Of technology transfer and power equipment: lessons from Asia’s rise
“Amongst the earliest producers’ good firms that undertook the long march to global competitiveness were manufacturers of thermal electricity generating equipment. Their progress began with a textbook, north-east Asian style case study of government reducing technology acquisition costs by centralizing bargaining power with multinational provider. In the 1980’s, China negotiated a “market-access-for –technology” deal with US based power company and diffused the acquired thermal turbine technology to mid-size engineering firms. By the 1990s (a span of 10 years), the companies were able to build mid-size turbines as the government pushed to acquire hydro power technology from foreign multinationals like Siemens” — Joe Studwell — How Asia Works, 2012. pp 198–199.
Introduction
With growing knowledge of poor access to energy levels in Africa at most international public energy discourse, with a huge percentage of this number located in Nigeria, much ground seems to have been covered by the government in solving this crisis ( the reality might seem different on the ground). Commendation has to go to both past and present administrations for following through on the power sector reform process.
However, one key element missing in both administrations plans for the power sector is the null consideration for technology transfer and learning from the foreign companies supplying equipment to this sector. Nigeria probably shares similitude with “1980s” China in terms of market access for energy equipment, but have a fundamental contrasting approach to long term sustainability which is equipment manufacture and supply.
Reality at hand
Dependent on whom you ask, the debate on the right approach to solving Nigeria’s growing electricity supply challenge follows two frames of thought. The old guards are in favour of centralized power supply due to reliability reasons, while the younger generation, who seem to be quite familiar with global development in the clean energy sector tilt in the direction of decentralized power generation/ mini/microgrids with emphasis on renewable energy. Irrespective of the group to which your position aligns best to, a consensus exists on both sides, fencists inclusive; Nigeria currently does not have nor produce the technology to achieve the broad aim of rapid energy access. Such technology(ies) must be borrowed from China, the US or Germany. This reality also applies to the transportation sector, particularly railway (this write-up doesn’t focus on this subject but obvious correlations exist).
This piece is based on three fundamental questions:
1. Is there a technology transfer/learning plan and path for technology adoption and reproduction for engineering firms in Nigeria between the Nigerian government and foreign companies operating in the power sector and railway industry?
2. Will Nigerian companies be able to manufacture gas turbines, hydro turbines, and solar power modules in the next 10–15 years in order to compete in international export and procurement markets, at least in Africa?
3. Does the Nigerian government have an industrial plan behind electricity access projects focused on agriculture and manufacturing?
Nigeria must have a plan such that in the next 15–20 years when power expansion projects are ongoing, Nigerian companies are able to produce and supply the required equipment. Power sector reforms and growth strategy must follow a clear industrialization plan. It would be foolhardy for Nigerians to assume that once there is 24/7 power supply, citizens would all roll in pools of prosperity due to increased outputs (so much evidence exists from Asia, South Africa and Latin America’s economic development/decline to buttress that point)
Way Ahead
A couple of times I have had the opportunity to attend international events on the power sector with individuals from Asia and during Q&A sessions, one sentence often repeated by attendees from the region is: “How can this technology be transferred to **insert country name** and how can we adapt and learn it for the future”. This is common reasoning among attendees from Asia that rarely goes unnoticed. The reason for such is that China became a global leader in hydro, gas and wind turbines, and solar equipment on the back of technology transfer from the US and Germany. Applying the strategy quoted earlier, between the 1980s and 2000s, Chinese manufacturers had learnt the borrowed technology and had captured 1/3 of the Indian market and exported $9 billion worth of power equipment in 2009 alone to Asia, Africa, Latin America and even Eastern Europe. There is nothing withholding Nigerian companies from accounting for up to 20–30% of power equipment purchase in Africa in the next 15–20 years.
How should we go about achieving this objective of becoming power equipment technology leaders at least in Africa? Here are some suggestions. Feel free to refute and provide corrections where appropriate.
1. “Grasp the Big and let go of the Small”. Nigeria must focus on technologies with large long-run competitive export advantage in Africa especially; gas turbines, battery storage, and low cut-in speed wind turbines.
2. State + Private sector sponsored research institutes with a mandate to have export-ready similar technology in the next 20 years should be created. The government should engage in joint ventures for access to technology licensing and openness with large foreign companies with propriety technologies. 80% of the training should be done in Nigeria. This will ensure that the technology to be learnt is first domiciled in the country.
3. Concessionary low rate financing for private sector equipment manufacturers to pursue rapid export plans with technology developed within the research institutes. Export must be ingrained in manufacturing from the onset.
4. 30% — 50% local content rate for least cost power technology equipment bought with government funds in Nigeria for the next large PPAs.
5. Technology transfer and learning must be rooted in our foreign policy and bilateral negotiations on a B2B scale and not B2C. Consumer behaviour will still be controlled by China and the West for the next 20 years.
Conclusion
I am of the opinion that Nigeria does not have to wait for the next set of power projects to begin to implement some of the thoughts I raised earlier. The first 3 suggestions can be adopted for Mambilla and Zungeru hydro projects. Also, an aggressive push should be made for technology transfer on Lithium–Ion batteries. Lithium–Ion batteries are essential for universal energy access for the coming decade; particularly in developing countries. More projects like the 100MW Tesla battery in Australia would spring up across Africa in 5 to 10 years’ time; Nigeria can lead in Africa. It is not rocket science.
There may be caveats to the actualization of my laid down thoughts, but seeing this is not rocket science, but seemingly more visionary than manufacturing pencils, it is very much achievable. The Nigerian government does not have to reinvent the wheel to get this done.
Technology is now open source!
-Ayodeji
