In March 2020, the late Chief of Staff (COS) to President Muhammed Buhari, Abba Kyari, and other top government functionaries were in Germany to conclude on commercial agreements for the Nigerian Electrification Roadmap (NER) Project. Sadly, it was during that journey that the late COS developed symptoms related to COVID-19 which later led to his untimely death. If anything, Nigeria needs to work with renewed zeal to ensure the successful implementation of the project for which he died. More importantly, the industrialization of Nigeria depends on it. With the global downturn and possible recession that will follow the COVID-19 pandemic, it appears there is no other option for the country but to develop its power sector and other infrastructure while diversifying the economy.
A few days ago, the Federal Government (FG) authorised the payment of its share of funding for the project directly to Siemens AG, a sum of 1.7 billion Naira in counterpart funding representing 15% of the total project cost. The remaining 85% will be paid by the German Government.
It is therefore imperative to evaluate the status of the agreement or proposal especially in view of the scarcity of details available in the public space on the subject. Ideally, a robust and thorough review/ discussion will bring about a better outcome than keeping interested members of the public away from the know.
To begin with, the payment by FG signals a genuine intention to commence the project. However, the loan will be repaid by the distribution companies (DisCos). Therefore, it needs the buy-in of the DisCos ab-initio except government is releasing this fund as part of its obligation as 40% part-owner of the DisCos- which makes sense. Thus, DisCos, in the interest of Nigerians, should make their position on this known now, through, perhaps, their umbrella body, ANED. Any attempt to voice out later when the project is underway or any action in the future to derail the project will be tantamount to working against the Nigerian nation. The details of the contract is assumed acceptable to the DisCos except they say otherwise now.
The recently released updated version of the technical and commercial proposal by Siemens is not much of a difference from the original document except for the information on the commercial implications of the first phase of the Project. This is fairly reasonable. However, all eyes must be on the ball!
Analysis
- Network Studies
Power system simulation studies carried out on the grid network by Siemens Experts in their Power Technologies Institute need to be published for review. There, it will be clear which bottlenecks became evident from the load flow studies which will enable monitoring and tracking of investment activities to ensure value for money spent. Essentially, we will be able to assign an health status to each equipment or network component now, and re-run the load flow studies at the end of the project to give it a new status commensurate with expenditure and intended project outcome.
- Security Standards for Gas and Electricity Networks
The goal of this project is to have a secure power network and an assured financial revenue stream for the Nigerian electricity market. To get there, There is a need to abide by the N-1 Security of Supply Standards for both the electricity and gas networks while aggressively investing in smart prepaid metering for all consumers such that there is visibility of both Naira and power flows in the NESI.
- Coordinated Power System Planning
Increasing generation capacity without a commensurate investment in the other parts of the electricity value chain will lead to monumental financial losses and the GenCos will continue to receive bailouts to stay in business. These losses are due to the exceptionally high aggregate technical, commercial and collection (ATC&C) losses on our dilapidated power network. With the removal of ATC&C losses, there will be a greater investor appetite and further investment in the generation, transmission. distribution and supply segments of the value chain. In addition, the improved revenue stream and appropriate pricing will lead to the development of gas-to-power infrastructure in Nigeria.
According to the proposal, the non-coincident peak load of the distribution network is about twice the peak supply delivered by TCN, where the peak was 5.2 GW of electricity wheeled in 2018 by TCN. This means when TCN- DisCo interface issues are removed, it is possible for consumers to gulp more than 13MW of electricity especially if consideration is given to the “suppressed” demand in the NESI as well as the fact that only 45% of Nigerians are connected to the electricity grid as at today. This justifies the idea that increasing generation capacity has to be a consideration in the overall strategy.
Siemens encouraged ramping up power generation especially during phase 3 of the NER project. This will enable us to first find a way to make the over 13GW of currently installed generation capacity to be transmitted and subsequently distributed to consumers who will experience upwards of 18 hours of electricity supply per day for a start citeris paribus.
- Network Losses
In the proposal, the critical success factor is the reduction of ATC&C losses.
ATC&C losses in the NESI was quoted to be 55%. There is a requirement to provide the details of studies carried out to determine the quoted loss levels in the NESI. Also, Siemens needs to publish the calculations or simulations done to determine the actual network losses before and after the implementation of phase 1 project activities. Furthermore, a loss reduction trajectory should be shown for every stage of the project development within the next 6 years spanning the planned 3 phases.
The document talks alot about preliminary studies. Results of all preliminary studies mentioned or carried out by Siemens previously on this project, particularly on the 33kV sub-transmission networks in Lagos, Ibadan and Kano have to be published. These studies should identify the actual bottlenecks and locations where we have capacity issues in both transmission and distribution networks and at their interfaces. Also, the data used in carrying out these studies need to be published.
- Transmission Network Upgrades
Phase 1 of the project is to enable 7GW of generation to be transmitted and distributed for consumption by consumers. To get 7GW of power generation through the transmission and distribution networks, Siemens claims that network studies showed that upgrades will have to be carried out on the transmission system including but not limited to transformer capacity upgrade in selected TCN substations, line reinforcement, reactive power compensation especially in Port/Harcourt, and upgrade of on-load tapchanger for voltage control. In addition, Siemens has determined that, in its current state, the distribution network is able to accommodate the 7GW scenario with minor tweaks. Technically speaking, this shows the transmission network remains the weakest link in the value chain.
- Distribution network expansion
The following points are noteworthy:
■ Publication of the network expansion (load flow) studies carried out are required for review.
■ Details of protection not included.
■ Design and operational manuals, which should be written in English Language, shall be taken as part of the key deliverables for the entire project.
■ For the upgrade works planned for Eko Electricity Distribution Company (EKEDC), and in the particular upgrade of Alagbon Injection Substation from 2 by 15MVA to 3 by 15MVA, the following questions are pertinent:
♤ What is the fault level before and after thinupgrade to the 3 by 15MVA status?
♤ What is the load profile & firm capacity for the substation?
♤ What will be the running arrangement?
■ The demonstration of compliance with order 5 of the Nigerian Content Act should be a priority for this project. Local Content should be foremost in our minds.
■ For the entire project, single line diagrams have to be reviewed just as other design specifications.
■ NEMSA directed that there should be no more connection of “point loads” on the network at 33kV. Yet, this project involves the delivery of 2.5MVA 33/0.415kV transformers. Also, effort should be made to clarify whether it should comply with new NEMSA directive on LV rating in the NESI or not. It is instructive to note that in some other installations in the project, Siemens is complying with the new LV rating as it plans to install 33/0.4kV and 11/0.4kV substations. There seems to be a mis-alignment in the overall strategy in this regard and this needs to be looked into.
■ The Project Management Team (PMT)on the Nigerian side needs to include seasoned power engineers. A special purpose vehicle to be established to facilitate the detailed engineering design will look after this. Ideally, the engineering design should be done in Nigeria.
■ In the section that talked about detailed scope and responsibilities, DisCos are not named among the entities to firm up the scope. They need to be included. (Page 50 of 111).
■ Siemens has stated that operators in the NESI have to provide the “as built documentation” for them to carry out some of their works. However, some of these are non-existent. Where so, Siemens needs to provide the drawings. These drawings have to be used as the basis for standardization for similar installations in the future, where possible, in the NESI.
- Security of Supply and Security of Revenue – A compelling case for metering of consumers
A nationalized or Centralized “Advanced Revenue” smart metering system has been recommended. This will be transparent to DisCos, MAPs, NBET, GenCos, TCN, NERC & other relevant stakeholders.
- Technical Training
■ There is an opportunity to build power training centres
■ There is an opportunity for freelancers to support training program in Siemens Training Academy (STA), NAPTIN, vocational schools, polytechnics etc.
■ More details on the training program required.
- The Commercial Proposals
Lump stumps were provided. Detailed breakdown of cost elements are required for proper scrutiny and comparison with industry standards and benchmark prices.
■ Cost of grid automation not provided despite years of working with the Nigerian government through TCN on grid automation. Does this mean Siemens is not ready to deliver this?
■ A total of 6.804 billion euros is the proposed cost for phase 1 of the project subject to change after a more detailed scope is presented. Siemens seems not to be fully ready as the costs for some of the activities in the phase 1, which should have started last year, have not been provided up till now.
From Siemens’ point of view, an upward review of cost will result except the project management team from the Nigerian side is thorough.
■ Commercials for phases 2 and 3 of the project have not been made available. This is reasonable. It will be nice to have sound power engineers involved in phase 1 such that the learnings from phase 1 will be useful in the scoping and management of the entire technical and commercial evaluation of the other two phases. The project management team on the Nigerian side should be the best among equals and should be allowed to complete the full project cycle of 3 phases where possible.
- Protection Devices
The protection scope leaves much to be desired. Whereas Siemens aims to replace protection relays within the medium voltage substations of the 11 DisCos, the types and quantity of the protection devices are required to be provided by the DisCos. This is a panacea for fatal flaw especially when it is clear that a proper protection system is required for grid reliability, stability and operation. I will recommend that the protection scope be given a more detailed attention by Siemens.
■ The fact that the measurement transducers (CTs and VTs) are not in the scope of work for Siemens may lead to misalignment in terms of rating, burden, specifications, settings etc.
- Gas Processing to Power Solutions
■ Flared gas to be harnessed for gas-to-power.
■ Coordination and working relationship with Nigerian Gas Company (NGC)not well detailed.
The correct implementation of the NER project in a government-to-government arrangement between Nigeria and Germany will bring about improvements in the power system in Nigeria. Much of this depends on having a very good project management team on the Nigerian side which will work assiduously for the benefit and interests of Nigerians.
Engineer Idowu Oyebanjo is a chartered power system professional and works in the UK electricity supply industry.
