The six-year electricity deal signed by the federal government and Germany-based Siemens AG in July will cost more than N1.15 trillion to execute.

The deal is a three-phase Nigerian electrification project which aims to achieve 25,000 megawatts of electricity in the country by 2025. This is according to the Technical and Commercial Proposal seen by our correspondent.

On July 22, 2019, the federal government and Siemens signed a Letter of Agreement on the Nigeria Electrification Roadmap which resulted from the meeting between President Muhammadu Buhari and the German Chancellor, Angela Merkel, on August 31, 2018 in Abuja.

President Buhari said at the signing ceremony that it was evident that more work needed to be done to upgrade the transmission and distribution system, adding that the government was initially reluctant to intervene as the distribution sector had already been privatised.

According to the Technical and Commercial Proposal dated May 7, 2019, phase 1 of the project seeks to increase power delivered by additional 2,000MW, significantly reduce Aggregate Technical, Commercial and Collection losses and achieve improved grid stability and reliability.

The document revealed that the scope of work for the first phase would entail transmission assets upgrade, distribution assets upgrade, grid automation, national metering infrastructure, power system simulation and general technical training.

The budgetary price for the transmission assets upgrade, which includes 11 containerised substations and 10 mobile substations, was put at €330m (about N113.42bn).

The cost of the distribution assets upgrade was estimated at €250m (N85.92bn). The upgrade would include products and systems for 14 stations and upgrade of 26 substations.

According to the document, the power system simulation would entail new software licences for the Transmission Company of Nigeria (€192,000); software M&S for TCN (€182,000); training and technical services support for TCN (€1.35m); new software licences for 11 distribution companies (€1.41m); software M&S for Discos (€848,000) and training and technical services support for Discos (€1.81m).

The cost of system development studies for 25,000MW transmission, sub-transmission and distribution grid capacity was put at €1m.

The budgetary prices for the grid automation, national metering infrastructure and the general technical training were not stated.

“The quantity and prices are all ex-work factory and are subject to change after detailed project scoping and design. Budget prices contained here exclude the following: i. Taxes, duties and other logistics costs ii. Project management costs iii. Costs of rights of way, Environmental and Social Impact Assessment, Environmental Impact Assessment, and other required licences or permits,” the document said.

According to the proposal, the objective of second phase is to increase the grid capacity from 7,000MW (expected to be realised from phase 1) to 11,000MW.

To achieve this, Siemens and other participants will focus on transmission and distribution assets upgrade including 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

“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 document said.

It said the budgetary price estimates for the distribution SCADA for the 11 Discos and gas processing to power projects would be submitted later.

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).