According to the Federal Government, the total funding needed for the first phase of the Presidential Power Initiative is €2.3 billion (N991.99 billion at the official exchange rate of N431.3/€).
PPI is a Federal Government initiative conceived on August 31, 2018, during a meeting between President Muhammadu Buhari and German Chancellor Angela Merkel.
It was conceived as a three-phase initiative to repair and expand Nigeria’s power grid through improved generation, transmission, and distribution.
To own and execute the PPI, the Federal Government had to create a special purpose vehicle, the FGN Power Company.
Data from the PPI Financing Structure document prepared by the FGN Power Company in Abuja on Friday revealed that a consortium of German banks would provide approximately 60% of the €2.3 billion. Other financial institutions would provide the balance at the same time.
According to the document, “the total project cost for PPI Phase 1 is estimated at €2.3 billion, with approximately 60% of the funds coming from a consortium of German banks to cover the offshore project cost.”
The financing for the offshore project will be sourced from German banks at a concessionary rate, which will be covered up to 90 to 95 percent by the Euler Hermes Aktiengesellschaft (German Export Credit Agency).
“The remaining 40 per cent of funding for the transmission and distribution onshore works will be sourced from other financiers.”
It added, “FGN Power Company has already commenced engagement with the development finance institutions for mutual collaborations on the required onshore funding.”
The company named some of the DFIs to include the African Development Bank, Afrexim Bank, French Development Agency, and the European Investment Bank.
Nigeria’s power grid has been characterized by frequent collapse lately, repeatedly plunging the country into darkness. The national electricity grid had collapsed about five times this year, twice in March and April, before it recorded another collapse early this month (June).
To avert this and ramp up national power generation above the persistent average of 3,500 megawatts, the government, in partnership with Germany, came up with the PPI.
“The PPI is a government-to-government initiative, Nigeria and German government. It is being deployed in phases and we are now in phase one, to raise power generation to 7,000MW,” the Minister of Power, Aliyu Abubakar, stated at the recent Power Dialogue in Abuja.
He added, “We are taking up the transmission and distribution parts in phase one. So the distribution part is involved. We have a lot of transformers in it. The transformers are over 2,800 which are to be deployed nationwide.”
