German engineering giant, Siemens, said its multi-billion dollar deal to revamp Nigeria’s Power infrastructure has gained the interest of investors.

This was disclosed by the company’s Nigerian CEO, Onyeche Tifase, who also noted that Siemens aims to implement similar strategies it used in Egypt that saw electricity generation in the North African country grow by over 40%

The Backstory: Nairametrics reported last year that Nigeria had allocated the first N61 billion for its Electrification Road Map in partnership with Siemens AG. This followed a July 2019 agreement between both parties.

The Nigerian electrification project has three phases. The project is aimed at achieving 25,000 megawatts of electricity in the country by 2025.

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

Last month, Nigeria approved the sum of N8.64 billion as part of counterpart funding for the Presidential Power Initiative (PPI), which is also known as the Siemens Project. The PPI funding structure includes:

• 85% from a consortium of banks, guaranteed by the German government through credit insurance firm, Euler Hermes.
• 15 % of FG’s counterpart funding.
• 2–3 years moratorium.
• 10–12 years repayment, at concessionary interest rates.

Tifase said that the project would upgrade existing power substations and install distribution lines and transformers to Nigeria’s electrical grid, adding that the project has made potential foreign investors see investment opportunities in Africa’s largest economy.

“Our ability to deliver all the automation of distribution, transmission and generation has boosted investors’ confidence.

“Oil and gas companies that had stepped back because of a lack of benefits are reconsidering,” she said.

Nigeria losses 2% of its annual GDP to power failure. Siemens plans to upgrade Nigeria’s transmission capacity to 7,000 megawatts in the first phase of the project as the World Bank also approved a $750 million loan in June to finance efficient metering of Nigeria’s grid.

Apart from the World Bank, the project is also financed by German banks including Deutsche Bank and Commerz bank with supervision from the German government.

The Nigerian National Petroleum Corporation (NNPC) declared open on Tuesday, August 11, bids by interested private investors to repair the pipelines and depots that are serving the refineries.

These pipelines, built almost 4 decades ago, are very critical in the successful movement of crude oil to the country’s 3 refinery complexes located in Port Harcourt, Kaduna and Warri, and the subsequent movement of the finished petroleum products to the consumers.

The pipelines, which according to NNPC are in dire need of comprehensive repairs, have experienced years of incessant theft and vandalism as well as ageing.

READ MORE: Refinery operations still loss-making: Capacity utilisation of the four refineries still 0% 

This project is expected to be operated on a public-private partnership basis as the bidders are expected to finance and execute the project, then operate for an agreed number of years before transferring back to the NNPC. In other words, the bidders for the extensive repairs of these pipelines would have to finance them independently and operate for a defined period in order to recover their investment costs with throughput tariffs.

It must be noted that this model is similar to the one that had been in place by the state oil giant for the refineries. The NNPC had also announced plans to get private investors to invest in the repair of the 3 refineries on a repair and operate basis, as they do not want to be involved in the management of these refineries.

The NNPC Group Managing Director, Mele Kyari, had said that the ultimate plan for these refineries was to allow it to run on the LNG model, where the shareholders would be free to decide on the fate of these refineries going forward.

READ MORE: NNPC states why it failed to fix refineries, to build 200,000 capacity refinery

The refineries, which have only run sporadically, were shut down by NNPC earlier this year while awaiting repairs and upgrade. These 2 projects are expected to be handled separately according to information made available on Tuesday.

In addition, the new pipelines would need intrusion detection systems, as well as deep burial, to stop theft or vandalism. The deadline for the submission of these bids is due by September 18.

Five oil majors (including Exxon Mobil and British Petroleum) reduced the value of their assets by $50 billion in Q2, 2020. They also reduced their production rates as the COVID-19 pandemic caused a downward trend in energy demand.

What this means: The cut in asset valuations and reduction in crude oil production by these oil majors showed the depth of damage the COVID-19 pandemic caused on the global energy sector in Q2, 2020.

Energy demand at one point was down by more than 30% globally and still remains below pre-pandemic levels.

READ MORE: Respite for Nigeria as Exxon Mobil and Shell lose $1.8 billion arbitration award  

Some of these conpanies’ executives said they took these austerity measures because they expect demand to continue to be on the downward trend in the meantime. This is in view of the fact that people around the world are traveling less, even as many global industries are not in full capacity. The pandemic has already killed more than 700,000 people.

Of those five oil majors, only Exxon Mobil (XOM.N) did not book sizeable impairments, Reuters reported. However, an ongoing re-evaluation of Exxon Mobil plans could lead to a reasonable amount of its assets being impaired, and signal the removal of 20% or 4.4 billion barrels of its oil and gas reserves.

READ ALSO: Oil prices drop to 21-year low as demand and storage crises persist

Oil major BP (BP.L) took a $17 billion hot. It said its plans in the coming years would be a focus on renewables and fewer fossils.

About two weeks ago, Nairametrics reported how Exxon Mobil and Chevron posted their worst losses in modern history, as the COVID-19 pandemic and a glut in crude oil reduced the demand for energy products in the second quarter of 2020.