Monday, 20 June 2022

Buhari's power deal with Germany to gulp N991.99 billion in first phase alone

The total funding requirement for the first phase of the Presidential Power Initiative is €2.3bn (N991.99bn at the official exchange rate of N431.3/€), figures obtained from the Federal 

Government showed.

PPI is an initiative of the Federal Government conceived during a meeting between Nigeria’s President, Major General Muhammadu Buhari (retd.), and German Chancellor, Angela Merkel, on August 31, 2018.

It was conceived as a three-phase initiative to rehabilitate and expand Nigeria’s electricity grid through improved generation, transmission, and distribution.

The Federal Government had to establish a special purpose vehicle, the FGN Power Company, to own and execute the PPI.

Data obtained in Abuja on Friday from the PPI Financing Structure document, put together by the FGN Power Company, showed that about 60 per cent of the €2.3bn would come from a consortium of German banks, while other financial institutions would provide the balance.

The document read in part, “The total project cost for PPI Phase 1 is estimated at €2.3bn in which about 60 per cent of the funds will come from the 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 per cent 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 the DFIs to include the African Development Bank, Afrexim Bank, French Development Agency, as well as the European Investment Bank.

Nigeria’s power grid has been characterised by frequent collapse lately, plunging the country into darkness repeatedly.

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