A deal between the federal government and the German government to debottleneck Nigeria’s electricity transmission facilities could be delayed for about five years, the global energy systems firm has said.
Siemens Energy has initiated a review of its wind business after taking a large hit to earnings and expected full-year revenues and profits due to problems at its unit Siemens Gamesa, one of the largest wind turbine makers in the world.
“Our third-quarter results demonstrate the challenges in turning around Siemens Gamesa,” Christian Bruch, President and CEO of Siemens Energy AG, said in a statement on the company’s results for the third quarter of the fiscal year 2022/2023 that ended on June 30, 2023.
At the end of June, Siemens Energy withdrew the profit guidance for the company due to problems with wind turbines by Siemens Gamesa.
“This is a disappointing and severe setback,” Siemens Gamesa chief executive Jochen Eickholt told reporters on an ad hoc call then.
In today’s Q3 earnings release, Siemens Energy said that its result before special items was a loss, driven by charges at Siemens Gamesa totaling $2.4 billion (2.2 billion euros). The charges relate mainly to quality issues of certain onshore platforms as well as increased product costs and ramp-up challenges in the offshore business.
“Due to the developments at Siemens Gamesa, Siemens Energy is reviewing the current strategy and action plan in the wind business. Details of this strategic plan will be presented at the Capital Markets Day in November,” the company added.
As a result of the charges and wind turbine issues at Siemens Gamesa, Siemens Energy Group now expects its FY 2022/2023 net loss at $4.94 billion (4.5 billion euros), about four times higher than the previously expected loss. Free cash flow pre-tax is expected up to a negative low triple-digit million euro amount, compared to a previous guidance of positive up to a low triple-digit million euro amount.
Former President Muhammadu Buhari about five years ago, met with the then German Chancellor, Angela Merkel and initiated the deal to overhaul and increase the operational transmission and distribution capacity of the power grid.
The agreement was basically meant to include the rehabilitation, upgrade and expansion of transmission and distribution networks and to improve power generation in three phases.
The first phase was to raise power supply to 7,000mw by 2021; and then increase it to 11,000mw in 2023 and thereafter push it to 25,000mw from 2025.
Following a groundswell of enquiries recently, the Managing Director of FGN Power Company, the Special Purpose Vehicle (SPV) for the execution of the project, Mr Kenny Anuwe, said that 80 per cent of equipment needed for the pilot project was already available in-country.
Stressing that the project remained on course, Anuwe reiterated that the initiative for Phase 1 was underway and had recorded notable successes.
“Some of the sites include Apo, Ajah, Okene, Nike Lake, Kwanar Dangora, Maryland, Omouaran, Ojo, Amukpe, Ihovbor, Potiskum, Birnin Kebbi, amongst others,” Anuwe said in a statement.