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BusinessDay 06 Mar 2018

Monday 05

Monday 05 March 2018 C002D5556 BUSINESS DAY 21 ANDREAS PISTAUER Head of Siemens operations in sub-Saharan-Africa for Power and Gas ement in all power projects - Siemens boss government giving the right incentive to developers to take on the opportunity provided by Siemens, we are ready to go. Our transmission is the major issue. What advice would you give to government on that? What do you mean by developers; do you mean private investors? You know the power sector has actually been privatized and we want to encourage that. We should continue in that line. It will still be for private developers to develop, and Siemens will provide all the necessary support to do that; the right technology including collaborating on financing while the government should ensure that there is a cost reflective tariff and necessary guaranties put in place. Cost reflective tariff has been an issue limiting investors and yet you are still putting in money into the sector. Why? I have full confidence for two reasons. Number one, Nigeria needs minimum of 30,000 megawatts as capacity; this is what it really requires. So the demand for power is so huge that it’s not a question of 100 megawatts, 450 megawatts or a thousand megawatts capacity. Any capacity that comes as addition would help. We would like to give you an example of Egypt; the government realised they ran into a shortage in the medium term on their capacity. They also realised the few turbines are not running efficiently and they are old technology. So, the Egyptian government decided it wanted to make a change in policy plan. Siemens agreed with the government that within three years’ time we would provide it with most efficient power generating capacity worldwide and in the past three years we have delivered 14, 000 megawatts capacities in three different power plants. That is the largest power plant project ever done within a single agreement. A similar thing can be done in Nigeria but requires both sides working together closely. The second reason is, does it make sense that today people who needed electricity are spending a lot for daily power needs. This is a problem for every production facilities, for every industry that wants to produce in Nigeria. I think the power generation is relatively easy to solve. The transmission sector; once the power generation is taken care of, the transmission sector also needs investment. An independent system operator is better in place than it being owned by the government. But if access to the grid is allowed not only for a particular generation company, and distribution companies are allowed to have their own generation then, the burden of the overall transmission line system would be reduced. But, there could be a win-win situation if distribution companies would also be allowed to have their generation capacity, then they can generate their own power needs and not necessarily everything has to go to the national grid. So this does really increase the reliability of electricity supply. For example, here in Lagos, if different distribution companies could generate their own electricity, then there is an integrated model; be it industrial facilities or industrial cluster generating electricity, they can also supply other industries. This is where we have to commend what is going on in Lagos State. Lagos State is working on establishing 3000 megawatts and they are also planning to have their own distribution network eventually. So, it means if we can have this repeated in some of the big states, then it means whatever we then have in the national poll can be used in other places. So for the Lagos embedded power project, we are happy that NERC has actually given them notice of no objection, that is very good and Siemens is going to work to support the state government in achieving this objective as fast as possible. In what way is Siemens going to be involved in that project? Siemens will be involved in terms of providing the right technology on a fast track bases, and even supporting it with financing. Do you think that 3000 megawatts is visible within the period of seven years for a state like Lagos? It’s visible. I just mentioned it earlier what we did in Egypt; in less than two years we have done about 5000 megawatts. We did in 18 months about 4000 megawatts. It’s the most efficient technology. We are also in discussion with the state government to actually ensure it has whatever support or collaboration needed to make it happen. Like I said, there cannot be industrialisation without electricity. If this can happen in Lagos State, other states will emulate it and perhaps it can also provide the stimulus for the Federal Government to also fast track whatever they are doing now. Again, in Siemens we are ready for it. We have developed special technology particular for Africa. Now we can make available 40 megawatts in 40 days, also an excellent financing model in order to relief the burden for the end customers. So it is a fantastic thing and you shouldn’t forget, one unit of 40 megawatts provides electricity for more than 2million people. Some of your competitors are doing so much also in terms of capacity development in Nigeria, even building of vocational centres for technicians. What expertly is Siemens doing to counter that? Ours is a slightly different philosophy. We talk may be less but do more. So, this is our philosophy: we don’t like to make statements that are not followed by actions, it is not our style. Siemens has done a lot in terms of vocational training; we can elaborate a little bit on the academy that is being put in place. I don’t know if you are aware that we are in collaboration with the Lagos State Government on this. We have the ‘Energy Academy’ in Lagos State where Siemens provides certification for technicians that are trained in different areas of electricity and electrical engineering. So, we are already doing that, we are also in discussion with some states government already so that we can actually set up vocational center, helping to set up technology centers in such a way that this can also help to promote establishment of employments in different areas. but was the first to be completed on time and on budget. So the plant is running just as you said but there may be other external issues just like insufficient gas supply affecting it. It is one of the best power plants in the country today. You can actually check that out with Niger Delta Power Holding Company of Nigeria. What are your challenges within the context of your operations in Nigeria? The challenges are less technical challenges because we provide a robust technology. One of the challenges is how projects become bankable, and also Siemens here supports many projects including Azura project and other projects in other countries. What is your own aspiration for a country like Nigeria which has huge power potentials yet struggling to fix its power challenge? I am confident that political decision makers would do the right things. They have the wisdom and the vision to know exactly that providing electricity to the people is the fundamental that would enable economic growth and prosperity in the country. Siemens installed Afam five which was commissioned several years ago. What is the state of that Afam five power plant? How will you access the performance of Geregu Power plant within the contest of the national power generation plan? I’m happy you touched on Geregu power plant. If you go and check the records, out of the NIPP projects that was awarded during former president Olusegun Obasanjo regime; Geregu was the last to be awarded Afam five is again one of the most reliable technologies we have supplied. But, if you have a car and you don’t fuel it, don’t put oil in it; even the best car without oil, will stop operating and this is what has happened with Afam five. But it can be easily fixed. We did a calculation that indicates that the plant can still provide additional 200 megawatts of power in less than twelve months.

Monday 05 March 2018 C002D5556 BUSINESS DAY 21 20 BUSINESS DAY C002D5556 Monday 05 March 2018 CEO INTERVIEW Interview with Private Sector Leaders ANDREAS PISTAUER Head of Siemens operations in sub-Saharan-Africa for Power and Gas Govt should replicate Azura power financial arrangement in all power projects - Siemens boss ANDREAS PISTAUER is the head of Siemens operations in sub-Saharan-Africa for Power and Gas. In this interview with Olusola Bello, Energy Editor, Pistauer threw more lights on the activities of his company in Nigeria in terms of providing technologies and finance projects that would help fast track power generations in Nigeria. Excerpts: Please can I meet? I am Andreas Pistauer. I am heading our Siemens activity in sub-Saharan- Africa for Power and Gas. Our job is to bring electricity to people. So how far have you gone on the project, that is, bringing electricity to people? I think we are doing very well. We are currently involved with Azura project, which is one of the largest power stations in the country. It is the first large scale Independent Power plant in Nigeria. We are working on another project as well in Delta State, and ours is to make sure that electricity comes to Nigeria as soon as possible. We are very proud because we have always had fantastic history; Nigerians and Siemens are in a very strong collaboration. We are trading on energy and everything that has to do with technologies. For me, it’s a great privilege to be here in Nigeria. My favourite place in Africa. Are you sure? Yes I’m sure. You went to Sapele for a ground breaking of a 150 megawatts power project being proposed by Pronton Energy. How involved is Siemens in that project? It is a very deep involvement and commitment to the project. One could say it is the technology that is driving the commitment. But what is really behind this is the people. What does 150 megawatts means to Nigeria and its people. Another 150 megawatts is roughly about 3.7% of the current production. So, a project like this with150 megawatts brings electricity to 7.5million people in Nigeria. It is an enormous change to the good trends of electricity supply. It will enable kids to study, it will enable fathers and mothers to do their business, and even enable companies to grow. A project like this has a lot of benefit to the country and it’s a privilege to work on such a project as this. It is not always easy, so it really requires the best brains, skilled and capable hands to handle. We have been very good partners in Nigeria. We are proud of the project and hope that the project will materialize in a way that construction will start very soon. Your company is supplying some of the turbines? Yes, the key technology is the turbines. It’s a highly efficient turbine, very reliable. It is the most suitable for the project, it is flexible, and you can stop it, and start it easily. It takes care of the low changes that exist in Nigeria energy sector, which is a very good reliable mission. What gives your company the confidence to be engaged in such project, given the economic scenario Nigeria? In Nigeria, I always hear different numbers, about 4000megawatts, most times with generation going up and down; sometimes it goes to about 5000 megawatts. Sometimes 3000 megawatts and I think there was one time it went as low as about 1,500 megawatts. So electricity is the backbone of modern economy. I mean nothing runs without electricity. If you don’t have light in the evening, kids cannot learn; if we don’t have electricity we cannot run computers, we cannot run new technologies, maybe production has to stop. So, currently you look at how difficult it is sometimes to get electricity, people are paying fortunes in this country to get electricity. In order to have electricity 24/7, the average cost is close to 5 cents per kilo hour including the back-up generators for instance. There may be two back-up generators in case one fails, the second one has to operate, including the high cost for diesel, the maintenance cost, capital cost and the bills from the utility. So the electricity in Nigeria may be three times more expensive than in New York, and it shouldn’t be like that, particularly with Nigeria, a country rich in oil and gas. So, a project like the one being put in place by Pronton Energy offers an opportunity to improve this. Coming back to your question; ‘why is Siemens involved?’ We are involved because we want to provide service, we don’t see ourselves just as supplier of technologies and then say okay; the thing is sold, we don’t care anymore. We care throughout the lifetime of the project; we want a power plant that is working. So, we do everything possible to enable projects like this work as we support developers to make the scheme work, and ensure the equipment is reliable. There is a long time servicing agreement, there is abundance training provided to develop the staff and also ensure that engineering capabilities are transferred. How many of such project are you thinking of, in the immediate future in Nigeria? From my own point of view, Nigeria needs two things; one, it is better for her to advance with the ambitious power programme the government has set forth for the sector, which is a very good concept to start with. However, it is important to maintain the tracking and demands that things really happen, particularly a head of the elections. The second point is that the government should look at not only the large projects but she also looks at the smaller ones. So, today in the industry, every commercial business has an urgent need for electricity and they also have the capacity to pay for it. So, if it is just a regulatory change that would enable smaller businesses to purchase their own power from independent producers, and not necessarily always going over to the state grid, they could make a tremendous change in the landscape. For example, we have particular technology developed for Africa, the most modern advanced mobile gas turbine generation unit. This unit was designed particular for Africa to fast track power generation. Fast track power that can be easily installed within just a few weeks. It’s very efficient, it doesn’t need much fuel as previous technologies and it’s very reliable and can be provided in any location possible. It runs on both natural gas and liquid flow. So, this unit is called XTDA 45. It provides 40 megawatts within 40 days. So we can put this unit in anywhere in Africa within 40 days and generate 40 megawatts. If the cluster is on10 units, it means generating 400 megawatts in few months. Nigeria currently has about 4000 megawatts operating power plants. So within a few months one could increase the capacity by over 10 percent. How will you access your level of involvement in the Nigerian power sector compared to previous years? It’s hard to judge from the inside. Its better you judge it from outside. I hope that Siemens will be more visible than it used to be. It should be building many of the power stations in Nigeria. It’s a very robust technology that we are providing. Many of these units run on gas turbine which is one of the most reliable machines that exists in the markets right now. I remembered during the Obasanjo’s regime, Siemens signed an MoU to provide 10000 megawatts for Nigeria. What is the state of that MoU; are you still pursuing it or what has happened to it? Any MoU requires two parties to advance it. I mean the principle of the MoU; if you look at the Federal side, it is definitely providing a guaranty mechanism for power projects agreement. Ultimately, it requires just a commitment from the government to say it will stand behind this project and ensure that the payments for the financial obligation are going to be paid. There have been great achievements like the Azura projects where another mechanism was found in order to compensate for that which is a perfect financial arrangement that should be repeated in other projects, even though it took years for other international financial institutions and political stakeholders to key-in into the concept. From my own prospective, the ministry of Power could say it has worked successfully and it should be a bench mark for other projects. There are many potential international investments capital that would love to invest in projects in Nigeria. But it requires a strong sustainability and skills. The Azura financial arrangement will be perfect model to follow. What has happened to the MoU you signed with government to generate 10,000mw? Mind you the MoU was signed to support the establishment of power plant of up to 10,000 megawatts and we are still committed to it. Like I said, once we have the right incentive from the government side we shall be ready to roll out. We are still committed to what we said we are going to do. If we have the government giving the right incentive to developers to take on the opportunity provided by Siemens, we are ready to go. What do you mean by developers; do you mean private investors? You know the power sector has actually been privatized and we want to encourage that. We should continue in that line. It will still be for private developers to develop, and Siemens will provide all the necessary support to do that; the right technology including collaborating on financing while the government should ensure that there is a cost reflective tariff and necessary guaranties put in place. Cost reflective tariff has been an issue limiting investors and yet you are still putting in money into the sector. Why? I have full confidence for two reasons. Number one, Nigeria needs minimum of 30,000 megawatts as capacity; this is what it really requires. So the demand for power is so huge that it’s not a question of 100 megawatts, 450 megawatts or a thousand megawatts capacity. Any capacity that comes as addition would help. We would like to give you an example of Egypt; the government realised they ran into a shortage in the medium term on their capacity. They also realised the few turbines are not running efficiently and they are old technology. So, the Egyptian government decided it wanted to make a change in policy plan. Siemens agreed with the government that within three years’ time we would provide it with most efficient power generating capacity worldwide and in the past three years we have delivered 14, 000 megawatts capacities in three different power plants. That is the largest power plant project ever done within a single agreement. A similar thing can be done in Nigeria but requires both sides working together closely. The second reason is, does it make sense that today people who needed electricity are spending a lot for daily power needs. This is a problem for every production facilities, for every industry that wants to produce in Nigeria. Our transmission is the major issue. What advice would you give to government on that? I think the power generation is relatively easy to solve. The transmission sector; once the power generation is taken care of, the transmission sector also needs investment. An independent system operator is better in place than it being owned by the government. But if access to the grid is allowed not only for a particular generation company, and distribution companies are allowed to have their own generation then, the burden of the overall transmission line system would be reduced. But, there could be a win-win situation if distribution companies would also be allowed to have their generation capacity, then they can generate their own power needs and not necessarily everything has to go to the national grid. So this does really increase the reliability of electricity supply. For example, here in Lagos, if different distribution companies could generate their own electricity, then there is an integrated model; be it industrial facilities or industrial cluster generating electricity, they can also supply other industries. This is where we have to commend what is going on in Lagos State. Lagos State is working on establishing 3000 megawatts and they are also planning to have their own distribution network eventually. So, it means if we can have this repeated in some of the big states, then it means whatever we then have in the national poll can be used in other places. So for the Lagos embedded power project, we are happy that NERC has actually given them notice of no objection, that is very good and Siemens is going to work to support the state government in achieving this objective as fast as possible. In what way is Siemens going to be involved in that project? Siemens will be involved in terms of providing the right technology on a fast track bases, and even supporting it with financing. Do you think that 3000 megawatts is visible within the period of seven years for a state like Lagos? It’s visible. I just mentioned it earlier what we did in Egypt; in less than two years we have done about 5000 megawatts. We did in 18 months about 4000 megawatts. It’s the most efficient technology. We are also in discussion with the state government to actually ensure it has whatever support or collaboration needed to make it happen. Like I said, there cannot be industrialisation without electricity. If this can happen in Lagos State, other states will emulate it and perhaps it can also provide the stimulus for the Federal Government to also fast track whatever they are doing now. Again, in Siemens we are ready for it. We have developed special technology particular for Africa. Now we can make available 40 megawatts in 40 days, also an excellent financing model in order to relief the burden for the end customers. So it is a fantastic thing and you shouldn’t forget, one unit of 40 megawatts provides electricity for more than 2million people. Some of your competitors are doing so much also in terms of capacity development in Nigeria, even building of vocational centres for technicians. What expertly is Siemens doing to counter that? Ours is a slightly different philosophy. We talk may be less but do more. So, this is our philosophy: we don’t like to make statements that are not followed by actions, it is not our style. Siemens has done a lot in terms of vocational training; we can elaborate a little bit on the academy that is being put in place. I don’t know if you are aware that we are in collaboration with the Lagos State Government on this. We have the ‘Energy Academy’ in Lagos State where Siemens provides certification for technicians that are trained in different areas of electricity and electrical engineering. So, we are already doing that, we are also in discussion with some states government already so that we can actually set up vocational center, helping to set up technology centers in such a way that this can also help to promote establishment of employments in different areas. How will you access the performance of Geregu Power plant within the contest of the national power generation plan? I’m happy you touched on Geregu power plant. If you go and check the records, out of the NIPP projects that was awarded during former president Olusegun Obasanjo regime; Geregu was the last to be awarded but was the first to be completed on time and on budget. So the plant is running just as you said but there may be other external issues just like insufficient gas supply affecting it. It is one of the best power plants in the country today. You can actually check that out with Niger Delta Power Holding Company of Nigeria. What are your challenges within the context of your operations in Nigeria? The challenges are less technical challenges because we provide a robust technology. One of the challenges is how projects become bankable, and also Siemens here supports many projects including Azura project and other projects in other countries. What is your own aspiration for a country like Nigeria which has huge power potentials yet struggling to fix its power challenge? I am confident that political decision makers would do the right things. They have the wisdom and the vision to know exactly that providing electricity to the people is the fundamental that would enable economic growth and prosperity in the country. Siemens installed Afam five which was commissioned several years ago. What is the state of that Afam five power plant? Afam five is again one of the most reliable technologies we have supplied. But, if you have a car and you don’t fuel it, don’t put oil in it; even the best car without oil, will stop operating and this is what has happened with Afam five. But it can be easily fixed. We did a calculation that indicates that the plant can still provide additional 200 megawatts of power in less than twelve months.

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