President Muhammadu Buhari on Friday approved and released $100m (N41.6bn at the official exchange rate of N415.63/$) as a take-up grant for the Presidential Power Initiative.
The President released the $100m as part of the $200m approved for the programme, as the balance alongside additional would come on a later date.
President Buhari and German Chancellor, Angela Merkel conceived the PPI initiative during a meeting 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.
A document obtained from the company in Abuja on the financing for the power programme indicated that billions of naira had already been released for the initiative.
It read in part, “FGN Power Company has already received the sum of $100m out of $200 million from the Ministry of Finance as approved by the President, being the take-up grant for the PPI implementation.
“The balance of $100m alongside additional funding required for the 15 per cent counterpart funding estimated to be made available to FGN Power Company in line with the July 2020 Federal Executive Council’s approval.
“The financing for the offshore will be sourced from German banks at a concessionary rate, which will be guaranteed by the Euler Hermes (German Export Credit Agency).”
It added, “The loan from German banks will fund 85 per cent of the offshore project cost, while the counterpart funding of 15 per cent is to be provided by the Ministry of Finance through the FGN Power Company.”
The document further stated that the Federal Government had committed to making huge initial investments under the PPI as a convertible loan on behalf of the power distribution companies, given their inability to secure requisite investments for the upgrade and modernisation of their networks.
“The FGN Power Company will subsequently on-lend the project cost to the Discos and Transmission Company of Nigeria, with the repayment coming from the beneficiaries’ revenue from the market.”