural and developmental projects and boost its fragile economy, which has been in and out of recession. The country’s economy has been projected to fall into recession again, due to the adverse impact of COVID-19 that has seen oil prices crash globally.

According to data obtained from DMO, $27.66 billion (N9.9 trillion) is the total external debt. This represents 34.89% of the total public debt stock. Whereas, $51.64 billion (N18.64 trillion) is the total domestic debt, which represents 65.11% of the total public debt.

READ MORE: Nigeria borrows N754 billion in 3-month, total debt now N25.7 trillion  

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The Federal Government accounts for 50.77% of the total domestic debt, which is $40.26 billion (N14.53 trillion), whereas the State Governments and Federal Capital Territory account for 14.34% of the total domestic borrowing which is $11.37 billion (N4.11 trillion).

Nigeria has been under a lot of fiscal crisis following the crash of oil prices triggered by the coronavirus pandemic. The oil sector accounts for about 90% of the country’s foreign exchange earnings and about 60% of its total revenue.

The country, which had lined up a series of debt issue this year, had to halt the external commercial borrowing due to oil price collapse. The Minister for Finance, Zainab Ahmed, had last week disclosed that the country would no longer go ahead with its Eurobond debt issue.

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READ ALSO: Lagos debt hits N39.6 billion, to borrow N97 billion more

The Nigerian government, for now, is focusing on the domestic markets and concessionary loans to help fund the 2020 budget deficit which is made worse by drop in revenue. In the recently approved 2020 revised budget, the federal government is expected to borrow N850 billion from the domestic market.

This rising debt has put a lot of pressure on the government’s resources as it spent $1.69 billion (N609,13 billion) to service its domestic debt in the first quarter of 2020 alone.

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Nairametrics had reported that Nigeria’s global rating is at risk due to the sharp rise in the country’s sovereign debt and a growing finance gap. According to a report from the global rating agency, Fitch Ratings, this could trigger a rating downgrade as policymakers struggle to stimulate growth and deal with the impact of low oil prices and sharp drop in revenue.

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According to Fitch, the country’s debt to revenue ration is set to deteriorate further to 538% by the end of 2020, from the 348% that it was a year earlier.

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Economy & Politics

Nigeria and US Authorities battle former Enron Nigerian Subsidiary over $80 million Yacht

Both Nigerian and American governments have opposed Enron Nigeria’s appeal. 

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19 years after the bankruptcy of Enron Corporation, one of the biggest corporate bankruptcies in American history, a former subsidiary of the company is battling Nigerian and American Authorities over the sale of a yacht valued at over $80 million acquired by Nigerian businessman Kolawole Aluko. 

The yacht was seized by the US Government in 2018 after prosecutors say it was bought with the proceeds of bribes paid to Nigeria’s former Minister of Petroleum, Diezani AlisonMadueke. 

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The yacht was later auctioned for $37 million in 2019. The Nigerian government also dropped claims to the proceeds of the sale recently and a Texas Court ordered all proceeds should be retained by the US Government. 

However, a former unit of the Bankrupt Enron, Enron Nigeria Power Holdings claims its entitled to the proceeds and demands $22 million in a bid to get an arbitration awarded to them against the Nigerian government for suspending a contract signed with Enron in 1999 to build and operate a Power plant. 

(READ MORE: Nigeria leads Africa combined in Q2 2020 on BTC P2P)

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Enron Nigeria claims the Nigerian government dropped claims to the proceeds of the yacht’s auction in an attempt to fraudulently transfer assets to stop creditors from accessing them. Saying Nigeria dropping its claims was a recognition of the factual and legal basis” in a DOJ court filing. 

Both Nigerian and American governments have opposed Enron Nigeria’s appeal. 

Enron Nigeria Power Holdings Ltd is owned by ex-Enron staff involved in the negotiations for the Power Plant contract in Nigeria and was bought out of bankruptcy for $750,000 in 2004 by a Cayman Islands registered company. 

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READ ALSO: N2trillion Mambila project: FG starts disbursement of compensation funds

An arbitration ruling in 2012 awarded Enron Nigeria Power Holdings $11.2 million including interest in damages against the Nigerian government. 

The DOJ says Mr. Aluko bought the yacht for $82 million in 2013 and funded a lavish lifestyle for Alison Madueke in exchange for NNPC contracts valued at over $1.5 billion. 

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Aluko and his business partner, Olajide Omokore are also accused of laundering illicit revenues into and through the United States

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