Germany: Buhari’s $2.3bn Siemens Power Deal Dormant Until Tinubu Revived It

• With over 210 Tcf, NUPRC says PIA enabling non-associated gas output

Emmanuel Addeh in Abuja

Germany’s Deputy Head of Mission in Nigeria, Mr. Johannes Lehne, yesterday said the $2.3 billion Siemens power deal between Nigeria and Germany remained largely dormant until President Bola Tinubu’s administration revived it when he assumed office.

Speaking on the second day of the Sub-Saharan Africa International Petroleum Exhibition and Conference (SAIPEC) in Lagos, tagged: “Celebrating a Decade of Energy, Oil, and Gas Innovation in Sub-Saharan Africa”, Lehne said the bilateral partnership in the power sector had stalled before gaining renewed traction under the current government.

The Siemens deal, originally conceived under former President Muhammadu Buhari, was designed as a government-to-government framework between Nigeria and Germany to overhaul Nigeria’s transmission and distribution infrastructure, improve grid stability and gradually increase available power capacity.

Siemens then set phased capacity targets of 7,000 megawatts by 2021 and 11,000 MW by 2023, ultimately aspiring to reach 25,000 MW by 2025. These targets were ambitious given the country’s 4,000 MW supply. However, for reasons the government failed to disclose, it never truly progressed.

“The strange thing was that this partnership was dormant until the beginning of President Tinubu’s time, where actually we revived this. We are in the power sector. We have a Presidential Power Initiative with President Tinubu for the reactivation of the Nigerian transmission system and electricity to everybody,” he said.

Lehne noted that beyond the PPI, Germany has expanded its energy cooperation with Nigeria through an Energy Support Programme, drawing from Berlin’s own experience in energy transition and diversification.

He explained that between 2021 and 2024, Germany intensified investments in renewable energy sources including solar, wind and geothermal, as part of efforts to reduce hydrocarbons and lower carbon emissions. Despite this push, he argued that what many countries describe as “energy transition” is often more accurately an “energy addition,” involving a broader mix of sources rather than a complete replacement of fossil fuels.

“There is no real energy transition; there is energy addition and a different mix of energy sources, which every country should consider in order to have the right energy policy,” he added.

According to him, gas remains central to Germany’s energy stability and will continue to serve as a key industrial feedstock for the next two to three decades. He stressed, however, that lessons from the Russia-Ukraine crisis underscored the dangers of overdependence on a single supplier.

Germany, he said, has since diversified its energy import base and rapidly developed four LNG import terminals capable of handling between 80 and 84 gigawatt hours of gas daily, in addition to pipeline supplies.

“For Germany, diversification of energy sources all over the world is part of policy. We need different partners. It is not clever to put all your eggs in one basket,” Lehne stated, explaining that if it’s available, Germany was ready to import gas from Nigeria.

Germany, with a Gross Domestic Product (GDP) of about $5 trillion and limited domestic energy resources, relies heavily on imports for oil and gas. Lehne said strengthening ties with resource-rich partners such as Nigeria aligns with the country’s long-term economic and energy security strategy.

Also speaking at the session, Deputy Director of Gas Utilisation at the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Jennis Anyanwu, said Nigeria’s challenge is not resource availability but converting abundant reserves into economic value.

He reiterated that Nigeria holds about 210.54 trillion cubic feet equivalent (TCF) of proven gas reserves, ranking it number one in Africa. When contingent resources are considered, he said the upside rises to about 650 TCF.

“The issue here is not about whether there is availability of gas. There is an abundance of gas in Nigeria, but the issue is accessibility and whether it is translated into value for the people and drives the economy as expected,” he said.

Despite its vast reserves, Anyanwu noted that Nigeria’s production performance lags behind its resource base. Current production, he said, stands at about 7.5 billion cubic feet of gas per day, placing the country far from the top globally.

“We rank number one in Africa in terms of reserves, but we are not number one in production. We are somewhere around number 19 globally. So we have huge reserves, but that does not translate into production,” he said.

He explained that about 54 per cent of Nigeria’s gas production is associated gas produced alongside oil, indicating that gas has historically been developed under oil economics rather than as a standalone commodity.

“There hasn’t been very intentional exploitation of gas as a commodity in its own right. Gas development does not occur simply because there is a resource. It only occurs when fiscal terms, regulatory frameworks and commercial structures align with the realities of gas economics, which are quite different from oil,” he added.

According to him, the Petroleum Industry Act (PIA) has significantly de-risked gas investments by addressing long-standing fiscal uncertainties that existed under the Petroleum Act. Under the previous regime, she said, fiscal terms for gas under Production Sharing Contracts (PSCs) were unclear, discouraging final investment decisions (FIDs).

In addition, he noted that the PIA reduced royalty rates for gas development. While onshore gas royalties were previously seven per cent and offshore five per cent, the new law provides a flat five per cent rate, with a further reduction to 2.5 per cent for gas utilised domestically.

Others speakers on the panel anchored by Paul Eardley-Taylor, Gas Sector Lead, Standard Bank, were: Dr Isaac Doku, General Manager Corporate Affairs, West Africa Gas Pipeline Company Limited (WAGPC) and George Amara, Project Advisor at UTM FLNG, who represented the Chief Executive, Julius Rone.