Siemens Energy AG expects to complete an overhaul of Nigeria’s dilapidated power infrastructure five years later than originally planned, due to delays caused by the coronavirus pandemic.
The German engineering company, which was contracted by Africa’s most populous nation four years ago to rehabilitate and expand Nigeria’s electricity grid by 2025, will now only conclude the project in 2030, Oladayo Orolu, head of business development and government relations at Siemens Energy said in an interview.
The three-phase project was set back by delays in starting the first phase, he said.
“When we conceptualized this project in 2018, our plan was within two years we should be done with phase one, but then Covid happened,” disrupting supply chains, which meant getting raw materials took longer than before, Orolu said.
The delay is a blow to Nigeria President Bola Tinubu’s reform agenda. The president, who took office in late-May, pledged to make electricity more accessible and affordable in the nation, where more than 40% of its population lack access to power and face constant blackouts.
In 2020, the World Bank estimated the economic cost of power shortages in Nigeria at around $28 billion – equivalent to 2% of its gross domestic product.
The delays are also likely to cause cost overruns.
“Prices are not at the same level they used to be,” Orolu said. “Some raw material components costs have been doubled, some are still close to where they used to be, some are just marginally higher,” he said. In 2020, phase one was projected to cost about €2 billion.
Orolu expects electricity output to increase by an additional 2,000 megawatts at the completion of phase one by 2025. “The objective of phase one is to do quick fix projects that will free up 2,000 megawatts, we currently have 5000, we are looking at taking that to 7,000,” he said.
The West African nation has an installed capacity of more than 13,000 megawatts, of which a daily average of about 3,400 megawatts is dispatched to consumers due to a poor transmission and distribution network. The partnership with Siemens will modernize the existing network before enlarging it until the country can produce and distribute 25,000 megawatts.
