Upgrading Nigeria’s power generationJuly 9, 2021
Seun Suleiman, CEO of Siemens Energy Nigeria, talks to The Energy Year about the company’s technological response to the Covid-19 crisis, its involvement in the Presidential Power Initiative (PPI) and other power sector activities, and the value of forming local partnerships. Siemens Energy is a global energy technology company.
In what ways has Siemens Energy undertaken a technological response to the Covid-19 crisis?
Covid-19 came as a shock for everyone, with a deep impact on Siemens Energy because we are embedded in the service business. Beyond being equipment manufacturers, we also provide complete lifecycle support for this equipment. Equipment such as gas turbines and compressors is crucial to the production of oil and gas and the generation of power. We were caught right in the middle of the crisis because we needed to transport people to these vital assets.
Our strategy was to introduce more technology. We now carry out remote support whereby we can access and diagnose a turbine, for example, from afar. This is done by moving data back and forth and correcting codes, loading them back into the system and running the machine. Through technology, we introduced remote support to provide the foreign technical expertise we lacked in-country. This gave us business continuity, thanks to which assets and equipment kept running and hence didn’t affect the production of oil, gas or electricity. We also introduced virtual training to enhance know-how among our staff.
In addition to this, some of the main added values we acquired from embracing digital have been non-disruption and, of course, stabilisation of prices. Digital allowed us to even reduce costs and prices at a time where there was no money to spend. Therefore, customers were still able to afford our services. Interestingly enough, clients were expecting companies like Siemens to quickly evolve and come up with solutions to tackle the issue around the pandemic in terms of providing continued support. Customers have been forced to become more tech-savvy as we engage in technological transfer to them. All of these changes have led to more efficiency.
What position does Siemens Energy have in the Nigerian energy market at present?
Siemens Energy became a full-fledged company listed on the Frankfurt Stock Exchange in September 2020. We are now an end-to-end energy company in three major areas: power generation, transmission and industrial applications (the third was formerly called oil and gas). As for the industrial applications space, it is fully established in Nigeria, with a robust fleet of 385 gas turbines and compressors servicing our various customers.
In regards to the generation business, we are deeply involved in Nigeria’s power generation sector, as seen in projects such as the Azura power plant, Afam power plant and the Geregu I and II power plants, which each have one large Siemens gas turbine. Those are supplying power to the grid, which reflects our inroads in the area of power generation in Nigeria. Lastly, our activity in the transmission space revolves around the PPI.
What steps does the PPI include and what impact do you expect it to have?
Siemens Energy is spearheading the PPI, a three-phased project, which will upgrade Nigeria’s installed power capacity to a total of 25,000 MW by 2025. Even with around 12,522 MW of power generation capacity installed in Nigeria, only about 4,000 MW reaches end users. With the rolling out of phase one of the PPI, we aim to reach 7,000 MW by focusing on critical and “quick win” interventions – the low-hanging fruits. Here, we intend to fix the transmission and distribution network by focusing on dilapidated equipment and ATC&C [Aggregate Technical, Commercial and Collection] losses to better output.
Phase II of the initiative aims to target network bottlenecks and make full use of the already existing generation and distribution capacities to ultimately move from 7,000 MW to 11,000 MW. Lastly, Phase III intends to hit 25,000 MW of capacity by the year 2025, and this last phase includes the construction of new power plants in the country. The FGN Power Company has the responsibility of executing the PPI by providing project management for the implementation of the whole initiative.
In February 2021, we signed on for the pre-engineering of Phase I, which includes many of the transmission and distribution network studies that will lead to the execution of this first phase.
As Siemens, we are very proud to be associated with this project as we believe we are contributing to solving one of the most important problems this country has. We have to look beyond the numbers and identify the impacts: create employment, spur SME opportunities, drive industrialisation and bring electricity to millions of households across Nigeria. This will be an economic evolution from where we are now to where we’re going in 2025.
What is the level of alignment between the different actors involved in this endeavour?
There are very good synergies. The FGN Power Company was set up as an SPV to execute the PPI, with the mandate to bring all stakeholders together, namely DisCos [distribution companies] and transmission companies such as TCN [Transmission Company of Nigeria]. There has been a complete alignment between all parts involved as we all know the pivotal importance of this project for the development of the nation. We interface with FGN Power Company on a daily basis, discussing matters such as strategy, execution and how to move the project from one phase to the next. The advancement of a project of this type would not be possible without synchronised efforts.
How involved is Siemens Energy in power generation projects in Nigeria?
In the case of the Azura power plant, we are involved in a long-term maintenance agreement. On a similar basis, we are working with Geregu Power, supporting their assets so they run efficiently. As for contracts, these follow different structures, with some that are long term and others that are based on our being called to fix a problem. On the service side, we are also working very closely with Transcorp Power, carrying out the rehabilitation phase for their plant. Likewise, for the third phase of the PPI, we will work on the construction of new power generation plants.
How important is the oil and gas industry for Siemens Energy Nigeria?
The industrial applications unit is our base business. We have 385 gas turbines and compressors in our fleet in Nigeria, cutting across our numerous customers. We have 30 field service engineers working with their boots on the ground, supporting major generating assets of our customers on a day-to-day basis.
Moreover, we have a workshop which is well situated and close to the locations where our clients have assets. In this facility we do a lot of compressor revamps, handling and fixing customers’ equipment. Our technicians are all Nigerians which goes to show that we take local content very seriously. This also means that we don’t need to step out of the country to give the full circle solution to the customer. Truth be told, the oil and gas sector is crucial to Siemens Energy, accounting for 80% of our business in Nigeria.
How important are partnerships to increase market penetration of your products?
Partnerships are essential for us as an international company with a local presence. We need collaborations, especially when it comes to introducing new equipment into the local market. There are plenty of localisation requirements to do that, so we have local partners to develop these initiatives. It’s important to understand that partnerships help expand your market share if you do them the right way. We look for partners who are strong in either the industrial or the oil and gas space and we develop that relationship. At present, we are actively looking for partners that we can synergise with to ultimately increase our market penetration.