NIGERIA – Siemens AG, a renown German energy conglomerate, will build new substations and refurbish existing ones inline with the electricity upgrade deal signed with Nigeria in August this year.

According to Nigeria’s Minister of Power, Sale Mamman, the German firm will upgrade 105 power substations across the country and build 70 new ones to enhance the efficiency of power distribution in the country.

Mamman further revealed that the Federal Government had already made an initial commitment of US$22.20 million towards the implementation of the deal with Siemens captured under Presidential Power Initiative.

The minister further noted that 35 power transformers would also be manufactured and installed across the country based on the terms of the deal with Siemens.

According to the power minister, 3,765 distribution transformers would be installed and 5,109km built across the country.

Nigeria’s power system suffers from a huge imbalance between what it generates and the demand from users.

Though it has the capacity to generate 8,000MW of operational power, only 4,500MW reliably reaches consumers.

Brownouts and blackouts are a regular feature of life in Nigeria, constraining the country’s economic development.

The inefficiencies of power supply have forced many businesses to rely on diesel powered generators for a reliable supply of electricity.

Diesel powered generators not only cost the businesses billions of dollars annually but also have an adverse impact on the environment given their huge carbon emissions.

The African Development Bank estimates that Nigerians spend at least US$14 billion annually on diesel for their generators as they seek to maintain a stable power supply.

This not only increases their cost of production but also impedes the expansion of Nigeria’s industrial sector.

According to the International Monetary Fund (IMF), lack of access to electricity and unreliable power supply are key constraints to doing business in Nigeria.

The IMF estimated the annual economic loss at about $29 billion.

Mamman however noted that the deal had a potential power evacuation capacity of over 13,000 megawatts, a quantum leap when compared to the nation’s current optimum capacity of around 4,500MW.

He noted that about seven gigawatts of power was expected to be achieved between now and 2021 in phase one of the deal.

The other two phases of the deal if successfully completed, will see the country’s national grid capacity expanded to 25,000MW greatly enhancing Nigeria’s capacity to efficiently distribute power to its citizens.

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