# VALIDATION REPORT

## AFAM COMBINED CYCLE GAS TURBINE POWER PROJECT IN

## NIGERIA

### REPORT NO. 2010-9165 REVISION N O. 04

### DET NORSKE VERITAS

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VALIDATION REPORT

DNV CLIMATE CHANGE
SERVICES AS

Version: 03
GHG reducing Measure/Technology: Grid Connected Electricity Generation Plants using Natural Gas

Small Scale

In summary, it is DNV’s opinion that the project activity “Afam Combined Cycle Gas Turbine Power Project”
in Nigeria, as described in the PDD, version 5.0 of 29 August 2012, meets all relevant UNFCCC requirements
for the CDM and all relevant host Party criteria and correctly applies the baseline and monitoring methodology
AM0029, version 03. Hence DNV requests the registration of the project as a CDM project activity.

| Report No.:2010-9165 |  | Subject Group:Environment |  | Indexing terms |
| --- | --- | --- | --- | --- |
| Report title:Afam Combined Cycle Gas Turbine Power Projectin Nigeria |  |  |  |  |
| Work carried out by:Michael Lehmann, Jan Van Evercooren, RicardoDíaz |  |  |  |  |
| Work verified by:Kakaraparthi Venkata Raman |  |  |  |  |
| Date of this revision:2012-10-12 | Rev. No.:04 | Number of pages:44 |  |  |
| © 2009 Det Norske Veritas ASAll rights reserved. This publication or parts thereof may not be reproduced or transmitted in any form or by any means, including photocopying or recording, without the prior written consent of Det Norske Veritas AS. |  |  |  |  |

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2.2 Scope 2

3 METHODOLOGY.....3

3.1 Desk review of the project design documentation
3.2 Follow-up interviews with project stakeholders
3.3 Resolution of outstanding issues
3.4 Internal quality control

3
13
14
16

3.4 Internal quality control 16
3.5 Validation team 16

4 VALIDATION FINDINGS .....
4.1 Participation requirements
4.2 Project design

17
17
17

4.2 Project design 17
4.3 Application of selected baseline and monitoring methodology 19
4.4 Project boundary 21

4.5 Baseline identification
4.6 Additionality

22
25

4.6 Additionality 25
4.7 Monitoring 32
4.8 Algorithms and/or formulae used to determine emission reductions 40

4.8 Algorithms and/or formulae used to determine emission reductions
4.9 Environmental impacts
4.10 Comments by local stakeholders
4.11 Comments by Parties, stakeholders and NGOs

Algorithms and/or formulae used to determine emission reductions 40
42
42
44

Appendix A Validation Protocol
Appendix B Curricula vitae of the validation team members

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VALIDATION REPORT

Abbreviations

| BM(EF) | Build margin (emission factor) |
| --- | --- |
| CapEx | Capital Expenditures |
| CAR | Corrective Action Request |
| CBN | Central Bank of Nigeria |
| (CC)GT | (Combined cycle) gas turbine |
| CMMS | Computerized maintenance management system |
| CDM | Clean Development Mechanism |
| CER(s) | Certified Emission Reduction(s) |
| CL | Clarification request |
| CM(EF) | Combined margin(emission factor) |
| CO2 | Carbon dioxide |
| CO2e | Carbon dioxide equivalent |
| CORDEC | Consultancy, Research and Development Centre(University of Port Harcourt) |
| DNV | Det Norske Veritas |
| DNA | Designated National Authority |
| DOE | Designated Operational Entity |
| DPR | The Department of Petroleum Resources |
| ECA | Economic Consulting Associates |
| EGASPIN | Environmental Guidelines and Standards for the Petroleum Industry in Nigeria |
| E(IPPC)B | European(Integrated Pollution Prevention and Control) Bureau |
| EMP | Environmental Management Plan |
| EMS | Environmental Management System |
| EoI | Expression of Interest |
| EPC | Engineering, Procurement & Construction |
| ETSAP | (IEA) Energy Technology System Analysis Program |
| FAR | Forward Action Request |
| FMEnv | Federal Ministry of Environment |
| GGFR | (WB) Global Gas Flaring Reduction Public-Private Partnership |
| GHG | Greenhouse gas(es) |
| GT | Gas turbine |
| GTZ | Deutsche Gesellschaft für Technische Zusammenarbeit |
| GWP | Global Warming Potential |
| (HR)SG | (Heat recovery) steam generator |
| IEA | (OECD) International Energy Agency |
| IPCC | Intergovernmental Panel on Climate Change |
| IRR | Internal Rate of Return |
| LGA | Local Government Area |
| LNG | Liquified Natural Gas |
| LoA | Letter of Approval |
| LoE | Letter of Endorsement |
| LoI | Letter of Invitation |
| LTSA | Long Term Service Agreement |
| (M)USD | (Million) U.S. dollar |
| NAOC | Nigerian Agip Oil Company Limited |
| NAPIMS | National Petroleum Investment Management Services |

\\mathrm{C O\_{2}}

\\mathrm{C O\_{2}e}

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VALIDATION REPORT
NCV Net calorific value
NE Northeast
NEA (OECD) Nuclear Energy Agency
NEPA National Electric Power Authority
NERC Nigerian Electricity Regulatory Commission
NG Natural gas
NGC National Gas Company
NGCC Natural gas combined cycle
NGO Non-governmental Organisation
NNPC Nigerian National Petroleum Company
OECD Organisation for Economic Co-operation and Development
(OC)GT (Open cycle) gas turbine
ODA Official Development Assistance
OM(EF) Operating margin (emission factor)
OpEx Operating Expenditures
PB Parsons Brinckerhoff
PCS Process control system
PDD Project Design Document
PHC Port Harcourt
PHCN Power Holding Company of Nigeria
PIC-CDM Presidential Implementation Committee on Clean Development Mechanism
PID Process and Instrument Drawing
PIN Project Idea Note
PLF Plant load factor
PPA Power Purchase Agreement
PPE(s) Personal protection equipment(s)
PTFP Presidential Task Force on Power
RFP Request for proposal
Shell GH Shell Guest House
Shell IA Shell Industrial Area
Shell RA Shell Residential Area
SIEP Shell International Exploration and Production
SIG Shell International Gas
SIPC Shell International Petroleum Company
SLD Single line diagram
SPDC The Shell Petroleum Development Company of Nigeria Limited
ST Steam turbine
tCO2e Tonnes of CO2 equivalent
UNFCCC United Nations Framework Convention on Climate Change
USEIA U.S. Energy Information Administration
WACC Weighted Average Cost of Capital
WB The World Bank
WBSCD World Business Council for Sustainable Development

\\mathrm{t C o o e}

\\mathrm{C O\_{2}}

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VALIDATION REPORT

1 EXECUTIVE SUMMARY - VALIDATION OPINION

DNV Climate Change Services AS (DNV) has performed a validation of the project activity
“Afam Combined Cycle Gas Turbine Power Project” in Nigeria. The validation was
performed on the basis of UNFCCC criteria for the Clean Development Mechanism and host
Party criteria, as well as criteria given to provide for consistent project operations,
monitoring and reporting.
The review of the project design documentation and the subsequent follow-up interviews have

The review of the project design documentation and the subsequent follow-up interviews have
provided DNV with sufficient evidence to determine the fulfilment of stated criteria.
The project is being developed as a unilateral project with host Party is Nigeria. The Party

The project is being developed as a unilateral project with host Party is Nigeria. The Party
fulfils the participation criteria and has approved the project and authorized the project
participant The Shell Petroleum Development Company of Nigeria Limited (SPDC). The DNA
from Nigeria confirmed that the project assists in achieving sustainable development.
The project correctly applies the baseline and monitoring methodology AM0029, version 03

The project correctly applies the baseline and monitoring methodology AM0029, version 03
“Baseline Methodology for Grid Connected Electricity Generation Plants using Natural
Gas”.
The project activity is based on a grid-connected electricity generation plant using natural

The project activity is based on a grid-connected electricity generation plant using natural
gas and by this GHG reducing technology, the project results in reductions of CO2 emissions
that are real, measurable and give long-term benefits to the mitigation of climate change. It is
demonstrated that the project is not a likely baseline scenario. Emission reductions
attributable to the project are hence additional to any that would occur in the absence of the
project activity.
The total emission reductions from the project are estimated to be on the average 550 234

The total emission reductions from the project are estimated to be on the average 550 234
tCO2e per year over the selected 10 year fixed crediting period. The emission reduction
forecast has been checked and it is deemed likely that the stated amount is achieved given that
the underlying assumptions do not change.

The monitoring plan provides for the monitoring of the project’s emission reductions. The
monitoring arrangements described in the monitoring plan are feasible within the project
design and it is DNV’s opinion that the project participants are able to implement the
monitoring plan.
In summary, it is DNV’s opinion that the project activity “Afam Combined Cycle Gas Turbine

Oslo, 2012-10-12

Michael Lehmann
Validator

In summary, it is DNV’s opinion that the project activity “Afam Combined Cycle Gas Turbine
Power Project” in Nigeria, as described in the PDD, version 5.0 of 29 August 2012, meets all
relevant UNFCCC requirements for the CDM and all relevant host Party criteria and
correctly applies the baseline and monitoring methodology AM0029, version 03. Hence, DNV
requests the registration of the project as a CDM project activity.
Oslo, 2012-10-12

Validator
DNV Oslo, Norway

DNV Climate Change Services AS

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## DET NORSKE VERITAS

## Report No: 2010-9165, rev. 04

## VALIDATION REPORT

## 2 INTRODUCTION

Shell International Exploration and Production BV (SIEP) has commissioned DNV Climate Change Services AS (DNV) to perform a validation of the Afam Combined Cycle Gas Turbine Power Project in Nigeria (hereafter called “the project”). This report summarises the findings of the validation of the project, performed on the basis of UNFCCC criteria for the CDM, as well as criteria given to provide for consistent project operations, monitoring and reporting. UNFCCC criteria refer to Article 12 of the Kyoto Protocol, the CDM modalities and procedures and the subsequent decisions by the CDM Executive Board.

## 2.1 Objective

The purpose of a validation is to have an independent third party assess the project design. In particular, the project's baseline, monitoring plan, and the project’s compliance with relevant UNFCCC and host Party criteria are validated in order to confirm that the project design, as documented, is sound and reasonable and meets the identified criteria. Validation is a requirement for all CDM projects and is seen as necessary to provide assurance to stakeholders of the quality of the project and its intended generation of certified emission reductions (CERs).

## 2.2 Scope

The validation scope is defined as an independent and objective review of the project design document (PDD). The PDD is reviewed against the criteria stated in Article 12 of the Kyoto Protocol, the CDM modalities and procedures as agreed in the Marrakech Accords and the relevant decisions by the CDM Executive Board, including the approved baseline and monitoring methodology AM0029. The validation was based on the recommendations in the Validation and Verification Manual /45/. The validation is not meant to provide any consulting towards the project participants. However, stated requests for clarifications and/or corrective actions may have provided input for improvement of the project design.

## Page 2

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VALIDATION REPORT

3 METHODOLOGY

The validation consisted of the following three phases:

I a desk review of the project design documents

II follow-up interviews with project stakeholders

III the resolution of outstanding issues and the issuance of the final validation report and
opinion.

The following sections outline each step in more detail.

3.1 Desk review of the project design documentation

The following tables list the documentation that was reviewed during the validation.

| /1/ | Economic Consulting Associates, Carbon Counts:CDM-PDD for project activity“Afam Combined Cycle Gas Turbine Power Project”in Nigeria,version 1.0 dated23 June 2010\[AfamAM0029PDD Final 140710-secure.doc\]andversion 5.0 dated29 August 2012\[AfamAM0029PDD V5 Final 290812\_marked up.doc\] |
| --- | --- |
| /2/ | Alstom Power Generation AG:Afam VI Combined Cycle Power Plant,River State,Nigeria:Technical Data for Generator 50WY21Z-092,HTGG418268,16 January2006\[HTGG418268EN--\[1\].pdf\] |
| /3/ | Daewoo Nigeria Limited,The Shell Petroleum Development Company of NigeriaLimited:Contract No.E-16681A.EPC for Afam VI 650 MW Power Project Part ISection 4-Scope of Work(including MFS),October 2005\[AFAM MFS 1a.pdf AFAM MFS 1b.pdf AFAM MFS 2a.pdf AFAM MFS 2b.pdfAFAM MFS 3.pdf AFAM MFS 4a.pdf\] |
| /4/ | Photograph of name plate:Hyundai.GT Generator Step-Up Transformer.EquipmentNo.12BAT10.TL-1188\[IMG\_2129.JPG\] |
| /5/ | Photograph of name plate:Hyundai.GT Generator Step-Up Transformer.EquipmentNo.10BAT10.TL-1189\[IMG\_0788.jpg\] |
| /6/ | Daewoo Nigeria Limited:Afam VI Power Station,Nigeria:Performance Test Reportfor Combined Cycle,AP6-S-SU-78-901,2 July 2010\[Afam VI CC Test Report\[1\].pdf\] |
| /7/ | Parsons Brinckerhoff:Performance Test Certificate for Combined Cycle powerPlant:CC Power Plant located at Afam VI-Power Station-Nigeria,4 July 2010\[AFAM VI - Perf.Test CC Plant-1.doc\] |
| /8/ | Alstom Power Generation AG:Afam VI Combined Cycle Power Plant,River State,Nigeria:Performance Test ReportSTG,T-0443-2,16 June 2010\[CC Performance Test Report\_AP6VST10031IFI0\_ScanFile\[1\].pdf\] |

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VALIDATION REPORT

| /9/ | Economic Consulting Associates, Carbon Counts:ER/IIRR-Spreadsheet for project activity“Afam Combined Cycle Gas Turbine Power Project”in Nigeria，initial version dated 10 June 2010\[Afam PDD cash flow Final 100610.xls\]andfinal version dated 29 August 2012\[Afam PDD cash flow v25\_NOTES ADDED.xls\] |
| --- | --- |
| /10/ | Daewoo Nigeria Limited，The Shell Petroleum Development Company of NigeriaLimited：Contract No.E-16681A.EPC for Afam VI 650 MW Power Project Part ISection 1-Form of Agreement，November 2005\[E-16681A.\_EPC\_and\_C\_Contract\_for\_AfamVI\_CCPG\_Plant.-signaturepage.pdf\]andSection 3-Schedule of Prices，November 2005\[E-16681A.\_EPC\_and\_C\_Contract\_for\_AfamVI\_CCPG\_Plant.-Price\_Milestone\_Schedule.pdf\] |
| /11/ | Alstom Power Generation AG：Afam VI Nigeria Gas Turbine GT13E2MXL:Equipment Training Program for Operation and Maintenance，Option CSXA000687，16 February 2006\[AP6-DEC-SPDC-L-0012-Off-Site Training Schedule for Gas TurbinePackages\[1\].pdf\] |
| /12/ | Power Holding Company of NigeriaPLC，The Shell Petroleum DevelopmentCompany of NigeriaLimited：Power Purchase Agreement Relating to A 276 MWPower Generation Facility and A Power Generation Facility Of Between 630&650MW In Afam，Nigeria。Afam V Purchase Agreement Relating to A 276 MWPowerGenerationFacility。Afam I-IV Purchase Agreement，9 December 2005\[Afam PPA pages.pdf\]\[Afam PPA\_ARICLE VII-METERING.pdf\]\[Annex H toPPA.pdf\]\[PPA duration.pdf\] |
| /13/ | Economic Consulting Associates，Environmental Resources Management，Triple-ESystems Consultants：CDM-PDD for project activity“Afam Integrated Gas andPower（AIGP）project”in Nigeria，version 0.1，for illustrating the proposed new methodology，2 February 2007\[Afam Integrated Gas and Power(AIGP)project.pdf\] |
| /14/ | Daewoo Nigeria Limited：Afam VI Power Station，Nigeria：Single Line Diagram330kV Switchyard Protection and Metering，AP6-Y-YP-13-001，6 March 2007\[AP6YYP31001IFC4\_ScanFile\_SLD metering\[1\].pdf\] |
| /15/ | Daewoo Nigeria Limited：Afam VI Power Station，Nigeria：Natural Gas SupplySystem Metering Section P&I Diagram，AP6-V-FG-13-003，19 February 2007\[PID NG Metering\_AP6VFG13003IFCR0\_ScanFile.pdf，file\]and\[IMG\_2132.JPG，photograph\] |
| /16/ | Daewoo Nigeria Limited：Afam VI Power Station，Nigeria：Operating &Maintenance Manual，330kV Switchyard & Banking Compound，AP6-Y-OM-92-001\[Tariff Meter.pdf\]，andNatural Gas Supply System，AP6-V-FG-92-001，December 2008\[O&M Manual extracts.pdf\] |

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VALIDATION REPORT

| /17/ | Consultancy, Research and Development Centre (University of Port Harcourt): The Shell Petroleum Development Company of Nigeria Limited. Environmental Impact Assessment for Afam Power Station Project, Final Report, October 2005\[Chap\_1...7\_final\_05.pdf...doc,Appendix\_D\_final\_05.pdf\] |
| --- | --- |
| /18/ | Federal Ministry of Environment:Environmental Impact Statement & Certificate,FMENV/EAI/000169,30 April 2008\[EIA Certificate FMENV\_EIA\_000169.doc\] |
| /19/ | Consultancy,Research and Development Centre(University of Port Harcourt):Afam Integrated Gas and Power Project Stakeholder Engagement Plan,AFM-TPI-000-F01-00003,June 2005 |
| /20/ | Stanley Amam(SPDC):Afam CDM Stakeholders Engagement18 March 2010\[Afam Stakeholder Engagement180310.pdf\] |
| /21/ | Shell International Exploration and ProductionB.V.:Letter toDNVBelgiumNV,Subject:Provision of validation services,-Shell International Exploration and ProductionBV-Contract Reference4600006214,29 April 2010\[DNV Contract Letter.pdf\] |
| /22/ | The Shell Petroleum Development Company of Nigeria Limited:Environmental Impact Assessment(EIA)Process:A Manual for EIA Execution inSPDC,SPDC99-201,December 2000and derived seriesThe Shell Petroleum Development Company of Nigeria Limited:Accompanying Guidelines forSPDC EIA Process.VolumeI,“Stakeholder Identification and Involvement”,SPDC2004-0002710VolumeII,“Scoping”,SPDC2004-0002711VolumeIII,“Data Collection”,SPDC2004-0002712VolumeIV,“Report Review”,SPDC2004-0002713VolumeV,“Preparation and Implementation of Environmental Management Plan”,SPDC2004-0002714March2004as well asThe Shell Petroleum Development Company of Nigeria Limited:Environmental Impact Assessment(EIA)Process:Stakeholders’Guide,SPDC2003-069,June2003 |
| /23/ | The Shell Petroleum Development Company of Nigeria Limited:Minor Contract Panel -OpEx Budget CommitmentForm:Untitled,2002\[Triple ECDM minor contract.pdf\]ande-mail message fromSPDC-RCE-SDC responsible personAmam toWestgeest,PeterP SPDC-RSE-FIN:Approval of Voucher NumberE155461-CDM Project Contract,16 December 2003\[RE Approval of Voucher NumberE155461-CDM Project Contract.msg\] |
| /24/ | E-mail [messagesfromBsvensson@worldbank.orgto](mailto:messagesfromBsvensson@worldbank.orgto) amongst othersSIEP-EPS-HSE responsible persons Hartog and Braithwaite,4 November 2003,andfrom Hartog,Jan JJ SIEP-EPS-HSE [toBsvensson@worldbank.org](mailto:toBsvensson@worldbank.org),17 November2003:RE:GGFR carbon credit survey\[Supporting Documentation.pdf\] |

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VALIDATION REPORT

| /25/ | E-mail message from SIG-GPWA responsible person Mortimer to Pepple, Noble E SPDC-RSE-NDL: Baseline study of CO2 emmissions wrt Carbon Credit Application, 26 February 2004 \[Supporting Documentation.pdf\] |
| --- | --- |
| /26/ | Letter from Shell International Petroleum Company Limited to GGFR responsible person Webber: Submission of the Afam Power Project in Nigeria as a GGFR Candidate CDM Project, 25 October 2004 \[Project.pdf\] |
| /27/ | Global Gas Flaring Reduction Public-Private Partnership: Request for Proposals. Nigeria: Carbon Credit Development for Flared Gas to Power Project, Trust Fund # TF052487, (Proposals must be submitted no later than the following date and time) August 22, 2005 (at 12:00 hrs)\[Nigeria Carbon Credit RFP.PDF\] |
| /28/ | Letter from Economic Consulting Associates to GGFR responsible person Svensson: Nigeria: Carbon Credit Development for Flared Gas to Power Project, 21 May 2005\[EOI CoverLetter\_21\_05\_2005.doc\] |
| /29/ | Letter from GGFR to ECA responsible person Wilson: Letter of Invitation for proposal to provide consulting services: to support the Federal Government of Nigeria, to build capacity associated with carbon credits as they relate to the gas flaring reduction projects in Nigeria, 25 July 2005\[ECA Nigeria CDM Letter of Invitation 7 25 05.pdf\] |
| /30/ | The World Bank: Contracts. Nigeria: Carbon Credit Development for Flared Gas to Power Project, Contract 7136676, 13 December 2005\[ECA\_WB contract 07\_12\_2005.pdf\] |
| /31/ | The Shell Petroleum Development Company of Nigeria Limited: Afam Project Idea Note, June 2005\[AFAM Project Idea Note Rev 5 16 June Clean Draft.doc\] |
| /32/ | Presidential Implementation Committee on Clean Development Mechanism: Letter of Endorsement: Nigeria Afam CDM Project(Gas to Power), 19 August 2005\[Letter of Approval 2005.pdf\] |
| /33/ | Alstom Power O&M Limited, Alstom Nigeria Limited, The Shell Petroleum Development Company of Nigeria Limited:Contract No.E-16681B.LTSA for Afam VI 650 MW Power Project, December 2005\[Afam VI LTSA front page.pdf\]\[Afam VI LTSA contract Price.pdf\]\[Afam VI LTSA Signature Page.pdf\] |
| /34/ | Economic Consulting Associates:Contract for Services between Economic Consulting Associates(‘ECA’)and the Subcontractor.Subcontractor name:SGS, Project name:Nigeria:Carbon Credit Development for Flared Gas to Power Project, January 2006\[SGS subcontract~signed.pdf\] |
| /35/ | The Shell Petroleum Development Company of Nigeria Limited:Proposal to Complete the Shell Afam Clean Development Mechanism Project,19 January 2007\[SPDC-Follow-onApproval.pdf\] |
| /36/ | Economic Consulting Associates, Environmental Resources Management,Triple-E Systems Associates Ltd.: |

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VALIDATION REPORT

|  | CDM-PDD for project activity in Nigeria, version 0.1 dated 2 February 2007 \[Afam Integrated Gas and Power (AIGP) project.pdf\] and CDM-NM for baseline and monitoring methodology “Emission reductions in electricity grids with a capacity deficit met by off-grid generation”, version 1.0 dated 2 February 2007 \[CDM\_NM\_CapacityDeficitGrids-2007-02-05.pdf\] |
| --- | --- |
| /37/ | Presidential Implementation Committee on Clean Development Mechanism: Letter of Approval: AFAM Flare Gas to Power Project, 30 January 2007 \[Letter of Approval 2005.pdf\] |
| /38/ | United Nations Framework Convention on Climate Change: CDM.Meth Panel summary recommendation to the Executive Board:NM0208，“Afam Integrated Gas and Power(AIGP)project”，F-CDM-NMSUMmp-NM0208，27 June 2008\[MP33\_NM0208\_Summary.pdf\] |
| /39/ | United Nations Framework Convention on Climate Change:Executive Board of the Clean Development Mechanism: Forty-First Meeting Report，CDM-EB-41，2 August 2008\[eb41rep.pdf\] |
| /40/ | E-mail messages from [stephen.wilson@eca-uk.com](mailto:stephen.wilson@eca-uk.com) to Amam，Stanley E SPDC-EPG-PCSSD，24 July 2009,and from Amam，Stanley E SPDC-EPG-PCSSD to [stephen.wilson@eca-uk.com](mailto:stephen.wilson@eca-uk.com)，5 August 2009：Re:Afam/Ahia Adibawa CDM Project - Progress??\[Microsoft Office Outlook-Memo Style.pdf\] |
| /41/ | The Shell Petroleum Development Company of Nigeria Limited:Company Cost Estimate:Afam Power Plant EPC and LTSA Contracts，5 October 2005\[EPC and LTSA Contract.pdf\] |
| /42/ | The Shell Petroleum Development Company of Nigeria Limited:Afam VI Power Plant.Project Closeout Report，Revision R02，10 June 2010\[Afam Closeout Report extracts.pdf\] |
| /43/ | Economic Consulting Associates,Carbon Counts:EF-Spreadsheet for project activity“Afam Combined Cycle Gas Turbine Power Project”in Nigeria，initial version dated19 September 2011\[Afam PDD Baseline EF calculations.xlsx\]and final version dated29 August 2012\[Afam PDD Baseline EF calculations v2.3\_corrected.xlsx\] |

3.1.2 Letters of approval
/44/ Federal Ministry of Environment (DNA of Nigeria): Letter of Approval, 21 June

| /44/ | Federal Ministry of Environment (DNA of Nigeria): Letter of Approval, 21 June 2010\[LETTER OF APPROVAL\_LOA\_AFAM GAS PROJECT.pdf\] |
| --- | --- |

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DET N

V

**3.1.3** /45/ /46/ /47/ /48/ /49/ /50/ /51/
3.1.4 /52/ /53/
/54/

/55/

/56/

/57/

/58/

VERITAS

Report No: 2010-9165, rev. 04

REPORT

## Methodologies, tools and other guidance by the CDM Executive Board

CDM Executive Board: Validation and Verification Manual, version 01.2 CDM Executive Board: Baseline and monitoring methodology AM0029, version 03 CDM Executive Board: Tool for the demonstration and assessment of additionality, version 06 CDM Executive Board: Guidelines on the Demonstration and Assessment of Prior _Consideration of the CDM, version 04_ CDM Executive Board: Guidance on the Assessment of Investment Analysis, version 05 CDM Executive Board: Tool to calculate the emission factor for an electricity _system, version 2.2.1_ CDM Executive Board: Glossary of CDM terms, version 04

## Documentation used by DNV to validate / cross-check the information

European Integrated Pollution Prevention and Control Bureau: Integrated Pollution _Prevention and Control: Reference Document on Best Available Techniques for_ _Large Combustion Plants, July 2006._ [ftp://ftp.jrc.es/pub/eippcb/doc/lcp\_bref\_0706.pdf](ftp://ftp.jrc.es/pub/eippcb/doc/lcp_bref_0706.pdf) \[cp\_bref\_0706\_large combustion plants.pdf\] Claire Soares: Gas Turbines: A Handbook of Land, Sea and Air Application, Butterworth Heinemann, 31 December 2007. Condensed extracts from selected chapters in [http://www.netl.doe.gov/technologies/coalpower/turbines/refshelf/handbook/1.1.pdf](http://www.netl.doe.gov/technologies/coalpower/turbines/refshelf/handbook/1.1.pdf) \[GAS TURBINES IN SIMPLE CYCLE & COMBINED CYCLE APPLICATIONS.pdf\] Alstom (Switzerland) Ltd: GT13E2 Gas Turbine: Superior flexibility / Superior _performance, PT-PE/BPROB/GT13E207/eng/TMG/06.09/CH/6262._ [http://www.power.alstom.com/\_eLibrary/presentation/upload\_61617.pdf](http://www.power.alstom.com/_eLibrary/presentation/upload_61617.pdf) \[upload\_61617\_GT13E2.pdf\] United Nations Framework Convention on Climate Change: Parties to the _Convention and Observer States._ [http://unfccc.int/parties\_and\_observers/parties/items/2352.php](http://unfccc.int/parties_and_observers/parties/items/2352.php) Energy Technology System Analysis Program: \*Gas-Fired Power, Technology Brief E02 - September 2009. [http://www.etsap.org/E-\*](http://www.etsap.org/E-*) techDS/EB/EB\_E02\_Gas\_fired%20power\_gs-gct.pdf \[EB\_E02\_Gas\_fired power\_gs-gct\_Sep 09.pdf\] Olivia Phillip International Consulting Limited: Nigeria: Electric Power Sector _Report 2008, 8 January 2008. Abstract in_ [http://www.marketresearch.com/product/print/default.asp?SID=63955720-](http://www.marketresearch.com/product/print/default.asp?SID=63955720-) 481997477-527782317&productid=1894663# \[Nigeria\_Electric Power Sector Report 2008.doc\] International Energy Agency: World Energy Outlook 2008, 2008. [http://www.worldenergyoutlook.org/docs/weo2008/WEO2008.pdf](http://www.worldenergyoutlook.org/docs/weo2008/WEO2008.pdf)

ORSKE

ALIDATION

## provided by the project participants

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VALIDATION REPORT

|  | \[WEO2008.pdf\] |
| --- | --- |
| /59/ | Nuclear Energy Agency, International Energy Agency: Projected Costs of Generating Electricity - 2005 Update \[ElecCost2005.pdf\] |
| /60/ | Prasad V.S.N. Tallapragada: Nigeria's Electricity Sector-Electricity and Gas Pricing Barriers, in "Unveiling the Future of Energy Frontiers" from Proc. 28th USAEE/IAEE North American Conference, New Orleans, LA, December 2-5, 2008. [www.iaee.org/en/publications/newsletterdl.aspx?id=72](http://www.iaee.org/en/publications/newsletterdl.aspx?id=72) \[Tallapragada\_Nigeria's Electricity Sector-Electricity and Gas Pricing Barriers.pdf\] |
| /61/ | U.S. Energy Information Administration: Country Analysis Briefs: Nigeria, May 2009. [http://www.eia.doe.gov/emeu/cabs/Nigeria/pdf](http://www.eia.doe.gov/emeu/cabs/Nigeria/pdf) \[USEIA\_Country Analysis Briefs\_Nigeria.pdf\] |
| /62/ | British Petrol: BP Statistical Review of World Energy June 2011, June 2011. [http://www.bp.com/assets/bp\_internet/globalbp/globalbp\_uk\_english/reports\_and\_publications/statistical\_energy\_review\_2011/STAGING/local\_assets/pdf/statistical\_review\_of\_world\_energy\_full\_report\_2011.pdf](http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2011/STAGING/local_assets/pdf/statistical_review_of_world_energy_full_report_2011.pdf) \[statistical\_review\_of\_world\_energy\_full\_report\_2011.pdf\] |
| /63/ | Nigerian Electricity Regulatory Commission: Multi-Year Tariff Order (MYTO) for the Determination of Charges and Tariffs for Electricity Generation, Transmission and Retail Tariffs for the Period 1 July 2008 to 30 June 2013, Order no: NERC/GL059, 1 July 2008. [http://www.nercng.org/index.php?option=com\_content&task=view&id=69&Itemid=84](http://www.nercng.org/index.php?option=com_content&task=view&id=69&Itemid=84) \[MYTO Order.pdf\] |
| /64/ | Central Bank of Nigeria: Data and Statistics, January 2006 to March 2010. [http://www.cenbank.org/rates/mnymktind.asp](http://www.cenbank.org/rates/mnymktind.asp) \[CBNrates20YYQN.pdf\] |
| /65/ | Triple-E Systems Associates Ltd.: Baseline GHG Emission Reduction Estimate for the Proposed Afam Power Rehabilitation Project. Study conducted for Shell Petroleum Development Company of Nigeria, April 2005 \[Triple E Baseline Study.doc\] |
| /66/ | The World Bank: Project Appraisal Document on a Proposed Credit of ... to the Federal Republic of Nigeria for a National Energy Development Project, Report No: 32164-NG, 25 May 2005. [http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2005/06/06/000012009\_20050606093133/Rendered/FD/321640rev.pdf](http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2005/06/06/000012009_20050606093133/Rendered/FD/321640rev.pdf) \[Project Appraisal to Nigeria for National Energy Development\_321640rev.pdf\] |
| /67/ | Intergovernmental Panel on Climate Change: 2006 IPCC Guidelines for National Greenhouse Gas Inventories. Volume 2: Energy. Chapter 2: Stationary Combustion, 2006 \[V2\_2\_Ch2\_Stationary\_Combustion.pdf\] |
| /68/ | S.O. Enibe, A.O. Odukwe: Patterns of Energy Consumption in Nigeria, Energy Convers. Mgmt Vol. 30, No. 2, pp. 69-73, 1990. [http://repository.unn.edu](http://repository.unn.edu/) ng/index2.php?option=com\_docman&task=doc\_view&gid= |

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|  | 18206&Itemid=306\[Patterns of Energy Consumption in Nigeria.pdf\] |
| --- | --- |
| /69/ | The Department of Petroleum Resources: Environmental Guidelines and Standards for the Petroleum Industry in Nigeria, Revised Edition 2002 |
| /70/ | International Finance Corporation: World Bank Group Environmental, Health, and Safety (EHS) Guidelines, 2007. [http://www.ifc.org/ifcext/sustainability.nsf/Content/EHSGuidelines\[Final+General+EHS+Guidelines.pdf\]](http://www.ifc.org/ifcext/sustainability.nsf/Content/EHSGuidelines%5BFinal+General+EHS+Guidelines.pdf%5D) |
| /71/ | Anthony O. Adegbulugbe, Adeola Adenikinju: Country Chapter: Nigeria in“Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH: Renewable Energies in West-Africa. Regional Report on Potentials and Marktes - 17 Country Analyses, 2009”. [http://www.gtz.de/de/dokumente/gtz2009-en-regionalreport-westafrica-gesamtpublikation.pdf\[gtz2009-en-regionalreport-westafrica-gesamtpublikation.pdf\]](http://www.gtz.de/de/dokumente/gtz2009-en-regionalreport-westafrica-gesamtpublikation.pdf%5Bgtz2009-en-regionalreport-westafrica-gesamtpublikation.pdf%5D) |
| /72/ | Onohaebi O. Sunday, Ogbeide O. Kingsley, Determination of power stations for upgrading the Nigeria power system using minimum loss criteria, Int. Journal of Acad. Research, Vol. 2, No. 4 (July), 2010 |
| /73/ | International Energy Agency: Electricity/Heat in Nigeria in 2008, 2011. [http://www.iea.org/stats/electricitydata.asp?COUNTRY\_CODE=NG\[iea.org\_stats\_electricitydata.asp\_Nigeria](http://www.iea.org/stats/electricitydata.asp?COUNTRY_CODE=NG%5Biea.org_stats_electricitydata.asp_Nigeria) 2008.pdf\] |
| /74/ | Central Bank of Nigeria: Statistical Bulletin, Volume 16, December 2005. [http://www.cenbank.org/OUT/PUBLICATIONS/REPORTS/RD/2007/STABULL-2005.PDF\[STABULL-2005.pdf\]](http://www.cenbank.org/OUT/PUBLICATIONS/REPORTS/RD/2007/STABULL-2005.PDF%5BSTABULL-2005.pdf%5D) |
| /75/ | Central Bank of Nigeria: Statistical Bulletin, Volume 15, December 2004. [http://www.cenbank.org/OUT/PUBLICATIONS/STATBULLETIN/RD/2005/2004%20STAT-BULL-PART%20A.PDF\[2004](http://www.cenbank.org/OUT/PUBLICATIONS/STATBULLETIN/RD/2005/2004%20STAT-BULL-PART%20A.PDF%5B2004) STAT-BULL-PART A.pdf\] |
| /76/ | International Energy Agency: World Energy Outlook 2005.Middle East and North Africa Insights, 2005\[weo2005.pdf\] |
| /77/ | Intergovernmental Panel on Climate Change(Working Group III \[Metz, B., O.Davidson,H.C. de Coninck,M.Loos,and L.A.Meyer(eds.)\].Cambridge University Press):8. Cost and economic potential in “IPCC Special Report on Carbon Dioxide Capture and Storage”,2005. [http://www.ipcc.ch/pdf/special-reports/srccs/srccs\_wholereport.pdf\[srccs\_wholereport.pdf\]](http://www.ipcc.ch/pdf/special-reports/srccs/srccs_wholereport.pdf%5Bsrccs_wholereport.pdf%5D) |
| /78/ | The World Bank: Technical and Economic Assessment of Off-Grid, Mini-Grid and Grid Electrification Technologies.Annexes,September 2006. [http://siteresources.worldbank.org/EXTENERGY/Resources/336805-1157034157861/ElectrificationAssessmentRptAnnexesFINAL17May07.pdf\[ElectrificationAssessmentRptAnnexesFINAL17May07.pdf\]](http://siteresources.worldbank.org/EXTENERGY/Resources/336805-1157034157861/ElectrificationAssessmentRptAnnexesFINAL17May07.pdf%5BElectrificationAssessmentRptAnnexesFINAL17May07.pdf%5D) |
| /79/ | World Business Council for Sustainable Development:Issue Brief: Natural Gas(in Electricity Generation),October 2006. [http://www.wbcsd.org/web/publications/IB%20Gas.pdf](http://www.wbcsd.org/web/publications/IB%20Gas.pdf) |

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VALIDATION REPORT

|  | \[IB Gas.pdf\] |
| --- | --- |
| /80/ | The Presidency of the Federal Republic of Nigeria / Presidential Task Force on Power: Roadmap for Power Sector Reform (A Customer-Driven Sector-Wide Plan to Achieve Stable Power Supply). August 2010. [http://www.nigeriapowerreform.org/rokdownloads/Roadmap%20for%20Power%20Sector%20Reform%20Full%20Version.pdf](http://www.nigeriapowerreform.org/rokdownloads/Roadmap%20for%20Power%20Sector%20Reform%20Full%20Version.pdf) \[Roadmap for Power Sector Reform Full Version.pdf\] |
| /81/ | M.J. Economides, A.O. Fasina, B. Oloyede / University of Houston: Nigeria Natural Gas: A Transition from Waste to Resource, World Energy vol.7 nr.1, January 2004. [http://www.worldenergysource.com/articles.text/economides\_WE\_v7n1.cfm](http://www.worldenergysource.com/articles.text/economides_WE_v7n1.cfm) \[ [www.worldenergysource.com\_articles\_text\_economides\_WE\_v7.pdf\]](http://www.worldenergysource.com_articles_text_economides_WE_v7.pdf%5D) |
| /82/ | Power Holding Company of Nigeria PLC: National Control Centre Osogbo Generation and Transmission. Grid Operations YYYY(Annual Technical Report), issued 2005, issued 2006, issued 2007, issued 2008, issued 2009 \[2009-annual-report.pdf\] |
| /83/ | G. Tyler: Public and Private Electricity Provision as a Barrier to Manufacturing Competitiveness,p.25 of Findings 221(December),2002. [http://www.worldbank.org/afr/findings](http://www.worldbank.org/afr/findings) \[Tyler\_Electricity Provision Barrier to Manufacturing Competitiveness\_WB Findings 221.pdf\] |
| /84/ | J. Kennedy-Darling,N.Hoyt,T.K.Murao,A.Ross / The University of Chicago:The Energy Crisis of Nigeria.An Overview and Implications for the Future,6 March 2006. [http://humanities.uchicago.edu/orgs/institute/bigproblems/Energy/BP-Energy-Nigeria.pdf](http://humanities.uchicago.edu/orgs/institute/bigproblems/Energy/BP-Energy-Nigeria.pdf) \[BP-Energy-Nigeria.pdf\] |
| /85/ | Letter from The Shell Petroleum Development Company of Nigeria Limited to NAOC responsible person Adetunji:Request for data on gas composition and plant efficiency for Okpai CDM project required to complete grid emission factor analysis for the Afam CDM project currently undergoing its registration process with the United Nations CDM Secretariat,Ref.UIB/G/G/SPDC-2012-05-00000551,28 May 2012 \[SPDC NAOC CDM Letter.pdf\] and e-mail message from NAOC responsible person Uranta to [stanley.amam@shell.com](mailto:stanley.amam@shell.com):RE CDM.zipx - DATA REQUEST,6 June 2012 \[RE CDM.zipx - DATA REQUEST.msg\] \[GAS DELIVERY TO TURBINES OKPAI IPP\_2005-2010.pdf\] |
| /86/ | Union of the Electricity Industry - EURELEC,VGB PowerTech e.V.: Efficiency in Electricity Generation,Ref.2003-030-0548,July 2003. [www.eurelectric.org/Download/Download.aspx?DocumentID=13549](http://www.eurelectric.org/Download/Download.aspx?DocumentID=13549) \[EEGJullyrevisedFINAL1-2003-030-0548-2-.pdf\] |
| /87/ | Energy Technology System Analysis Program:Coal-Fired Power,Technology Brief E01-April 2010. [http://iea-etsap.org/web/E-TechDS/PDF/E01-coal-fired-power-GS-AD-get.pdf](http://iea-etsap.org/web/E-TechDS/PDF/E01-coal-fired-power-GS-AD-get.pdf) \[E01-coal-fired-power-GS-AD-get.pdf\] |

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\| /88/ \| National Technical Working Group On Energy Sector: Report of the Vision 2020, July 2009.

[http://valuefronteiraonline.com/public\_upload/file/Energy%20NTWG%20Report.pdf\[Energy](http://valuefronteiraonline.com/public_upload/file/Energy%20NTWG%20Report.pdf%5BEnergy) NTWG Report.pdf\] \|
\| \-\-\- \| \-\-\- \|
\| /89/ \| The World Bank: Project Performance Assessment Report. Niger. Energy Project(Credit 1880-NIR), Report No:32149,15 April 2005.
[http://lnweb90.worldbank.org/oed/oeddoclib.nsf/DocUNIDViewForJavaSearch/940A328EB0D35B5F85257070007F3EC3/$file/ppar\_32149.pdf\[ppar\_32149.pdf\]](http://lnweb90.worldbank.org/oed/oeddoclib.nsf/DocUNIDViewForJavaSearch/940A328EB0D35B5F85257070007F3EC3/$file/ppar_32149.pdf%5Bppar_32149.pdf%5D) \|
\| /90/ \| The World Bank: State and Trends of the Carbon Market 2006,25 May 2006. [http://www.fonamperu.org/general/mdl/documentos/carbonmarket2006.pdf\[carbonmarket2006.pdf\]](http://www.fonamperu.org/general/mdl/documentos/carbonmarket2006.pdf%5Bcarbonmarket2006.pdf%5D) \|

Main changes between the PDD version published for the 30 days stakeholder commenting
period and the final version submitted for registration are:
• Sect. A

• Sect. A
-the aerial view of Afam VI is replaced by a plot plan

-the aerial view of Afam VI is replaced by a plot plan
-maps of the surrounding area and of the Nigeria power grid are added

-maps of the surrounding area and of the Nigeria power grid are added
-a history is added of the Afam Power Plant;

-a history is added of the Afam Power Plant;

• Sect. B.5
-the serious prior consideration of the CDM and initiatives taken in parallel with the

-the serious prior consideration of the CDM and initiatives taken in parallel with the
physical implementation of the project activity are added
-the input values for the investment analysis are changed to the latest available at the

-the input values for the investment analysis are changed to the latest available at the
starting date
-the uncomplete common practice analysis is replaced by a version taking into account

-the uncomplete common practice analysis is replaced by a version taking into account
that the project activity belongs to measures b in the Tool for the demonstration and
assessment of additionality
-an assessment of the impact of CDM registration is added;

-an assessment of the impact of CDM registration is added;
Sect. B.6

• Sect. B.6
-the uncomplete determination of the baseline emission factor EFBl is replaced by a

-the uncomplete determination of the baseline emission factor EFBl is replaced by a
version in accordance with the Tool to calculate the emission factor for an electricity
system. The elaborated items cover the inclusion of off-grid power plants, the
determination of the BM emission factor sample group and the calculation of both OM
and BM emission factors;
Sect. C

-the crediting start is changed from 27 September 2010 to 1 November 2012.

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VALIDATION REPORT

3.2 Follow-up interviews with project stakeholders

In the period from 18 to 20 August 2010, DNV visited the Afam VI Power Plant and
performed interviews with project stakeholders.

|  | Date | Name | Organization | Topic |
| --- | --- | --- | --- | --- |
| /91/ | 18 August 2010 Shell IA, PHC | Mr. Ben Agbajogu (Afam Operations Manager) | SPDC | Technical description |
| /92/ | Ben Agbajogu, Mr. Taaj Shobayo (Chief Regional Economist) | SPDC | Investment analysis |  |
| /93/ | 19 August 2010 am Shell IA, PHC | Taaj Shobayo | SPDC | Investment analysis |
| /94/ | 19 August 2010 pm SPDC Afam VI, Okoloma | Ben Agbajogu | SPDC | Technical description, physical site inspection |
| /95/ | Mr. Paul Ithunokhe (Afam Community Relations Officer)4 local representatives | SPDCCommunities in Oyigbo LGA | Stakeholders' comments |  |
| /96/ | 19 August 2010 pm Shell RA, PHC | Mr. Charles Okoro(Regional Manager HSE) | SPDC | Stakeholders' comments |
| /97/ | 20 August 2010 am Shell IA, PHC | Charles Okoro | SPDC | Environmental impacts |
| /98/ | 20 August 2010 pm Shell GH, Abuja | Mr. Victor Fodeke(Head,Special Climate Change Unit) | FMEnv | Environmental impacts |

Jcederal Ministrybnvironment E “FMEnv”), DNA of Nigeria;
-The Shell Petroleum Development Company of Nigeria Limited (“SPDC”), project

Organizations involved in the interviews:
Jcederal Ministrybnvironment E “FMEnv”), DNA of Nigeria;

-The Shell Petroleum Development Company of Nigeria Limited (“SPDC”), project
participants.
Remark that Stanley Amam (CDM & CO2 Management Lead) of SPDC was present during

\\mathrm{C O\_{2}}

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VALIDATION REPORT

Persons contacted during the validation, or persons who contributed with other information
that is not included in the documents listed above:

|  | Date | Name | Organization | Topic |
| --- | --- | --- | --- | --- |
| /99/ | 18 to 20 August 2010 | Mr. Stephen Wilson | ECA | Baseline study and monitoring methodology |
| /100/ | 20 August 2010 | Mrs. M.A. Akindele(Group General ManagerRenewable EnergyDivision-RED-) | NNPC | Company involvement in project |
| /101/ | complete validation period | Mr. Stanley Amam(CDM&CO2ManagementLead) | SPDC | Main contact person for project |

&,\\mathrm{C O}\_{2}

Othe r organizations involved:
Economic Consulting Associates (“ECA”), GHG Consultants;

-Economic Consulting Associates (“ECA”), GHG Consultants;

- Nigerian National Petroleum Company (“NNPC”), joint venture participants in SPDC.

- Nigerian National Petroleum Company (“NNPC”), joint venture participants in SPDC.


The objective of this phase of the validation is to resolve any outstanding issues which need
be clarified prior to DNV’s positive conclusion on the project design. In order to ensure
transparency a validation protocol was customised for the project. The protocol shows in a
transparent manner the criteria (requirements), means of verification and the results from
validating the identified criteria. The validation protocol serves the following purposes:
• It organises, details and clarifies the requirements a CDM project is expected to meet;

• It organises, details and clarifies the requirements a CDM project is expected to meet;
• It ensures a transparent validation process where the validator will document how a

The validation protocol consists of four tables. The different columns in these tables are
described in the figure below. The completed validation protocol for the project activity
“Afam Combined Cycle Gas Turbine Power Project” in Nigeria is enclosed in Appendix A to
this report.
A corrective action request (CAR) is raised if one of the following occurs:

(b) The CDM requirements have not been met;
(c) There is a risk that emission reductions cannot be monitored or calculated.

A corrective action request (CAR) is raised if one of the following occurs:
(a) The project participants have made mistakes that will influence the ability of the

(c) There is a risk that emission reductions cannot be monitored or calculated.
A clarification request (CL) is raised if information is insufficient or not clear enough to

(c) There is a risk that emission reductions cannot be monitored or calculated.
A clarification request (CL) is raised if information is insufficient or not clear enough to

A clarification request (CL) is raised if information is insufficient or not clear enough to
determine whether the applicable CDM requirements have been met.
A forward action request (FAR) is raised during validation to highlight issues related to

A forward action request (FAR) is raised during validation to highlight issues related to
project implementation that require review during the first verification of the project activity.
FARs shall not relate to the CDM requirements for registration.

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Report No: 2010-9165, rev. 04

VALIDATION REPORT

\[Image: Image7\]

| Requirement | Reference | Conclusion |
| --- | --- | --- |
| The requirements the project must meet. | Gives reference to the legislation or agreement where the requirement is found. | This is either acceptable based on evidence provided(OK)or a corrective action request(CAR)if a requirement is not met. |

| Checklist question | Reference | Means of verification(MoV) |
| --- | --- | --- |
| The various requirements in Table 1 are linked to checklist questions the project should meet.The checklist is organised in different sections,following the logic of the CDM-PDD | Gives reference to documents where the answer to the checklist question or item is found. | Means of verification(MoV)are document review(DR),interview(I)or any other follow-up actions(e.g.,on site visit and telephone or email interviews)and cross-checking(CC)with available information relating to projects or technologies similar to the proposed CDM project activity under validation. |

| R | Assessment by DNV | Draft and/or Final Conclusion |
| --- | --- | --- |
|  | The discussion on how the conclusion is arrived at and the conclusion on the compliance with the checklist question so far. | OK is used if the information and evidence provided is adequate to demonstrate compliance with CDM requirements. A corrective action request(CAR)is raised when project participants have made mistakes,the CDM requirements have not been met or there is a risk that emission reductions cannot be monitored or calculated.A clarification request(CL)is raised if information is insufficient or not clear enough to determine whether the applicable CDM requirements have been met.A forward action request(FAR)during validation is raised to highlight issues related to project implementation that require review during the first verification of the project activity. |

| Validation Protocol Table 4: Forward Action Requests |  |  |
| --- | --- | --- |
| Forward action request | Ref. to checklist question in table 2 | Response by project participants |
| The FARs raised in Table 2 are repeated here. | Reference to the checklist question number in Table 2 where the FAR is explained. | Response by project participants on how forward action request will be addressed prior to first verification. |

Figure 1 Validation protocol tables

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VALIDATION REPORT

3.4 Internal quality control

The validation report underwent a technical review performed by a technical reviewer
qualified in accordance with DNV’s qualification scheme for CDM validation and
verification.

3.5 Validation team

| Role | Last Name | First Name |
| --- | --- | --- |
| Team leader(Validator) | Lehmann | Michael |
| Validator | Van Evercooren | Jan |
| Expert | Díaz | Ricardo |
| Technical reviewer | Kakaraparthi | Venkata Raman |

| ne | Country | Type of involvement |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Desk review | Site visit/Interviews | Reporting | Supervision of work | Technical review | TA1.1 competence |  |  |
|  | Norway | √ |  | √ | √ |  |  |
|  | Belgium | √ | √ | √ |  |  |  |
|  | Mexico | √ |  | √ |  |  | √ |
|  | India |  |  |  |  | √ | √ |

The qualification of each individual validation team member is detailed in Appendix B to this
report.

* * *

## DET NORSKE VERITAS

## Report No: 2010-9165, rev. 04

## VALIDATION REPORT

## 4 VALIDATION FINDINGS

The findings of the validation are stated in the following sections. The validation criteria (requirements), the means of verification and the results from validating the identified criteria are documented in more detail in the validation protocol in Appendix A. The final validation findings relate to the project design as documented and described in the PDD, version 5.0 dated 29 August 2012 /1/.

## 4.1 Participation requirements

The project participant is The Shell Petroleum Development Company of Nigeria Limited of Nigeria. The host Party (Nigeria) meets all relevant participation requirements /55/. A letter of approval (LoA) /44/ was issued by the DNA of Nigeria on 21 June 2010, authorizing SPDC as project participants and confirming that the project assists in achieving sustainable development. The LoA was received from the project participants. DNV does not doubt the authenticity of the LoA. The signatory of the LoA was interviewed and the authenticity ascertained during the FMEnv interview (Fodeke /98/). DNV considers the letter is in accordance with paragraphs 45- 48 of the VVM /45/.

## 4.2 Project design

According to the EPC-contract (Part 1 Sect. 4 /3/), the project is to build and operate a new SPDC owned power plant of 650 MW with the name Afam VI, fuelled by natural gas. Afam VI is aimed to be a new capacity addition to the Nigeria power grid. The coordinates of the new power plant are between 7.2545 E / 4.8480 N and

7.2600 E / 4.8525 N decimal degrees. It is approx. 30 km northeast of Port Harcourt and close to SPDC’s Okoloma natural gas plant. Afam VI is adjacent to the existing PHCN owned Afam Power Plant and is connected to the Nigeria power grid through the existing Afam substation on PHCN area. The new equipment on SPDC area consists of:

- Three parallel 150 MW gas turbines plus connected heat recovery steam generator;
- One 200 MW steam turbine;
- The four corresponding transformer sets. The gas turbines are Alstom GT13E2, and the heat recovery steam generators are Doosan. The steam turbine is Alstom. The transformers are of Hyundai make. Above equipment is intended to operate in “combined cycle gas turbine” mode (CCGT mode, up to 650 MW), but “open cycle gas turbine” mode (OCGT mode, up to 450 MW) is also possible. Thermal efficiency in CCGT mode would be 50%, in OCGT mode 36%.

## Page 17

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VALIDATION REPORT

Remark that the numbering for Afam VI refers to the non-operational units Afam I to V in the
Afam Power Plant. The history of the PHCN owned non-operational units is illustrated in the
table below:

|  | Commissioning | Date and reason why not in operation |
| --- | --- | --- |
| Afam I | 1962 | explosion 1997, equipment scrapped |
| Afam II | 1976 | explosion 1997, planned rehabilitation of 2 units out of 4 in 2011 |
| Afam III | 1978 | explosion 1997 |
| Afam IV | 1982 | explosion 1997, planned reconditioning of 2 units out of 6 in 2011 |
| Afam V | 2001 | failed due to lack of maintenance in 2005 |

DNV has accepted that above described Afam VI technology would result in significantly
better performance than any commonly used technologies in the host country, based on the
fact that the technology is to be considered modern technology and on information published
on the Internet regarding commonly used technologies in Nigeria. DNV’s opinion may be
best expressed in a University of Chicago study /84/, where is concluded that the power grid
operator’s “severe technological deficiencies are prevalent throughout the power system, both
upstream and down. For example, with modern technology about 40% of the energy
consumed in thermal plants can be converted to electrical energy. In the absence of this
technology, as currently the case in Nigeria, this figure can be as low as 12%”.
Regarding DNV’s assessment of the transfer of technology:

Regarding DNV’s assessment of the transfer of technology:

• Construction know-how transfer is evidenced through the on-site training of the Nigerian
workers provided by South-Korea based EPC-contractor Daewoo (outcome of the 18
August 2010 introductory interview /91/).
Accuracy and completeness of above project description was partially verified during the

165.8 MW for the “Rated active power Pn” (cf. above figure of 150 MW),
and during the subsequent 19 August 2010 physical site inspection /94/ when nameplates
were checked. The period of the August 2010 interviews however was also that of the
finalization of the commissioning tests. Rated capacities were therefore cross-checked using
the available Performance Test Reports:
• The Performance Test Report for the CCGT mode (Daewoo /6/, PB certified /7/) contains

• The technical specification sheet for one gas turbine (Alstom /2/) containing a figure of
165.8 MW for the “Rated active power Pn” (cf. above figure of 150 MW),
and during the subsequent 19 August 2010 physical site inspection /94/ when nameplates

• The Performance Test Report for the CCGT mode (Daewoo /6/, PB certified /7/) contains
a figure of 642 MW for the global “NPd (Designed (Guaranteed) Net Power Output)” of
the plant (cf. above figure of 650 MW);

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VALIDATION REPORT

• The Performance Test Report for the steam turbine (Alstom /8/) contains a figure of 217
MW for the “Guaranteed Power Output, corr. \[MW\]” (cf. above figure of 200 MW).
The heat rate of Afam VI was cross-checked from mentioned Performance Test Report for the

The heat rate of Afam VI was cross-checked from mentioned Performance Test Report for the
CCGT mode in order to assess if plant thermal efficiency is reasonably defined:

• Reference range for the CCGT mode is 54-58% (EIPPCB /52/). The test result is 50.7%
(cf. above figure of 50%);

• Reference range for the OCGT mode from mentioned source EIPPCB is Soares’
monography on gas turbines /53/ indicating 36.4% for the Alstom GT13E2, while Alstom
themselves /54/ claim “close to 37%”. Test data are by DNV recalculated for a resulting
34.8% (cf. above figure of 36%).
The expected operating lifetime of the project activity is 20 years, which by DNV is

The expected operating lifetime of the project activity is 20 years, which by DNV is
considered acceptable on the basis of the involved equipment. According to the project
participants, the plant load factor is 90% and the expected annual amount of electricity
generated is therefore 5 124 600 MWh. The plant load factor value was by DNV evaluated to
be acceptable for the following reasons:
• the availability factor of 95% (see the DNV cross-checked information from the NERC

• the availability factor of 95% (see the DNV cross-checked information from the NERC
/63/);

• the project’s aim of adding power generation capacity in a deficit power grid.
The difference between the two mentioned percentages would be due to the power grid not

The difference between the two mentioned percentages would be due to the power grid not
being accessible full-time.
The starting date of the project activity is stated to be 9 December 2005. This is the signing

The starting date of the project activity is stated to be 9 December 2005. This is the signing
date of the EPC-contract as confirmed during the introductory interview (Agbajogu /92/).
According to the latter interview, the construction activity started in January 2006. The gas
turbines were commissioned in September 2009, the steam turbine in December 2010.
A fixed crediting period of 10 years is selected, starting on 1 November 2012 (or the date of

DNV considers the project description contained in the PDD to be complete and accurate. The
PDD complies with the relevant forms and guidance for completing the PDD.

The summary of DNV’s assessment is as follows:

• Methodology applicability criterion 1, “The project activity is the construction and
operation of a new natural gas fired grid-connected electricity generation plant”.
DNV has considered that sources are available that indicate

4.3 Application of selected baseline and monitoring methodology
The methodology applied is the approved baseline and monitoring methodology AM0029, in

DNV has considered that sources are available that indicate

- the project activity is to build and operate a new power plant of 650 MW with the name

* * *

## DET NORSKE VERITAS

## Report No: 2010-9165, rev. 04

## VALIDATION REPORT

- Afam VI is a new capacity addition to the Nigeria power grid. See the Power Purchase Agreement (PHCN /12/);
- Methodology applicability criterion 2, “The geographical/physical boundaries of the baseline grid can be clearly identified and information pertaining to the power grid and estimating baseline emissions is publicly available”. The baseline grid is the Nigeria power grid. Regarding the boundaries and the publicly available information involved, DNV has
- searched the website of the competent Nigerian Electricity Regulatory Commission [http://www.nercng.org/index.php?option=com\_frontpage&Itemid=1](http://www.nercng.org/index.php?option=com_frontpage&Itemid=1), and
- discussed the issues during the FMEnv interview (Fodeke /98/), and has found convincing evidence for the boundaries of the Nigeria power grid in -a 2009 report by the Deutsche Gesellschaft für Technische Zusammenarbeit /71/, containing a map that was taken over in PDD Sect. A.4.1.2 (Fig. 3, “Map of Nigeria baseline grid”)
- a 2010 article in the Int. Journal of Acad. Research /72/
- the publicly available information on the International Energy Agency website /73/;
- Methodology applicability criterion 3, “Natural gas is sufficiently available in the region or country, e.g. future natural gas based power capacity additions, comparable in size to the project activity, are not constrained by the use of natural gas in the project activity”. DNV has considered that
- regarding the regional availability, SPDC’s Okoloma gas plant is close to Afam VI (Agbajogu /94/) and supplying natural gas since 2008-10. The production rate is 240 Mscf/d, while the Afam VI consumption rate at 650 MW was by DNV cross-checked to be 113 Mscf/d. The rest of the natural gas goes to gas grid operator NGC (Agbajogu /91/)
- regarding countrywide availability, sources are available that indicate
  a. a Gas Master Plan to triple the production capacity to 2 042 Mscf/d by the end of
  2009 to enable the total Nigerian gas-fired power generating capacity to grow to over 6 000 MW. See Tallagprada /60/. The figure was updated in the PTFP Roadmap from August 2010 /80/ to approx. 1 636 Mscf/d up to April 2011 for a targeted increase of approx. 7 000 MW

b. the 2009 statistics (January) showing that Nigeria has the 7th largest proved natural
gas reserves in the world i.e. 184 Tcf of proved natural gas. See USIEA Country Brief /61/. The figure was updated in the 2010 year end statistics to be the 9th largest proved gas reserves i.e. 5.3 Tcm (BP /62/). Both the above documents demonstrate Nigeria to be having surplus gas and that future power plants of similar capacity will not be affected;

- Applicability of the Additionality Tool (CDM-EB /47/), “The document provides a general framework for demonstrating and assessing additionality and is applicable to a wide range of project types. Some project types may require adjustments to this general framework”. DNV has cross-checked that the methodology
- makes reference to the latest approved version of the Additionality Tool
- requires an assessment comprising three steps Step 1, application of Additionality Tool Sub-steps 2b (Option III, benchmark analysis), 2c (Calculation and comparison of financial indicators) and 2d (Sensitivity analysis)

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Step 2, application of Additionality Tool Step 4 (Common practice Analysis)
Step 3, application of Additionality Tool Step 5 (Impact of CDM registration);

Step 3, application of Additionality Tool Step 5 (Impact of CDM registration);

• Applicability of the EF Tool (CDM-EB /50/), “The tool may be applied to estimate the
OM, BM and/or CM when calculating baseline emissions for a project activity that
substitutes grid electricity, i.e. where a project activity supplies electricity to a grid or a
project activity that results in savings of electricity that would have been provided by the
grid (e.g. demand-side energy efficiency projects)”.
DNV has cross-checked that the methodology

DNV has cross-checked that the methodology

- requires the build margin (BM) and operating margin (OM) approach as specified in the

- requires the build margin (BM) and operating margin (OM) approach as specified in the
  EF Tool

- requires baseline emissions to be calculated by multiplying the electricity generated with

- requires baseline emissions to be calculated by multiplying the electricity generated with
  a baseline emission factor EFBl, the lowest value calculated with the EF Tool among three
  options
  Option 1, the build margin


Option 1, the build margin
Option 2, the combined margin using a 50/50 OM/BM weight

Option 2, the combined margin using a 50/50 OM/BM weight
Option 3, the emission factor of the technology (and fuel) identified as the most likely

Option 3, the emission factor of the technology (and fuel) identified as the most likely
baseline scenario.

4.4 Project boundary

The spatial extent of the project boundary is by DNV confirmed to be in accordance with
AM0029 /46/. The clear definition was by DNV evaluated during the physical site inspection
/94/. As required by the methodology, the project boundary includes:
• The project site i.e. components and facilities on the Afam VI project site. DNV has

• The project site i.e. components and facilities on the Afam VI project site. DNV has
checked the three parallel gas turbines plus the connected heat recovery steam generator
and the one steam turbine;

• All power plants connected physically to the baseline grid i.e. the Nigeria power grid.
DNV has checked the Afam VI connection to the existing PHCN Afam substation.
The sources and gases are justifiably selected since they are in accordance with the AM0029

The sources and gases are justifiably selected since they are in accordance with the AM0029
requirements:

• In the calculation of project emissions, only CO2 emissions from fossil fuel combustion at
the project plant are considered;
• In the calculation of baseline emissions, only CO2 emissions from fossil fuel combustion

\\cup\_{i}

This is illustrated in the table below:

|  | GHGs involved | Description |
| --- | --- | --- |
| Baseline emissions | CO2 | Emissions of power plant(s) in the baseline i.e. Afam VI in OCGT mode fuelled with natural gas |
| Project emissions | CO2 | Emissions of project plant i.e. Afam VI in CCGT mode fuelled with natural gas |

\\mathrm{C O\_{2}}

• In the calculation of baseline emissions, only CO2 emissions from fossil fuel combustion
in power plant(s) in the baseline are considered.
This is illustrated in the table below:

\\mathrm{C O}\_{2}

\\mathrm{C O\_{2}}

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Both other emissions sources foreseen by AM0029 are leakage emissions:

- Upstream fugitive methane applies to both the project activity and the baseline scenario. Since this methane amount is higher in the baseline scenario thus resulting in leakage emissions below 0, these are zeroed for conservative reasons;
- Upstream CO2 emissions from Liquified Natural Gas (LNG) do not apply to the project, since Afam VI is not fuelled with LNG. The identified boundary and selected sources and gases are justified for the project activity. The validation of the project activity did not reveal other greenhouse gas emissions occurring within the proposed CDM project activity boundary as a result of the implementation of the proposed project activity which are expected to contribute more than 1% of the overall expected average annual emission reduction, which are not addressed by AM0029 (version
  03).

## 4.5 Baseline identification

The baseline scenario is identified using the step approach prescribed in AM0029 /46/. The identification has been assessed by DNV as follows. Step 1, identification of plausible baseline scenarios:

- The project participants have identified scenarios amongst the scenarios a…d in AM0029 suggested to be analysed inter alia
  a. the project activity not implemented as a CDM project (the project participants’ Option

b. power generation using natural gas, but technologies other than the project activity (Options 2)
c. power generation technologies using energy sources other than natural gas (Options 3 to
8)
d. import of electricity from connected grids, including the possibility of new interconnections (Option 9);

- Overview of the project participants’ Options, including the reason why eventually being considered as not realistic and credible. DNV on the basis of the evidence between brackets has accepted reasons for rejecting the Option
- Option 1, “Natural gas power generation using combined cycle (CCGT) technology without CDM. Efficiency: 50%. Lifetime: 20+ years”
- Option 2, “Natural gas power generation using open cycle (OCGT). Efficiency: 36%. Lifetime: 20+ years”
- Option 3, “Coal-fired power generation using conventional steam cycle. Efficiency: 36- 40%. Lifetime: 20-30 years”, rejected since
  a. there is only limited involvement from the Nigerian Government in stimulating
  coal-fired power generation (see the Roadmap of the Presidential Task Force on Power /80/)

b. coal-fired power generation entails higher capital costs than gas-fired power
generation in CCGT mode (compare ETSAP /87/ for coal with ETSAP /56/ for gas)

- Option 4, “Oil-fired power generation using conventional steam cycle. Efficiency: 36- 40%. Lifetime: 20-30 years”, rejected since there is insufficient oil refining capacity in Nigeria (see USIEA Country Brief /61/) and refined products would need to be imported at a much higher cost compared to

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domestic fuel(s) such as natural gas

- Option 5, “Large-scale hydropower plant (or cluster of smaller units). Lifetime: >50
  years”, rejected since
  a. there are no regional resources available (see Nigeria Vision 2020 Program /88/)
  b. there is only limited involvement from the Nigerian Government (see cited PTFP
  Roadmap)
- Option 6, “Large-scale array of grid-connected wind turbines. Lifetime: 15-20 years”,
  rejected since
  there are no regional resources available and the involvement from the Nigerian
  Government is limited (see cited Nigeria Vision 2020 Program)
- Option 7, “Biomass; solar; tidal; wave. Lifetime: 20 years”, rejected since
  there are no regional resources available and the capital costs are higher (see cited
  Nigeria Vision 2020 Program)
- Option 8, “Nuclear power generation. Efficiency: 30%. Lifetime: 40 years”, rejected
  since
  there is limited involvement from the Nigerian Government (see cited Nigeria Vision
  2020 Program)
- Option 9, “Import of electricity from connected grids, including new interconnections”,
  rejected since
  the transmission capacity of the Nigeria power grid as well as of the linked Niger
  power grid is not sufficient (see WB Report No. 32149 /89/);
  • DNV has evaluated that above list of baseline scenarios is complete taking into account
  that
- a baseline scenario as "continuation of the current situation" is not to be identified seen
  the basics of the methodology
- an option as “off-grid diesel power generation” has not been identified since it is only
  available for customers with sufficient capital (the fuel cost is considerably higher than in
  the case of grid-connected power generation).
  Step 2, identification of the economically most attractive scenario:
  • The project participants in accordance with AM0029 have identified their Option 2,
  “Natural gas power generation using open cycle (OCGT)” as the economically most
  attractive scenario after an investment analysis involving the other remaining alternative
  after Step 1, Option 1, “Natural gas power generation using combined cycle (CCGT)”;

the lifetime of 20 years
the benchmark of 17%

the O&M costs excluding fuel of 30.2/21.2 MUSD per year
a natural gas price of 1.26 USD/MWh

the benchmark of 17%
the investment costs of 423.8/296.7 MUSD

a natural gas price of 1.26 USD/MWh
the plant load factor of 90%

the plant load factor of 90%
an electricity price of 18.7 USD/MW (hourly capacity payment) plus 0.50 USD/MWh

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VALIDATION REPORT

The project participants’ calculations result in the preselection of Option 2 (baseline
scenario) with an IRR of 27.6% compared to the Option 1 (project scenario) IRR of
15.8%. Option 2 is eventually selected for identification of the economically most
attractive scenario on the basis of a sensitivity analysis involving 10% variation of
investment costs, O&M costs, fuel price and output price;
DNV has evaluated that above input values are reasonable taking into account that

• DNV has evaluated that above input values are reasonable taking into account that

- the benchmark is the downrounded 2005 3rd quarterly average of the Prime Lending rate
  (CBN /74/)

- the Option 1 value for the investment costs is the SPDC value for the EPC-contract in

- the Option 1 value for the investment costs is the SPDC value for the EPC-contract in
  the Bid Sheet dated 5 October 2005 /41/. The value is calculated by using the
  “Thermoflow” power industry cost estimating tool

- the Option 1 value for the O&M costs is the CEA value for the annual LTSA related

- the Option 1 value for the O&M costs is the CEA value for the annual LTSA related
  amount in the Bid Sheet. The value is calculated with the lower of the three bids from
  Siemens (scheduled plus unscheduled LTSA costs over 15 years plus import duties)

- the Option 2 values for the investment and O&M costs are derived from the Option 1

- the Option 2 values for the investment and O&M costs are derived from the Option 1
  values through a general OCGT:CCGT ratio of 0.70 estimated from the 350 USD/kW
  (OCGT) and 500 USD/kW (CCGT) capital cost values sourced from the International
  Energy Agency in 2005 /76/

- the natural gas price and the electricity price are the values from the actual draft of the

- the natural gas price and the electricity price are the values from the actual draft of the
  Power Purchase Agreement signed 9 December 2005 /12/

- the plant load factor is calculated with the availability factor of 95% (as in NERC /63/).

- the plant load factor is calculated with the availability factor of 95% (as in NERC /63/).
  The details of DNV’s evaluation of reasonableness for the Option 1 investment and O&M
  costs, the natural gas and electricity prices and the plant load factor are included in section
  4.6.2.
  The approved baseline methodology has been correctly applied to identify a complete list of


DNV has further assessed if the baseline scenario sufficiently takes into account relevant
national and/or sectoral policies, macro-economic trends and political aspirations by verifying
the following documents:
• The Electric Power Sector Reform i.e. laws & regulations from 2005;

• The Electric Power Sector Reform i.e. laws & regulations from 2005;

DNV has also assessed if all available data, literature and sources are clearly referenced.
All the assumptions and data used by the project participants are listed in the PDD and/or

- development by the Nigerian government of the Plan in 2009. The Plan would promote
  new gas-fired power plants to help reduce gas flaring and provide much-needed electricity
  generation (see above cited USIEA Country Brief).
  DNV has also assessed if all available data, literature and sources are clearly referenced.

- reforms in the power sector. Since the new Electric Power Sector Reform legislation
  from 2005, these resulted in the unbundling of the PHCN into 18 companies, 6 generating,
  1 transmission, and 11 distribution companies (Tallagprada /60/)

- development by the Nigerian government of the Plan in 2009. The Plan would promote


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## DET NORSKE VERITAS

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## VALIDATION REPORT

## 4.6 Additionality

The additionality of the project is demonstrated using the step approach in AM0029. The methodology makes reference to the latest approved version of the Additionality Tool (CDM- EB /47/):

- Step 1, “Benchmark investment analysis” i.e. application of Additionality Tool Sub-steps 2b (Option III, benchmark analysis), 2c (Calculation and comparison of financial indicators) and 2d (Sensitivity analysis);
- Step 2, “Common practice analysis” i.e. application of Additionality Tool Step 4 (Common practice analysis);
- Step 3, “Impact of CDM registration” i.e. application of Additionality Tool Step 5 (Impact of CDM registration). Remark that therefore, “latest approved version” of the Additionality Tool must be interpreted as “latest approved version including Step 5”.

## 4.6.1 Evidence for prior CDM consideration and continuous actions to secure

## CDM status

The EPC-contract was signed on 9 December 2005 /10/, which is considered as the starting date of the project activity. This date is during the introductory interview (Agbajogu /91/) by DNV confirmed to be the earliest date on which the project participants have committed to expenditures related to the implementation of the project activity. The starting date is thus before the validation start (16 July 2010). Also according to said introductory interview, the first construction activity was in January

2006. The assessment of the project participants’ serious consideration of the CDM prior to the starting date is documented in detail in section B.5 of Table 2 in the validation protocol in Appendix A to this report. The key events according to DNV’s assessment are the following:

- In 2003, the signing of a contract with Triple-E /23/ as the consultant to perform one NEPA/SPDC cooperative study targeted at constructing a transparent and robust baseline for the Nigerian power sector;
- In 2003-2004, the contacts between Shell subsidiairies (SIG, SIPC and SPDC) and WB’s GGFR (The World Bank’s Global Gas Flaring Reduction Public-Private Partnership) /24/ /25/ (e-mail messages) /26/ (letter) resulting in the decision to submit the than so-called (no number) “Afam”-project as a CDM project. Above contacts occurred in parallel with SPDC and GGFR contacts with ECA as the CDM consultant under a GGFR contract /27/ /28/ /29/ /30/. The letter mentioned summarizes the decisive factors to seek the CDM status,
  a. above mentioned NEPA/SPDC cooperative study
  b. the investment cost of equipment to perform in CCGT mode
  c. the possibility of WB support;
- The decision to undertake “Afam” as a CDM project on the basis of mentioned decisive factors was eventually taken during SPDC’s Board of Directors meeting on 29 October 2004;
- On 29 June 2005, the submittance of a Project Idea Note /31/ for “Afam” to the Nigerian CDM authority, on 19 August 2005 followed by an endorsement from this authority (PIC- CDM /32/).

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## VALIDATION REPORT

As indicated above, the EPC-contract was signed on 9 December 2005, the starting date of the project activity. Continued actions were taken to secure the CDM status along the project implementation. The assessment of the project participants’ initiatives between the starting date and the global stakeholder consultation is documented in detail in section B.5 of Table 2 in the validation protocol in Appendix A to this report. The key events according to DNV’s assessment are the following:

- Up to 31 December 2006, ECA’s performance of the GGFR contract regarding a newly developed methodology and PDD for the than so-called “Nigeria: Carbon Credit Development for Flared Gas to Power Project”;
- On 16 June 2006, the signing of a contract with SGS /34/ as the validator to submit a newly developed methodology and PDD;
- In January 2007, the signing of a contract with ECA as the consultant to finalize the newly developed methodology and PDD /35/. Both final documents NM0208 and PDD are dated 2 February 2007 and relate to the than so-called “Afam Integrated Gas and Power (AIGP) project” (ECA /36/);
- On 30 January 2007, the approval from the Nigerian CDM authority (PIC-CDM /37/);
- Up to 2 August 2008, the contacts between SGS and the UNFCCC e.g. /38/ ending up in a non-acceptance decision (CDM-EB /39/);
- On 5 August 2009, the instruction to ECA to proceed with a PDD based on AM0029 /40/ for the project now so-called “Afam Combined Cycle Gas Turbine Power Project”;
- On 29 April 2010, the signing of a contract with DNV (SIEP /21/) as the validator to submit the PDD based on AM0029. The chronology ends up with the publishing of PDD version 1.0 dated 23 June 2010 on the CDM website on 16 July 2010, the validation start. It is DNV’s opinion that the proposed CDM project activity complies with the requirements of the latest version of the guidance on prior consideration of CDM.

## 4.6.2 Benchmark investment analysis

## Choice of approach

The approach is prescribed since Step 1 in AM0029 requires that a benchmark investment analysis is performed consisting of the Additionality Tool Sub-steps 2b (Option III, benchmark analysis), 2c (Calculation and comparison of financial indicators) and 2d (Sensitivity analysis). As the financial indicator, the project participants have chosen the Internal Rate of Return (IRR) before tax of the total investment i.e. the project-IRR before tax. The underlying assumptions comprise the following:

- The observation period is 20 years. This period is to be considered appropriate since it is equal to the operating lifetime;
- There is no salvage value indicated in the calculation, nor a working capital returned, item discussed during one interview dedicated to the investment analysis (Agbajogu /92/). This assumption is to be considered appropriate since according to the project participants
- the returned working capital would very likely be negligible and also as per the EB guidelines on investment analysis,

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VALIDATION REPORT

- a salvage value is not required since the financial working is done for the operating
  lifetime of the project.

Benchmark selection

As the benchmark, the project participants have chosen the Prime Lending rate published by
the Central Bank of Nigeria. Internal Rate of Return before tax of the project.
rd
The benchmark value used in the calculation is 17% i.e. the downrounded 2005 3 quarterly

rd
The benchmark value used in the calculation is 17% i.e. the downrounded 2005 3 quarterly
average of the Prime Lending rate. DNV has confirmed that this value is the latest available
quarterly value before the starting date i.e. 9 December 2005 (CBN /74/ /75/).

3^{\\mathrm{r d}}

Input parameters
DNV has evaluated the relevance of the input values as part of the assessment of the project

DNV has evaluated the relevance of the input values as part of the assessment of the project
participants’ identification of the baseline scenario. For the following input parameters,
further evaluation is given hereunder: the amount of output, the output price, the investment
costs, and the O&M costs including the fuel price. Particular emphasis is given to DNV’s
confirmation that the values are the latest available before the starting date i.e. 9 December
2005 (source dates are underlined). No other input parameters e.g. taxes needed assessment
since the financial indicator calculated is the project-IRR before tax.
Amount of output

The 5 124 600 MWh figure is calculated as the electricity generated from a 650 MW installed
net capacity and a 90% plant load factor.
DNV has validated this value as follows.

DNV has validated this value as follows.
The 90% value comes close to the (technically acceptable) availability factor of 95% (as in

The 90% value comes close to the (technically acceptable) availability factor of 95% (as in
NERC /63/) and this is reasonably explained by the fact that the project concerns additional
power generation capacity in a deficit power grid. According to the project participants, the
difference between the two percentages is due to the external factor that the grid accessibility
is not 100% (Agbajogu /91/).
Output price

Output price
The output price consists of the electricity price of 18.7 USD/MW (the hourly capacity

The output price consists of the electricity price of 18.7 USD/MW (the hourly capacity
payment) plus 0.50 USD/MWh (the commodity payment).
DNV has validated these values as follows.

DNV has validated this value as follows:
• The reasonableness as well as the conservativeness of the 423.8 MUSD figure is

• The reasonableness as well as the conservativeness of the 423.8 MUSD figure is
confirmed by the 425.3 MUSD figure later agreed upon (see EPC-contract Part 1 Sect. 3
from November 2005 /10/);
• 423.80 MUSD for 650 MW capacity corresponds to 652 USD/kWe. DNV has confirmed

• 423.80 MUSD for 650 MW capacity corresponds to 652 USD/kWe. DNV has confirmed
that this value lies within the range of specific costs according to specialized sources

- the construction costs for gas-fired generating technologies lie between 400 and 800

- the construction costs for gas-fired generating technologies lie between 400 and 800
  USD/kWe according to the Nuclear Energy Agency & International Energy Agency /59/


* * *

VALIDATION REPORT

-the capital cost for CCGT power plants is around 500 USD/kW according to the
International Energy Agency /76/

- the total capital requirement for a new NGCC plant without CO2 capture is between 515

- the total capital requirement for a new NGCC plant without CO2 capture is between 515
  and 724 USD/kW according to a 2005 IPCC Special Report /77/

- the capital cost projections for gas turbine power plants vary within 20% according to


\\mathrm{C O\_{2}}

- the capital cost projections for gas turbine power plants vary within 20% according to
  the 2006 WB Technical and Economic Assessment /78/ showing a 2005 capital cost
  projection for combined cycle between 570 and 720 USD/kW

- the (relatively low) capital costs for CCGT are typically around 570 USD/kW according

- the (relatively low) capital costs for CCGT are typically around 570 USD/kW according
  to a 2006 WBCSD Issue Brief /79/;


• Regarding the estimating tool used by the project participants moreover, DNV has
checked that Thermoflow Inc. is a provider of well established and respected gas turbine
thermal modelling and cost estimating software packages ( [http://www.thermoflow.com/](http://www.thermoflow.com/)).
O&M costs

O&M costs

The 30.2 MUSD per year figure (excluding fuel) is the CEA value for the annual LTSA
related amount in the Bid Sheet dated 5 October 2005. The value is calculated with the lower
of the three bids from Siemens (scheduled LTSA costs of 132.64 MUSD plus unscheduled of
1.68 MUSD over 15 years plus 26.70 MUSD import duties) and the downrounded 2005 3rd
quarterly average of the Prime Lending rate being 17% (CBN /74/) to amortise these values
into an annual amount.
The natural gas price of 1.26 USD/MWh is the value from the actual draft of the official

The natural gas price of 1.26 USD/MWh is the value from the actual draft of the official
contractual agreement, the Power Purchase Agreement signed 9 December 2005.
DNV has validated the O&M costs value (excluding fuel) as follows:

DNV has validated the O&M costs value (excluding fuel) as follows:
• The reasonableness as well as the conservativeness of the 30.2 MUSD per year figure is

• 30.2 MUSD per year for 650 MW capacity corresponds to 47 USD/kWe. DNV has
confirmed that this value lies within the range of specific costs for gas-fired power plants
of 4.92-47.36 USD/kWe according to the above cited Nuclear Energy Agency &
International Energy Agency. After investigating the appropriateness of said (rather wide)
reference range,

- it comes from a specialized source which is considered a world leading source regarding

- it comes from a specialized source which is considered a world leading source regarding
  energy pricing and costs

- it is not an ex-post evaluation of the 2010 situation, but a forecast from 2005 for 5 years


DNV has focused on finding Afam VI related indications that the project’s 47 USD/kWe
is due to a mix of these factors, noticing that

- the most recent existing unit of the Afam Power Plant (Afam V, commissioned in 2001)

- the most recent existing unit of the Afam Power Plant (Afam V, commissioned in 2001)
  failed due to lack of maintenance in 2005

- Afam VI was the victim of a militant attack and subsequent shutdown in 2007.

- that O&M costs can vary widely from country to country, depending on a range of
  factors such as access to technical staff, availability of spare parts, import duties, security
  and safety, …,
  DNV has focused on finding Afam VI related indications that the project’s 47 USD/kWe

- it is not an ex-post evaluation of the 2010 situation, but a forecast from 2005 for 5 years
  later,
  and in order to illustrate

- Afam VI was the victim of a militant attack and subsequent shutdown in 2007.
  30.2 MUSD per year also corresponds to 7% of the investment costs. DNV has confirmed


• 30.2 MUSD per year also corresponds to 7% of the investment costs. DNV has confirmed
that this value is more than the 4% for gas-fired power according to the International

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## DET NORSKE VERITAS

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## VALIDATION REPORT

Energy Agency (ETSAP /56/). DNV has considered that the project’s 7% nevertheless cannot be rejected on the basis of said reference % since the latter is not strictly appropriate: the 4% figure pertains to OECD area and it therefore does not reflect the situation in non-OECD countries e.g. Nigeria (see also above cited case of the Afam V unit). DNV has validated the fuel price value as follows:

- 1.26 USD/MWh of natural gas corresponds to 0.35 USD/GJ. DNV has confirmed that this value lies far beneath the range of gas prices of 3.5-4.5 USD/GJ according to the above cited specialized source the Nuclear Energy Agency & International Energy Agency. DNV has considered that the project’s 0.35 USD/GJ nevertheless should not be rejected on the basis of said reference range for its conservativeness and reasonableness, considering it equals
- 0.35 USD/mcf which is close to the 0.30 USD/mcf mentioned in a 2004 article in World Energy /81/, explaining that “Because the Nigerian government wants to stop flaring gas by 2008, there is an obvious incentive to bring this gas to the export market, likely the
  U.S., as LNG. This can happen as long as the producers are still willing to sell the gas for $0.30/mcf”
- 0.37 USD/MMBtu which is close to values mentioned by Tallagprada /60/, explaining that in 2008 “The (Nigerian) Government’s policy introduces a floor price of US$0.40/MMBtu at power plants based on a price of US$0.10/MMBtu at the well head and a transmission charge of US$0.30/MMBtu. The price of gas to non-power consumers is expected to cross subsidize the price to power plants resulting in a pooled price of US$0.80/MMBtu to the gas producers. … However, the price of gas for power generation is set to go up to US$1.00/MMBtu by 2013, by which time the cross subsidy is expected to be phased out”.

## Calculation and conclusion

The project-IRR before tax without CERs revenue is 15.8%, which confirms that the project activity in the absence of CDM benefits and compared to the benchmark value of 17% is not financially attractive. The calculation is reported in a spreadsheet under MS-Excel (ECA /9/). DNV has verified the involved worksheet (“Project without CERs”) and has found the calculation to be correct. The assumptions and input values as described above were found to be correctly transformed in formulas.

## Sensitivity analysis

The project participants have carried out a sensitivity analysis for input parameters contributing more than 20% to revenue or costs in order to check the robustness of the investment analysis. The sensitivity analysis considers variation of the investment costs, the fuel price and the output price up to the value at which the project-IRR before tax attains the benchmark value of 17%. Variation of the amount of output has not been considered since the latter by the project participants has been calculated using a 90% plant load factor, and as explained higher in this section, this factor comes close to the NERC requirement of 95% availability. Summary of the project participants’ conclusions including DNV’s assessment:

- If the investment costs would decrease with 5.3%, the IRR would reach the benchmark value. This condition is considered to be unlikely seen the base value is calculated with

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## VALIDATION REPORT

the “Thermoflow” tool that does not include unforeseen payments. Any deviations from the base value would in reality be upward, not downward. DNV has confirmed on the basis of the EPC-contract /10/ and the actual value /42/ that the investment costs show an upward deviation compared to the base value;

- If the O&M costs (excluding fuel) would decrease with 11%, the IRR would reach the benchmark value. This condition is considered to be unlikely seen the base value is the lower value within three bids for the LTSA related amount. Any deviations from the base value would in reality be upward, not downward. DNV has confirmed on the basis of the LTSA /33/ that the O&M costs show an upward deviation compared to the base value;
- If the natural gas price would decrease with 26%, the IRR would reach the benchmark value. Any deviation is however considered to be theoretical seen the base value is imposed by the Power Purchase Agreement and part of a contractual agreement and therefore not subject to variation;
- If the electricity price would increase with 3.3%, the IRR would reach the benchmark value. This condition is considered to be unlikely seen the base value is imposed by the Power Purchase Agreement and part of a contractual agreement and moreover on the basis of
- the political sensitivity
- the history of low electricity prices in Nigeria, and
- the difficulties with bill collection in Nigeria and Rivers State, not subject to variation.
  As a conclusion, input parameter variation up to the value when the financial indicator attains the benchmark value is not realistic.

## 4.6.3 Common practice analysis

DNV has assessed if the project participants’ analysis is in accordance with the Additionality Tool. The criteria used were deemed to be correct and the evidence appropriate.

## Performance of Sub-step 4a (analysis of other activities)

The scopes chosen by the projects participants are as follows:

- For the geography, the Nigeria power grid. The choice is justifiable since the grid refers to nationwide laws & regulations;
- For the technology, the grid connected power plants actually in operation using closed cycle (CCGT). The choice is in accordance with AM0029 since the baseline scenario type of power plant is using open cycle (OCGT);
- For the scale, 325-975 MW. The choice is acceptable since the range covers ± 50% of the project’s 650 MW installed net capacity;
- For the environment, Nigeria. The choice is acceptable since as for the geography, the country refers to nationwide investment climate. The power plants connected to the Nigeria power grid using closed cycle are ten:
- Alaoji, Delta-II, Egbema, Geregu, Kolo Creek, Obita, Okitipupa, Okpai, Omoku phase II and Sapele.

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Since Alaoji, Egbema, Obita, Okitipupa and Omoku phase II are not in operation actually,
Delta-II and Kolo Creek have a capacity below 325 MW, and Sapele has a capacity above 975
MW, the similar activities are two:

• Geregu has a global capacity of 414 MW of which 276 MW using closed cycle;

• Okpai has a capacity of 480 MW.

Performance of Sub-step 4b (comparison with similar activities)
The project participants identify the following distinctions between the project activity and

The project participants identify the following distinctions between the project activity and
the similar activities:

• The Geregu power plant was entirely financed by federal government funds;

• The Okpai power plant was set up to create a market for the previously flared gas at the
Kwale Oil and Gas Processing Plant. The Kwale flare reduction project is registered as a
CDM project activity (UNFCCC Registration Ref. No. 0553). The choice of the CCGT
technology for Okpai is therefore to be considered as supported by CDM benefits.
These distinctions are deemed to be essential by DNV since they pertain to the financing of

These distinctions are deemed to be essential by DNV since they pertain to the financing of
the projects.

Application of §47 (four step determination of F and Nall-Ndiff)
DNV has confirmed that the project activity belongs to measures b of §6 since its GHG

\\mathrm{N\_{a l l}\ N\_{d i f f})}

DNV has confirmed that the project activity belongs to measures b of §6 since its GHG
reducing technology involves a “switch of technology” (from OCGT to CCGT mode)
“without change of energy source” (natural gas).
DNV has further confirmed that the project participants have appropriately applied the §47

DNV has further confirmed that the project participants have appropriately applied the §47
calculation instructions resulting in:
• An output range of 325-975 MW, being the output range covering +/-50% of the 650 MW

• An output range of 325-975 MW, being the output range covering +/-50% of the 650 MW
installed net capacity of Afam VI;

• A Nallvalue of 5, being the number of power plants

- in the applicable geographical area (covered by the Nigeria power grid)

\\mathrm{N l l}

- in the applicable geographical area (covered by the Nigeria power grid)

- within the applicable output range (above mentioned 325-975 MW)

- within the applicable output range (above mentioned 325-975 MW)

- having started commercial operation before the starting date of the project activity (9

- having started commercial operation before the starting date of the project activity (9
  December 2005)

- not being registered or under validation as a CDM project activity (above mentioned


Documentation of evidence
The evidence provided by the projects participants has been evaluated by DNV as follows:

- not being registered or under validation as a CDM project activity (above mentioned
  Okpai is excluded);

\\mathrm{N}{}\_{\\mathrm{d i f f}}

• A factor F of 0 and a Nall-Ndiffof 0, being correctly calculated with above Nalland Ndiff.

The evidence provided by the projects participants has been evaluated by DNV as follows:

0,

\\mathrm{N\_{a l l}N\_{d i f f}}

\\mathrm{N\_{a l l}N\_{d i f f}}

• For the performance of Sub-step 4a, the data sources are
the NCC Osogbo Reports (PHCN /82/) for a total of 19 power plants in Nigeria,

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[http://www.industcards.com/cc-nigeria.htm](http://www.industcards.com/cc-nigeria.htm) for the Alaoji, Delta-II, Egbema, Geregu, Kolo Creek and Okpai power plants, the source being based on the Platts UDI World Electric Power Plants Data Base, [http://www.total.com/en/our-energies/natural-gas-/power-generation-940907.html](http://www.total.com/en/our-energies/natural-gas-/power-generation-940907.html) for the Obita power plant, [http://www.africancrisis.co.za/Article.php?ID=94582&](http://www.africancrisis.co.za/Article.php?ID=94582&) for the Okitipupa power plant, [http://www.ng.total.com/06\_total\_nigeria\_press/0608\_2Nov2010\_tepng\_news\_1.htm](http://www.ng.total.com/06_total_nigeria_press/0608_2Nov2010_tepng_news_1.htm) for the Omoku phase II power plant, and [http://www.ijar.lit.az/pdf/6/2010(4-6](http://www.ijar.lit.az/pdf/6/2010(4-6)).pdf for the Sapele power plant. The documentation is deemed appropriate since the data come from official sources e.g. PHCN as well as dedicated sources e.g. Platts, the well-known large independent team of journalists dedicated to the energy industry, [http://www.platts.com](http://www.platts.com/);

- For the performance of Sub-step 4b, the data sources are [http://www.nigeriaelectricityprivatisation.com/wp-](http://www.nigeriaelectricityprivatisation.com/wp-) content/uploads/downloads/2011/01/Geregu-Genco-2011-01-13.pdf for the Geregu power plant, and [http://cdm.unfccc.int/Projects/DB/DNV-CUK1155130395.3/view](http://cdm.unfccc.int/Projects/DB/DNV-CUK1155130395.3/view) for the Okpai power plant. The documentation is deemed appropriate since the data come from official sources (the CDM-EB regarding Okpai, the Nigerian government regarding Geregu). **Conclusion** On the basis of the project participants’ criteria and evidence, DNV has confirmed that the proposed project activity is not common practice.

## 4.6.4 Impact of CDM registration

The project-IRR before tax with CERs revenue is 16.8%, which confirms that the presence of CDM benefits would support the continuing operation of the project activity, the value without CERs being 15.8% and the benchmark value 17%. The calculation is reported in the already cited ER/IRR-Spreadsheet. In addition to the input values by DNV evaluated as part of the assessment of the project participants’ identification of the baseline scenario, the calculation makes use of a CERs price of 7.04 USD/tCO2. DNV has confirmed that this value was available before the starting date

i.e. 9 December 2005: it is the 2005 average of the primary market transactions (WB /90/). DNV has verified the worksheet “Project with CERs” in the ER/IRR-Spreadsheet and has found the calculation to be correct.

## 4.6.5 Conclusion

In conclusion, the assessment of the presented arguments is deemed by DNV to sufficiently demonstrate that the project is additional and not a likely baseline scenario, i.e. the project activity has the ability to reduce anthropogenic emissions of greenhouse gases by sources below those that would have occurred in the absence of the registered CDM-project.

## 4.7 Monitoring

The project participants have documented their monitoring plan in the PDD (ECA /1/).

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DNV has assessed if the means of monitoring described in the monitoring plan comply with the requirements of the methodology:

- Parameters needed for the calculation of the baseline emissions BE being EG \* EFBl, are the following
- the annual amount EG of electricity generated is based on the measurement of,
  a. EG5 for the amount generated by the gas turbines (according to the project
  participants, the “Electricity produced by gas turbines”)

b. EG6 for the amount generated by the steam turbine (the “Electricity produced by
steam turbine”)

- the emission factor of electricity generation EFBl is not monitored, it is a parameter available at validation;
- Parameters needed for the calculation of the project emissions PE being FC \* NCV \* EF \* OXID, are the following
- the annual amount FC of natural gas combusted is based on the measurement of FC1 for the amount combusted globally (according to the project participants, the “Annual quantity of fuel (natural gas) combusted in project activity”). FC2, FC3 and FC4 for the amount combusted by gas turbines #1, #2 and #3 separately are measured to control the measurement of FC1 (the “Annual quantity of fuel (natural gas) combusted in gas turbine #1, #2, #3”)
- the average net calorific value NCV (“The net calorific value (energy content) per volume unit of natural gas used in the calculation of project emissions“) and the average emission factor EF of the natural gas (“CO2 emission factor per unit of energy of natural gas used in the calculation of project emissions”) are based on the chemical analysis of the gas at the reception point
- the oxidation factor of the natural gas OXID is not monitored, it is a parameter available at validation.
  The above list of parameters to be monitored (EG5, EG6, FC1, NCV and EF) in DNV’s opinion is complete. Furthermore, the parameters are clearly described. Remark that according to interviews performed, development indicators and environmental impacts are as part of their Environmental Management Plan monitored by SPDC (Okoro /97/) as well as by the FMEnv, and the outcome is compared (Fodeke /98/). The project monitoring plan is in compliance with the monitoring methodology AM0029 (version 03). It is DNV’s opinion, that the project participants are able to implement the monitoring plan.

## 4.7.1 Parameters determined ex-ante

DNV’s evaluation of the data and parameters that are not monitored throughout the crediting period, but

- that are determined only once and thus remain fixed throughout the crediting period, and
- that are available when validation is undertaken, is illustrated in the following paragraphs:
- EFBl for the emission factor of electricity generation;
- OXID for the oxidation factor of the natural gas. The emission factor of electricity generation EFBl is the first parameter available at validation. The parameter is needed for the calculation of the baseline emissions BE being EG

- EFBl. EFBl should be determined in accordance with AM0029 i.e. the lower value of the

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three following Options for calculation. The project participants have documented their determination process in the PDD (ECA /1/) and in the EF-Spreadsheet (ECA /43/):

- **Option 1, the build margin emission factor BMEF of the power grid according to the EF** Tool (CDM-EB /50/);

- **Option 2, the combined margin emission factor CMEF of the power grid according to** above EF Tool;

- **Option 3, the emission factor of the technology (and fuel) identified as the most likely** baseline scenario and calculated as 3.6 \* COEFBl/ηBl with

- COEFBl for the emission factor of the fuel

- ηBl for the efficiency of the technology.
  The EF Tool prescribed for Options 1 and 2 requires the project participants to apply a stepwise determination of subsequently the operating margin emission factor OMEF of the power grid, the build margin emission factor BMEF and the combined margin emission factor CMEF, preceded by the identification of the relevant electricity system. Since the project participants have chosen for the inclusion of off-grid power plants, the EF Tool requires them to substantiate this choice in a further preceding step. The application of both preceding steps has been assessed by DNV as follows:

- Step 1, identification of the relevant electricity system The baseline grid is the Nigeria power grid (see section 4.2). On the basis of the NCC Osogbo Reports (PHCN /82/), the project participants have identified 18 grid power plants, i.e.

- 3 hydropower plants

- 14 natural gas fuelled thermal power plants, whereof the Okpai power plant is supported by CDM benefits (see section 4.6.3)

- 1 diesel oil fuelled thermal power plant i.e. the Geometric power plant, however not in operation in the period from 2005 to 2009. DNV has verified worksheet “Power plant data & assumptions” of the EF-Spreadsheet and has found the identification to be correct;

- Step 2, choice to include off-grid power plants The project participants have substantiated their choice on the large capacity deficit of the Nigeria power grid and provide appropriate documentation regarding the importance of off-grid generation. DNV has cross-checked the involved documentation being the PTFP Roadmap /80/ and studies from Triple-E /65/ and WB origin (/66/, Report No. 32164). The former document was found to contain the substantiation of the choice to include off- grid power plants since it indicates that in 2009, off-grid plants represent at least 6 000 MW i.e. approx. 73% of the total capacity of grid power plants being 8 175 MW according to the 2009 NCC Osogbo Report (Annex 2 Step 4 of the EF Tool requires at least 10%). Regarding the procedures in Annex 2 Step 1 of the EF Tool, the project participants have used existing data on off-grid power generation, mainly collected for above Triple-E study. They have made use of these data following option b by statistically evaluating the data covering the Lagos area database in this study and inferring these to the entire off- grid power generation. DNV has found the choice of the collected data (Annex 2 Step 1.1) to be acceptable on the basis of the number of units and their rating (CAP) in the verified worksheet “off grid 2”


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and of the opinion in above WB study that all units can be considered to be diesel
generators (TECH, FUEL) connected to the Nigeria power grid (GRID, SWITCH).
The project participants have further applied the instructions on

The project participants have further applied the instructions on

- the classification of off-grid power plants. As these are also included in the build margin,

- the classification of off-grid power plants. As these are also included in the build margin,
  the project participants have identified the prescribed 3 vintage classes on the basis of the
  capacity additions according to above Triple-E study (for the period from 1974 to 2002)
  and their own interpolation taking into account above mentioned PTFP Roadmap estimate
  of the total capacity of 6 000 MW in 2009 (for the period from 2003 to 2009). DNV has
  verified worksheet “off-grid 1” and taking into account the lack of start dates, has
  considered the determination of the classes “OFF GRID <5 YEARS”, “OFF GRID >5 <10
  YEARS” and “OFF GRID >10 YEARS” to be sufficiently in accordance with Annex 2
  Step 1.2

- the definition of the sectors for which data are collected. According to worksheets “off-

- the definition of the sectors for which data are collected. According to worksheets “offgrid 2” and “off-grid 3” where residential, commercial and industrial diesel oil fuelled offgrid generators are mentioned, the data are collected for the whole economy

- the relevance of the existing data sources used being a Tyler article in Findings 221 /83/,

- the relevance of the existing data sources used being a Tyler article in Findings 221 /83/,
  above Triple-E study in particular its Lagos area database, the University of Chicago
  study already mentioned /84/ and above PTFP Roadmap. The only comprehensive and
  robust data come from the Triple-E study. These data are however not of suitable vintage
  and quality to meet the requirements laid out in Annex 2, since they are not updated after
  2002 (the EF Tool requires to calculate OMEF using a single year within the 5 most
  recent years prior to the validation start i.e. 16 July 2010) and they do not contain all
  needed information (Annex 2 Step 1.1 requires a minimum of data/information to be
  collected, see DNV’s above assessment of the choice of the collected data)
  -the aggregation of the data to the above defined 3 vintage classes. The project


-the aggregation of the data to the above defined 3 vintage classes. The project
participants have derived global estimates for the total population, being an average
capacity of 302 kW (CAP), the reciprocating engine as the unique technology (TECH),
diesel oil as the unique fuel (FUEL). DNV has verified worksheet “off grid 2” and has
found the aggregation to be correct.
The project participants have calculated OMEF and BMEF for both Option I (“Only grid

The further stepwise determination for Option I of BMEF (Option 1) has been assessed by
DNV as follows:

The project participants have calculated OMEF and BMEF for both Option I (“Only grid
power plants are included in the calculation”) and Option II ("Both grid power plants and offgrid power plants are included in the calculation”). For reasons mentioned under Step 2, the
calculation for Option II is not on the same level of quality as the calculation for Option I. The
project participants prefer nevertheless not to delete the calculation in order to substantiate
that in the case of the Nigeria power grid, inclusion of off-grid power plants results in a less
conservative estimate of the baseline emissions. For transparency reasons, DNV has assessed
the further steps required by the EF Tool for these Options separately, emphasizing on the full
quality Option 1 calculation and subsequently describing the Option II calculation additions to
Option I.
The further stepwise determination for Option I of BMEF (Option 1) has been assessed by

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The project participants have identified the SETsample-CDMas the BMEF sample group. The sample comprises 8 grid power plants. It consists of the SET≥20%reduced by the plants of over 10 years (one, Shiroro), but augmented with the plants under the CDM (one, Okpai). DNV has verified worksheet “GRID ONLY Option 1” and has found the identification to be correct;

- Step 6, calculation of the build margin emission factor The project participants have calculated a BMEF of 0.519 tCO2/MWh through ∑(EGm \* EFelm)/∑EGm where the summation covers the SETsample-CDM. DNV has verified worksheet “GRID ONLY Option 1” and has found the calculation to be correct, with

- EGm, the net electricity quantity generated in 2009 (as in the 2009 NCC Osogbo Report)

- EFelm, the emission factor of electricity generation as described in worksheet “Power plant data & assumptions”, using either FCm \* NCV \* EFCO2/EGm in accordance with Option A1 as in EF Tool Step 4, with the gas consumption FC as in the 2009 NCC Osogbo Report (gas consumption for Okpai as from NAOC data /85/, see worksheet “Okpai fuel use data”), a fuel net calorific value NCV for the natural gas of 0.035 GJ/m³ (an average value for Nigerian natural gas from an appropriate DNV cross-checked source being Enibe /68/), a fuel CO2 emission factor EF for the natural gas of 56.1 tCO2/TJ (as in the 2006 IPCC Guidelines /67/) and above EGm, or
  3.6 \* EFCO2/η in accordance with Option A2 as in EF Tool Step 4, with above fuel CO2 emission factor EF for the natural gas of 56.1 tCO2/TJ and the average net energy conversion efficiency η as in EF Tool Annex 1 (39.5% for natural gas plants in open cycle from after 2000, 60% for natural gas plants in combined cycle from after 2000).
  The further stepwise determination of CMEF (Option 2) has been assessed by DNV as follows:

- Step 3, selection of the method for the operating margin The project participants have selected the simple OM method based on the fact that approx. 32% of the 2005 to 2009 average of the total generation came from hydropower plants being the only Nigerian low cost/must run power plants. The 32% figure would derive from the above 2005 to 2009 NCC Osogbo Reports. Considering that the EF Tool requires less than 50%, DNV has verified worksheet “GRID ONLY Option 2” and has found the 32% figure to be correct;

- Step 4, calculation of the operating margin emission factor The project participants have calculated an OMEF of 0.573 tCO2/MWh through ∑(EGm \* EFelm)/∑EGm where the summation covers the identified 14 natural gas fuelled thermal power plants (the diesel oil fuelled Geometric not being operated in the period from 2005 to 2009). DNV has verified worksheet “GRID ONLY Option 2” and has found identification and calculation to be correct, with

- EGm, the net electricity quantity generated in the period from 2007 to 2009 (as in the 2007 to 2009 NCC Osogbo Reports)

- EFelm, the emission factor of electricity generation as described in worksheet “Power plant data & assumptions”, see under Step 5.


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- Step 7, calculation of the combined margin emission factor The project participants have calculated a CMEF of 0.546 tCO2/MWh by averaging the above mentioned OMEF and BMEF values. The further stepwise determination for Option II has been assessed by DNV as follows:
- Identification of the power units to be included (in BMEF) In terms of the vintage of data for the sample group of grid power plants, see under Step 1. For the sample group of off-grid power plants, see under Step 2. The project participants have identified the SET≥20%as the BMEF sample group. The sample comprises 7 grid power plants and 2 off-grid power plant classes. DNV has verified worksheet “INCL OFF-GRID Option 1” and has found the identification to be correct;
- Calculation of the build margin emission factor The project participants have calculated a BMEF of 0.613 tCO2/MWh through ∑(EGm \* EFelm)/∑EGm where the summation covers the SET≥20%. DNV has verified worksheet “INCL OFF-GRID Option 1” and has found the calculation to be correct, with additionally to Option I for the off grid classes
- EGm, the net electricity quantity generated using CAPm \* PLFdefault,off-grid\* 8760 in accordance with Option 3 as in EF Tool Step 4, with the class total capacity CAP based on above described capacity addition assessment in worksheet “off-grid 1” and the default plant load factor PLF determined with a conservative 300 hours of full capacity operation per year
- EFelm, the emission factor of electricity generation of 0.673 tCO2/MWh as described in worksheet “off-grid 3”, using 3.6 \* EFCO2/η in accordance with Option A2 as in EF Tool Step 4, with a fuel CO2 emission factor EF for the diesel oil (FUEL) of 74.1 tCO2/TJ (as in the 2006 IPCC Guidelines /67/) and the average net energy conversion efficiency η based on the weighted average capacities from the above mentioned Lagos area database and the default efficiencies as in EF Tool Annex 1 (33%/37%/42% for the residential/commercial/industrial generators with reciprocating engine-TECH-and nominal capacity of 30/121/905 kW -CAP-);
- Calculation of the operating margin emission factor The project participants have calculated an OMEF of 0.585 tCO2/MWh through ∑(EGm \* EFelm)/∑EGm where the summation covers above identified 14 natural gas fuelled thermal power plants and 3 off-grid vintage classes. DNV has verified worksheet “INCL OFF-GRID Option 2” and has found the calculation to be correct, with additionally to Option I for the off grid classes
- EGm, the net electricity quantity generated using above CAPm \* PLFdefault,off-grid\* 8760
- EFelm, the emission factor of electricity generation being above 0.673 tCO2/MWh;
- Calculation of the combined margin emission factor The project participants have calculated a CMEF of 0.599 tCO2/MWh by averaging the above mentioned OMEF and BMEF values. For the determination of the emission factor of the technology (and fuel) identified as the most likely baseline scenario (Option 3), the project participants have calculated a value of
  0.511 tCO2/MWh. The calculation in the worksheets “GRID ONLY Option 3” and “INCL OFF-GRID Option 3” has been confirmed by DNV to be in accordance with the methodology
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VALIDATION REPORT

since it was performed for the technology (and fuel) of the baseline scenario (“Natural gas
power generation using open cycle (OCGT)”) through above mentioned
3.6 \* COEFBl/ηBl
and with appropriate values for

\ .66,^{\*},{\\check{C O E F B/n B{}l}}}

and with appropriate values for

• COEFBl, i.e. 0.0561 tCO2/GJ, a default emission factor of natural gas from the 2006
IPCC Guidelines, and

\\mathrm{t C O}\_{2}/\\mathrm{G J}

• ηBl, i.e. 39.5%, above mentioned average net energy conversion efficiency for natural gas
plants in open cycle from after 2000 as in EF Tool Annex 1.
The project participants in accordance with the methodology have chosen the Option 3 value

The project participants in accordance with the methodology have chosen the Option 3 value
of 0.511 tCO2/MWh for the emission factor of electricity generation EFBl since this value is
the lower of the determined values:

\\mathbf{t C O\_{{2}}/M W h}

| EFBl in tCO2/MWh | Option1 | Option2 | Option3 |
| --- | --- | --- | --- |
| OptionI， “only grid power plants” | 0.519 | 0.546 | 0.511 |
| OptionII， “off-grid power plants included” | 0.613 | 0.599 |  |

q oxidation factor of the natural gas OXID is the second parameter available at
validation. The parameter is needed for the calculation of the project emissions PE being FC \*
NCV \* EF \* OXID. The project participants have chosen the value of 1, the default oxidation
factor from the 2006 IPCC Guidelines.

\\mathbf{F C}^{\*}

\\mathrm{N C V},^{ _},\\mathrm{E F},^{_}

DNV’s evaluation of the data and parameters that need to be monitored is illustrated in the
following paragraphs:

- the measuring equipment for the electricity generated EG;

- the measuring equipment for the electricity generated EG;

- the measuring equipment for the amount of natural gas combusted FC;

- the monitoring of the properties NCV and EF of the natural gas.
  The following equipment is installed to monitor the electricity generated EG:


• The electricity meters are of the static meter type (EDMI Mk6E);

• The measuring is continuous, the recording frequency is 1x/day;
• Maintenance and calibration are in accordance with the requirements in the Power

• The meter class is 0.2S, the accuracy is 0,2%;

• For EG6, main/back-up electricity meters in the export point to the bus-bar of the
transformator set for the steam turbine.
The location of the electricity meters as in the PDD was by DNV cross-checked with the

The following detailed information was provided and by DNV evaluated on appropriateness
based on provided as well as supplier’s information (EDMI, [http://www.edmimeters.com/Products.aspx](http://www.edmimeters.com/Products.aspx)):
• The electricity meters are of the static meter type (EDMI Mk6E);

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The following equipment is installed to monitor the amount of natural gas combusted FC:

- For FC1, main/back-up flow meters at the gas reception point;
- For FC2, FC3 and FC4, flow meters at the turbine inlet. The location of the flow meters as in the PDD was by DNV cross-checked with the appropriate PID (file) /15/. The following detailed information was provided and by DNV evaluated on appropriateness based on provided as well as supplier’s information (Elster-Instromet, [http://www.elster-](http://www.elster-/) instromet.com/en/products\_and\_services.html):
- The flow meters are of the turbine meter type (Elster-Instromet SM-RI-X). The flow meters at the gas reception point are connected to a separate flow computer (Elster- Instromet Model 2000). Remark that for these meters, the PID erroneously indicates the ultrasonic meter type;
- The Elster-Instromet “Turbine Gas Meter Handbook” indicates that the total uncertainty of turbine meters can be as low as 0.5% and that repeatability can be close to 0.1%;
- The measuring is continuous, the recording frequency is 1x/day;
- All meters undergo annual maintenance in accordance with the O&M Manual /16/. The calibration frequency is 1x/year. The following equipment is installed to monitor the average net calorific value NCV and the **average emission factor EF of the natural gas:**
- Sampling openings at the gas reception point;
- A gas chromatograph at the in-house laboratory. The following detailed information was provided and by DNV evaluated on appropriateness:
- The sampling and analysis are fortnightly, the recording frequency is fortnightly;
- Operation is in accordance with the requirements in the O&M Manual /16/.

## 4.7.3 Management system and quality assurance

DNV’s evaluation of the incorporation in the monitoring plan of all indicators of importance for controlling and reporting of the project performance is illustrated in the following paragraphs:

- a discussion of the frequency, responsibility and authority for registration, monitoring, measuring and reporting activities;
- an evaluation of the training needs to assure appropriate operation and maintenance. SPDC have outlined all procedures for the registration, monitoring, measuring and **reporting activities** in documents called “Afam VI Power Project Operations and Maintenance Reports”. These documents contain the identification and briefing of the responsible personnel regarding the meter locations, the calibration requirements, the monitoring frequency, the recording method, ... During the 19 August 2010 physical site inspection, it became clear that these documents are part of above mentioned O&M Manual and taken up in the computerized maintenance management system of Afam VI (the “CCMS”). The CCMS is referred to in SPDC’s Environmental Management System under ISO 14001 (Agbajogu /94/).
- The measured data will be logged with the Afam VI process control system (the “PCS”);
- All data will be archived in the CCMS and will be backed up regularly;

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- The data needed will be recorded in a purpose built spreadsheet also used for the data reporting and the calculation of the emission reductions. Procedures for quality assurance/quality control contained in the CCMS amongst other describe SPDC’s cross-check of the data for the monitored parameters:
- The measured data for the electricity generated EG will be checked with PHCN’s measurements at the substation;
- The measured data for the amount of natural gas combusted globally FC1 will be checked
- with the gas supplier’s measurements at the Okoloma Gas Plant
- with the daily records for FC2, FC3 and FC4 at the turbine inlet;
- Regarding the estimate for the properties NCV and EF of the natural gas, will the gas supplier’s data be checked with the data from SPDC’s fortnightly sampling of the natural gas at the gas reception point and subsequent analysis using the gas chromatograph in the on-site laboratory. The location of the sampling openings was by DNV cross-checked with the appropriate PID (photograph) /15/. The training needs initially made out part of the operation know-how transfer during the instruction of the Nigerian engineers by the EPC-subcontractor Alstom (Off-Site Training /11/). Procedures involved are contained in the CCMS.

## 4.8 Algorithms and/or formulae used to determine emission reductions

The project participants have documented their calculation process in the PDD (ECA /1/) and in the ER/IRR-Spreadsheet (ECA /9/):

- The baseline emissions BE are calculated as EG \* EFBl with

- EG for the electricity generated

- EFBl for the emission factor per unit of electricity;

- The project emissions PE are calculated as FC \* COEF with

- FC for the amount of natural gas

- COEF for the emission coefficient of the natural gas.
  The project participants have not calculated a leakage term L. They consider leakage zero on the basis of arguments documented in the PDD. DNV’s assessment of

- the completeness, accuracy, transparency and conservativeness of formulas, parameters and values used, and

- the assumptions made for estimating GHG emission reductions, and uncertainties, is illustrated in the following paragraphs:

- the baseline emissions;

- the project emissions;

- leakage. The baseline emissions BE being EG \* EFBl are calculated with the following parameters:

- EG for the electricity generated;

- EFBl for the emission factor per unit of electricity. EG is a monitored parameter. EFBl is a parameter determined ex-ante.


## Page 40

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## DET NORSKE VERITAS

## Report No: 2010-9165, rev. 04

## VALIDATION REPORT

DNV has on the basis of PDD and IRR/ER-Spreadsheet confirmed that the calculation process is in accordance with the methodology (AM0029 /46/). DNV has furthermore assessed if the BE ex-ante estimate is in line with above BE calculations:

- EG is estimated as 5 124 600 MWh/yr based on the global plant capacity (650 MW, the project value) and the plant load factor (90%, a percentage that reflects the lack of capacity in the Nigeria power grid);

- EFBl is estimated as 0.511 tCO2/MWh (value determined ex-ante). The project emissions PE being FC \* COEF are calculated with the following parameters:

- FC for the amount of natural gas;

- COEF for the emission coefficient of the natural gas, being NCV \* EF \* OXID with

- NCV for the net calorific value of the natural gas

- EF for the emission factor of the natural gas

- OXID for the oxidation factor of the natural gas.
  FC, NCV and EF are monitored parameters. OXID is a parameter determined ex-ante. COEF is calculated in accordance with the methodology. DNV has on the basis of PDD and IRR/ER-Spreadsheet confirmed that the calculation process is in accordance with the methodology. DNV has furthermore assessed if the PE ex- ante estimate is in line with above PE calculations:

- FC is estimated as 1 054 203 429 m³/yr based on the global plant capacity (650 MW, the project value), the plant load factor (90%, a percentage that reflects the lack of capacity in the Nigeria power grid), the CCGT net efficiency (50%, the project value) and a net calorific value of the natural gas (0.035 GJ/m³, see NCV);

- NCV is estimated as 0.035 GJ/m³ (as already explained in section 4.7.1, an average value for Nigerian natural gas from the appropriate DNV cross-checked source Enibe /68/);

- EF is estimated as 0.0561 tCO2/GJ (a default value for natural gas from an appropriate DNV cross-checked source being the 2006 IPCC Guidelines /67/);

- OXID is estimated as 1 (value determined ex-ante). **Leakage L has not been calculated. DNV has on the basis of the arguments documented in** the PDD confirmed if the omission of L calculations as foreseen in the methodology is acceptable:

- The calculation of the “fugitive CH4 emissions associated with fuel extraction, processing, liquefaction, transportation, re-gasification and distribution of natural gas used in the project plant in the absence of the project activity” would result in a value < 0 since the global plant capacity of 650 MW (the project value) would in the OCGT mode (baseline scenario) require a higher amount of natural gas than in the CCGT mode (project activity); these emissions have been considered zero;

- “CO2 emissions from fuel combustion/electricity consumption associated with the liquefaction, transportation, re-gasification and compression into a natural gas transmission or distribution system, in the case LNG is used in the project plant” have not been calculated since the project plant does not use LNG. **Globally, there are no assumptions found in the calculation process that can be considered not** conservative. The zero value for the leakage due to the fugitive CH4 emissions however is applied for the sake of conservativeness.


## Page 41

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VALIDATION REPORT

Based on the calculations and results presented in the sections above the implementation of
the project activity will result in an average ex-ante estimate of emission reductions
conservatively calculated to be 550 234 tCO2e per year for the selected crediting period.
All assumptions and data used by the project participants are listed in the PDD and/or

All assumptions and data used by the project participants are listed in the PDD and/or
supporting documents, including their references and sources. All documentation used by the
project participants as the basis for assumptions and source of data is correctly quoted and
interpreted in the PDD. All values used in the PDD are considered reasonable in the context
of the proposed CDM project activity. The baseline methodology has been applied correctly
to calculate project emissions, baseline emissions, leakage and emission reductions. All
estimates of the baseline, project and leakage emissions can be replicated using the data and
parameter values provided in the PDD.

4.9 Environmental impacts

The EIA process in Nigeria is governed by a number of laws and regulations amongst others
the Petroleum Act from 1969 and the EIA Act No. 86 from 1992. These are gathered and
clarified in documents from:

• The Department of Petroleum Resources, document being called the EGASPIN,
“Environmental Guidelines and Standards for the Petroleum Industry in Nigeria” /69/;

• SPDC, document series being included in the Shell EIA Manual /22/.

Mentioned documents were by DNV cross-checked during the 20 August 2010 Okoro
interview /97/.
During the subsequent FMEnv interview (Fodeke /98/), it was confirmed that the project is in

4.10 Comments by local stakeholders

• Air quality, noise nuisance, water quality and soil & groundwater quality. The one adverse
effect according to the EIA-certificate requires SPDC to put in place adequate equipment
for wastewater treatment to prevent the pollution of the Imo River north to Afam VI.
Remark that for the water quality and the noise nuisance is referred to WB’s EHS
Guidelines /70/. These guidelines were cross-checked by DNV;
• Human health i.e. the health of the workforce and the involved communities. In the PDD,

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## DET NORSKE VERITAS

## Report No: 2010-9165, rev. 04

## VALIDATION REPORT

The interview pointed out that the SPDC’s past consultation events mentioned in the PDD have been carried out in accordance with the EIA requirements (regarding time, media, scope) as clarified in SPDC’s Shell EIA Manual /22/:

- The 19 June 2003 EIA Scoping Workshop, with representatives of eight Communities within the Oyigbo LGA, of competent authorities (the FMEnv, the Rivers and Abia State Ministries of Environment, the Oyigbo LGA) and representatives of NGOs;
- The 14 September 2004 EIA Feedback Session, with above mentioned representatives plus one representative of the National Inland Waterways Authority. Another series of consultation events are actually being carried out in accordance with the project’s Environmental Management Plan (Chapter 6 of /17/) and Stakeholder Engagement Plan /19/, both resulting from the EIA process:
- The quarterly events for the Youth Forum, with the major Communities’ Youth leaders and Council counsellors;
- The annual events for the Grassroots Forum, with representatives of all Community segments;
- The annual events for the active leaders in the field, with representatives of governmental focal points (the River State, the Oyigbo LGA, …);
- The annual events for the top level leaders, with representatives from the Rivers and Abia States. A further consultation event was carried out on 18 March 2010 in order to evaluate the benefits of the CDM status for the project. The event was attended by 53 leaders and representatives from Communities affected by the project (including Okoloma, Egberu, Komkom, Afam-Nta, Ayama, Izuoma, Umuosi, Mgbosi, Oyigbo, …). The PDD contains a summary of the comments received and therefore, the involved report /20/ was cross-checked by DNV. The stakeholders’ remaining concerns seem to pertain to:
- Technical items such as breakdown of the electricity supply;
- Environmental items such as the continuing flaring of gas, the increasing noise nuisance;
- Social items such as the influx of people. During the 19 August 2010 meeting with four local representatives (Ithunokhe /95/), DNV recorded the following concerns:
- The repair of damaged landlines in Oyigbo (regarding this repair should be reminded that the repair is not SPDC’s, but PHCN’s responsibility);
- The upgrade of the NEPA clinic, mentioned in Sect. 4.9;
- The availability in the neighbourhood of the plant’s fire fighting services. In general however, the project is considered an improvement for the area thanks to amongst others the availability of electricity, the reduction of the diesel generator noise, the better air quality, the enhanced employment and business opportunities. The 19 August 2010 meeting delivers sufficient indication that due account is being taken of actual stakeholders’ comments. As regarding the comments originally resulting from the EIA process, due account taken is implicitly evidenced by the issuance of the EIA Certificate (FMEnv /18/). DNV considers the local stakeholder consultation carried out adequately.

## Page 43

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VALIDATION REPORT

4.11 Comments by Parties, stakeholders and NGOs

The PDD, version 1.0 of 23 June 2010, was made publicly available on the CDM website
and Parties, stakeholders and NGOs were through the CDM website invited to provide
comments during a 30 days pe riod from 16 July 20 1 0 to 1 4 August 2010.
No comment s w ere received.

[http://cdm.unfccc.int/Projects/Validation/DB/GFQDD52CLQX16SE42BIEQV4TKZEWCI/view.html](http://cdm.unfccc.int/Projects/Validation/DB/GFQDD52CLQX16SE42BIEQV4TKZEWCI/view.html)

* * *

DET NORSKE VERITAS

# APPENDIX A

## CDM VALIDATION PROTOCOL

* * *

Table 1 Mandatory requirements for Clean Development Mechanism (CDM) project activities

| Requirement | Reference | Conclusion |
| --- | --- | --- |
| About Parties |  |  |
| 1\. The project shall assist Parties included in Annex I in achieving compliance with part of their emission reduction commitment under Art.3. | Kyoto Protocol Art.12.2 | Unilateral project, no Annex I Parties.OK |
| 2\. The project shall assist non-Annex I Parties in contributing to the ultimate objective of the UNFCCC. | Kyoto Protocol Art.12.2. | Host Party is non-Annex I Nigeria.OK |
| 3\. The project shall have the written approval of voluntary participation from the designated national authority of each Party involved. | Kyoto Protocol Art.12.5a,CDM Modalities and Procedures§40a | Nigeria LoA confirms that participation is voluntary.OK |
| 4\. The project shall assist non-Annex I Parties in achieving sustainable development and shall have obtained confirmation by the host country thereof. | Kyoto Protocol Art.12.2,CDM Modalities and Procedures§40a | Nigeria LoA confirms that the project contributes to the sustainable development of the host country.OK |
| 5\. In case public funding from Parties included in Annex I is used for the project activity,these Parties shall provide an affirmation that such funding does not result in a diversion of official development assistance and is separate from and is not counted towards the financial obligations of these Parties. | Decision 17/CP.7,CDM Modalities and Procedures Appendix B,§2 | N/A,unilateral project,no Annex I Parties. |
| 6\. Parties participating in the CDM shall designate a national authority for the CDM. | CDM Modalities and Procedures§29 | Nigeria DNA is Federal Ministry of Environment(FMEnv).OK |
| 7\. The host Party and the participating Annex I Party shall be a Party to the Kyoto Protocol. | CDM Modalities§30/31a | Nigeria has ratified the Kyoto Protocol on 2004-12-10.OK |
| 8\. The participating Annex I Party's assigned amount | CDM Modalities and | N/A,unilateral project,no Annex I Parties. |
| shall have been calculated and recorded. | Procedures§31b |  |
| 9\. The participating Annex I Party shall have in place a national system for estimating GHG emissions and a national registry in accordance with Kyoto Protocol Article 5 and 7. | CDM Modalities and Procedures§31b | N/A, unilateral project, no Annex I Parties. |
| About additionality |  |  |
| 10\. Reduction in GHG emissions shall be additional to any that would occur in the absence of the project activity,i.e.a CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the registered CDM project activity. | Kyoto Protocol Art.12.5c,CDM Modalities and Procedures§43 | See Table 2,Sect.B.5. |
| About forecast emission reductions and environmental impacts |  |  |
| 11.The emission reductions shall be real,measurable and give long-term benefits related to the mitigation of climate change. | Kyoto Protocol Art.12.5b | See Table 2,Sect.B.6. |
| 12.Documentation on the analysis of the environmental impacts of the project activity,including transboundary impacts,shall be submitted,and,if those impacts are considered significant by the project participants or the Host Party,an environmental impact assessment in accordance with procedures as required by the Host Party shall be carried out. | CDM Modalities and Procedures§37c | See Table 2,Sect.D. |
| About stakeholder involvement |  |  |
| 13.Comments by local stakeholders shall be invited,a summary of these provided and how due account was | CDM Modalities and Procedures§37b | See Table 2,Sect.E. |
| taken of any comments received. |  |  |
| 14\. Parties, stakeholders and UNFCCC accredited NGOs shall have been invited to comment on the validation requirements for minimum 30 days,and the project design document and comments have been made publicly available. | CDM Modalities and Procedures§40 | The PDD was made publicly available on [http://cdm.unfccc.int/Projects/Validation/DB/GFQDD52CLQX16SE42BIEQV4TKZEWCI/view.htmland](http://cdm.unfccc.int/Projects/Validation/DB/GFQDD52CLQX16SE42BIEQV4TKZEWCI/view.htmland) Parties,stakeholders and NGOs were through the CDM website invited to provide comments during a 30day period from16July2010to14August2010.OK |
| Other |  |  |
| 15.The baseline and monitoring methodology shall be previously approved by the CDM Executive Board. | CDM Modalities and Procedures§37e | Meth applied isAM0029 version03.Version is actual at the validation start(2010-07-16)since valid from2008-05-30onwards and no more recent version issued yet.OK |
| 16.A baseline shall be established on a project-specific basis,in a transparent manner and taking into account relevant national and/or sectoral policies and circumstances. | CDM Modalities and Procedures§45c,d | See Table2,Sect.B.4. |
| 17.The baseline methodology shall exclude to earn CERs for decreases in activity levels outside the project activity or due to force majeure. | CDM Modalities and Procedures§47 | See Table2,Sect.B.4. |
| 18.Provisions for monitoring,verification and reporting shall be in accordance with the modalities described in the Marrakech Accords and relevant decisions of the COP/MOP. | CDM Modalities and Procedures§37f | See Table2,Sect.B.7. |

* * *

Table 2 Requirements checklist

| Checklist Question |  | Rating |
| --- | --- | --- |
| A General description of project activity |  |  |
| A.1 | Title of the project activity(VVM para 55-57) |  |
| A.1.1 | Does section A.1 of the PDD include a clearly identifiable project title, version number of the PDD and date of the PDD? | / |
| A.1.2 | Is the PDD in accordance with the applicable requirements for completing PDDs? | / |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  |  |  |  |
| / | DR | Published PDD (ECA/1/) includes: |  |  |

- project title, Afam Combined Cycle Gas Turbine Power Project
- version number, 1.0
- date, 2010-06-23.
  Clearly identifiable title of the project activity
  Version number of the PDD is included
  Date of the PDD is included. \| \| OK \|
  \| / \| DR \| Contents/format of published PDD in line with CDM requirements for completing PDDs:
  A. General description of project activity
  B. Application of a baseline and monitoring methodology
  C. Duration of the project activity/Crediting period
  D. Environmental impacts
  E. Stakeholders' comments
  Annex 1: Contact information on participants in the project activity
  Annex 2: Information regarding public funding
  Annex 3: Baseline information
  Annex 4: Monitoring information.
  Yes
  If no, list where the PDD is not in accordance: \| \| OK \|

* * *

| Checklist Question | Rating |
| --- | --- |
| A.2 Description of the project activity(VVM para 58-64 and VVM para 135 and 136(a) & (c) for small-scale project activities, as applicable) |  |
| A.2.1 How was the design of the project assessed? | / / / /9 |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  |  |  |  |
| / / / / 4/ | DR I | What type is the project? |  |  |
| ☑Project in existing facility or utilizing existing equipment(s) |  |  |  |  |
| Existing equipment is PHCN Afam substation |  |  |  |  |
| ☐Large scale project |  |  |  |  |
| ☐bundled small scale projects, each with emission reductions not exceeding15000tCO2e per year |  |  |  |  |
| ☐individual small scale project activity with emission reductions not exceeding15000tCO2e per year |  |  |  |  |
| ☐Greenfield project. |  |  |  |  |
| How was the design of the project assessed? |  |  |  |  |
| ☑Physical site inspection(Agbajogu/94/) |  |  |  |  |
| See DNV files: |  |  |  |  |
| DNV Prog of Validation Activity.docx |  |  |  |  |
| Shell\_Afam VI\_ChecklistNotes |  |  |  |  |
| SV&FUI\_01\_JVEV\_20100818.pdf |  |  |  |  |
| Shell\_Afam VI\_Assessment |  |  |  |  |
| SV\_02\_JVEV\_MLEH\_20110225\_RCDA15032011.doc |  |  |  |  |
| See Shell file“Afam VI Power Plant(APP6) |  |  |  |  |
| Site Induction for Visitors/APP6 Plot Plan” |  |  |  |  |
| ☑Reviewing available designs and feasibility studies |  |  |  |  |
| See DNV file: |  |  |  |  |
| Shell\_Afam VI\_Assessment |  |  |  |  |
| SV\_02\_JVEV\_MLEH\_20110225\_RCDA15032011.doc |  | OK |  |  |

* * *

| Checklist Question |  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  | See: |  |  |

- Technical specification sheet (Alstom /2/)
- EPC-contract Part 1 Sect. 4 /3/
  If a physical site inspection is not undertaken, justify why no site visit was undertaken: \| \| \|
  \| A.2.2 \| If a greenfield project, describe the physical implementation of the project when the validation was commenced. \| /1/ \| DR \| N/A, no greenfield project. \| \| OK \|
  \| A.2.3 \| If physical site visits were performed based on sampling(only applicable for bundled small scale projects, each with emission reductions not exceeding 15000 tCO2e per year),justify the sampling through a statistical analysis: \| /1/ \| DR \| N/A, no physical site visits performed based on sampling,no bundle of SSC projects. \| \| OK \|
  \| A.2.4 \| Is the description of the proposed CDM project activity as contained in the PDD sufficiently covers all relevant elements,is accurate and that it provides the reader with a clear understanding of the nature of the proposed CDM project activity? \| /1/ /2/ /4/ /5/ /6/ /7/ /8/ /10/ /53/ /91/ /94/ \| DR I CC \| Published PDD Sect.A.2 (“Description of the project activity”)accurate when combined withPDD Sect.A.4.3 (“Technology to be employedby the project activity”)and Figure 2 (“Schematic illustration of the project activitywithin CDM project boundary”)in PDD Sect.B.3,butno layout of plant included(CL1).Location is adjacent to Afam Power Plant nearPort Harcourt(Rivers State)owned byPHCNwith non-operational units Afam I to V(Agbajogu /94).Main elements(Agbajogu /91):-project activity is to build and operate newpower plant Afam VI of 650 MW fuelled bynatural gas(NG)-Afam VI consists of 3x150MW GTs plusHRSG and 1x200MW ST(CCGT plant withOCGT mode possible).GTs are AlstomGT13E2.HRSGs are Doosan.ST is Alstom,inEPC-contract Part 1 Sect.3/10/ indicated as \| CL-1 \| OK \|

* * *

| Checklist Question |  | Rating |
| --- | --- | --- |
|  |  |  |
| A.2.5 | Does the project activity involve alteration of existing installations? If so, have the differences between pre-project and post-project activity been clearly described in the PDD? | / /9 |
| A.2.6 | Does the project design engineering reflect current good practices? | / /5 /5 /5 /5 /10 |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  | “two casting turbine with HP-section and double flow LP-turbine with lateral exhaust”. |  |  |
| Transformers are Hyundai, for GTs 185 MW, see name plate photograph /4/ (service factor 0.81), for ST 260 MW, see name plate photograph /5/ (service factor 0.77) |  |  |  |  |

- Afam VI is new capacity addition to Nigeria power grid.
  Remark on power figures cross-check:
- technical specification sheet for 1 GT (Alstom /2/) contains figure of 165.8 MW for the “Rated active power Pn”; Soares’ monography on gas turbines /53/ contains figure of 172.2 MW for the “Gross Electrical output” of Alstom GT13E2 (with “Gross Electrical efficiency” of 36.4%)
- Performance Test Report for CC (Daewoo /6/, PB certified /7/) contains figure of 642 MW for the “NPd (Designed (Guaranteed) Net Power Output)”
- Performance Test Report for ST (Alstom /8/) contains figure of 217 MW for the “Guaranteed Power Output, corr. \[MW\]”. \| \| \|
  \| /4/ \| DR I \| Existing equipment is PHCN Afam substation (Agbajogu /94/). No alteration since Afam VI new plant that is connected to said substation. \| \| OK \|
  \| /2/ \| DR CC \| Engineering reflects good practices:
- global efficiency of 50% in CCGT mode, however published PDD Sect. B.4 specifies 50-55% range as identified in EPC-contract tender (Amam /101/) (CL 2)
  reference range is 54-58% (EIPPCB /52/) test result is 50.7% in Performance Test Report \| CL-2 \| OK \|
  \| 4/1/ \| \| \| \| \|

MoV = Means of Verification, DR= Document Review, I= Interview, CC= Cross-Checking

CDM Validation Protocol – Report No. 2010-9165, rev. 04

* * *

| Checklist Question |  | Rating |
| --- | --- | --- |
|  |  |  |
| A.2.7 | Would the technology result in a significantly better performance than any commonly used technologies in the host country? Is any transfer of technology from any Annex-I Party involved? | /1/1/1/5/9 |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  | for CC/6/( - efficiency of 36% in OCGT mode, however published PDD Sect. B.4 specifies 36-40% range as identified in EPC-contract tender for the GTs (see CL2) while cross-check values are a. 36.4% for Alstom GT13E2 (with “Gross Electrical output” of 172.2 MW, Soares /53/)b. close to 37%(Alstom /54/)reference range is 36-40%(EIPPCB /52/)test result is 34.8% DNV calculated from Performance Test Report for CC. |  |  |
| /11/71/11 | DRI CC | Better performance since commonly used technologies may concisely be described by “installed generating capacity of about 6GW but actual available output is less than 2.5GW.Power black-out is frequent”(DNV cross-check with Olivia Phillip /57)).Transfer of technology:-GTs and ST are foreign design(Alstom),HSRGs are foreign design(Doosan)-operation know-how transfer since Nigerian engineers outside Nigeria instructed by foreignEPC-subcontractor Alstom(Off-Site Training/11).Published PDD Sect.A.4.3 emphasizesNNPC/NAPIMS role in negotiations involved-construction know-how transfer since Nigerian workers locally instructed by foreignEPC-contractor Daewoo(on-site training,Agbajogu/91).Published PDD Sect.A.4.3 emphasizesSPDC role in recruitment involved. |  | OK |

* * *

| Checklist Question |  | Ref | MoV | Assessment by DNV |  |  | Draft Concl. | Final Concl. |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| A.3 | Participation requirements(VVM para 51-54,123-125) |  |  |  |  |  |  |  |  |
| A.3.1 | Do all participating Parties fulfil the participation requirements as follows: | /1/ /55/ | DR CC | Unilateral project,no Annex I Parties,host Party is Nigeria.Nigeria info:-Kyoto Protocol date of signature,none date of ratification,2004-12-10-DNA name,Federal Ministry of Environment(FMEnv) contact person,Mr.Victor(Ayodeji)Fodeke(Head,Special Climate Change Unit).Party fulfils requirements(UNFCCC/55/)Nigeria(host)CountyXCountryYa)Party has ratified the Kyoto Protocolb)Party has designated a Designated National Authorityc)The assigned amount has been determined |  |  |  |  | OK |
| A.3.2 | Do the letters of approval meet the following requirements? | /1/ /44/ /98/ | DR I | Host Party LoA from FMEnv(LoA/44/)Nigeria(host)CountyXCountryYa)LoA confirms that Party has ratified the Kyoto Protocolb)LoA confirms that participation is voluntaryc)The LoA confirms that the project contributes to the sustainable development of the host countryd)The LoA refers to the precise project activity title in the PDDe)The LoA is unconditional with respect to(a)to(d)abovef)The LoA is issued by the respective Party's DNAg)The LoA was received directly by the DNA or the PP |  |  |  |  | OK |
| MoV=Means of Verification,DR=Document Review,I=Interview,CC=Cross-Checking |  |  |  |  |  |  |  |  |  |

MoV = Means of Verification, DR= Document Review, I= Interview, CC= Cross-Checking
CDM Validation Protocol – Report No. 2010-9165, rev. 04

* * *

| Checklist Question |  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- | --- |
| h) In case of doubt regarding the authenticity of the letter of approval, describe how it was verified that the letter of approval is authentic |  | Person who signed was confronted with document during FMEnv interview (Fodeke /98/) |  |  |  |  |
| A.3.3 | Have all private/public project participants been authorized by an involved Party? | /11/44/ | DR | Project participants: The Shell Petroleum Development Company of Nigeria Limited (SPDC). SPDC authorized by Nigeria (LoA /44/). |  | OK |
| A.4 Technical description of the project activity(VVM para 58-64) |  |  |  |  |  |  |
| A.4.1 | Is the project's location clearly defined? | /11/92/95/ | DRI | Published PDD Sect.A.4.1 contains regarding project location:- aerial view, but not suitable for clear project location(see CL1)- description of location is Afam quarter of Okoloma, Oyigbo LGA, Rivers State. According to interview(Agbajogu /92/),a. LGA is comparable to"district",state comparable to"province",b. LGA covers municipalities such as Okoloma.Remark:"Communities"do not refer to area,but to people(Ithunokhe /95/)- reference distance,approx.30km NE of Port Harcourt-coordinates(of SPDC network),between71520"E/45046"Nand71526"E/45053"N. | (CL1) | OK |
| A.5 Public funding of the project activity |  |  |  |  |  |  |
| A.5.1 | In case public funding from Parties included in Annex I is used for the project activity,have these Parties provided an affirmation that such funding does not result in a diversion of | /1/ | DR | No public funding from Annex I Party. |  | OK |

7^{\\circ}15^{\\circ}20^{\\circ}E/4^^{\\circ}50^{\\circ}46^{\\circ}N

7^{\\circ}15^26^{\\circ}E/4^{\\circ}50^{\\circ}53^{\\circ}N.

CDM Validation Protocol – Report No. 2010-9165, rev. 04

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| Checklist Question |  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- | --- |
| official development assistance and is separate from and is not counted towards the financial obligations of these Parties? |  |  |  |  |  |  |
| BApplication of a baseline and monitoring methodologyB.1Methodology applied(VVM para 65-76) |  |  |  |  |  |  |
| B.1.1 | Does the project apply an approved methodology and the correct version thereof? | /1/46/47/50/ | DR | Meth applied is AM0029 version 03(CDM-EB/46).Version is actual at the validation start(2010-07-16)since valid from2008-05-30onwardsand no more recent version issued yet.Tools applied:-Additionality Tool version 5.2(CDM-EB/47).Version is actual at the validation start sincevalid from2008-08-26 onwards-EF Tool version 02(CDM-EB/50).Version is actual at the validation start since valid from2009-10-16 onwards. |  | OK |
| B.1.2 | If applicable,has any specific guidance provided by the CDM EB in respect to the applied methodology been considered? | /1/ | DR | No specific guidance provided.Remark:AM0029 asks to note the general guidance byEB22 on national and/or sectoral policies and regulations with respect to possible subsidies/fiscal incentives. |  | OK |
| B.1.3 | If the project applies a small-scale methodology,does the project also comply with the general guidelines to SSC CDM methodologies,which provides guidelines on equipment capacity, equipment performance/lifetime,baseline identification for type-II/III Greenfield project activities,sampling and other monitoring-related issues? | /1/ | DR | N/A,no small-scale meth. |  | OK |
| B.2 | Applicability of methodology (and tools)(VVM para 65-76) |  |  |  |  |  |
| Insert a row for each applicability criteria of the applied methodology(and tools) |  |  |  |  |  |  |
| B.2.1 | How was it validated that project complies with the following applicability criterion: |  |  |  |  |  |
| (AM0029)1.The project activity is the construction and operation of a new natural gas fired grid-connected electricity generation plant? | /1/3/12/ | DR | Published PDD Sect.A.2 (“Description of the project activity”) combined with PDD Sect.A.4.3 (“Technology to be employed by the project activity”) contains main elements that - project activity is to build and operate new power plant Afam VI of 650 MW fuelled by NG.Evidence is EPC-contract Part 1 Sect.4/3-Afam VI is new capacity addition to Nigeria power grid.Evidence is PPA/12. |  | OK |  |
| B.2.2 | How was it validated that project complies with the following applicability criterion: |  |  |  |  |  |
| (AM0029)2.The geographical/physical boundaries of the baseline grid can be clearly identified and information pertaining to the grid and estimating baseline emissions is publicly available? | /1/98/ | DRI | Baseline grid is Nigeria power grid.Regarding boundaries and publicly available info.DNVa.checked NERC website [http://www.nercng.org/index.php?option=com\_frontpage&itemid=1b.b](http://www.nercng.org/index.php?option=com_frontpage&itemid=1b.b) discussed issue during FMEnv interview(Fodeke /98/)butno evidence that criterion is met(CAR1). | CAR1 | OK |  |
| B.2.3 | How was it validated that project complies with the following applicability criterion:(AM0029)3.Natural gas is sufficiently available in the region or country,e.g.future natural gas based power capacity additions, comparable in size to the project activity,are not constrained by the use of natural gas in the project activity? | /1/9/60/61/62/80/91/94/ | DRICC | Regarding regional availability:SPDC’s Okoloma gas plant is close to Afam VI(Agbajogu /94/) and supplying gas since 2008-10.Gas is so-called non-associated gas meaning gas not produced along with petroleum.Production rate is 240 Mscf/d,while initialER/IRR-Spreadsheet(ECA /9/)ex-anteestimates1300MW consumption rate forAfamVI on650MW(DNV cross-checked to be113Mscf/dusing other SPDC values inER/IRR- |  | OK |

* * *

DET NORSKE VERITAS

| Checklist Question | Rating |
| --- | --- |
|  |  |
| B.2.4 How was it validated that project complies with the following applicability criterion:(Additionality Tool)The document provides a general framework for demonstrating and assessing additionality and is applicable to a wide range of project types.Some project types may require adjustments to this general framework? | / /4 |
| B.2.5 How was it validated that project complies with the following applicability criterion:(EF Tool)The tool may be applied to estimate the OM, BM | / /5 |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  | Spreadsheet). Rest of gas goes to gas grid operator NGC (Agbajogu /91/).Regarding countrywide availability:Sources cross-checked are,a. Gas Master Plan developed to triple production capacity to 2042 Mscf/d by the end of 2009 to enable total gas-fired generating capacity to grow to over6000MW(Tallagprada/60/).Figure updated in the PTFP Roadmap from August 2010/80/to approx.1636 Mscf/d up to April 2011 for a targeted increase of approx.7000MWb.2009 statistics(January)show that Nigeria has the 7th largest proved gas reserves in the world i.e.184 Tcf of proved NG(USIEA Country Brief/61/).Figure updated in 2010(yearend)to9th largest proved gas reserves i.e.5.3Tcm(BP/62/)。 |  |  |
| /7/ | DRCC | DNV cross-checked that AM0029:-makes reference to the latest approved version of the Additionality Tool(CDM-EB/47/)-requires assessment comprising three stepsStep1,application ofTool Sub-steps2b(Option III,benchmark analysis),2c(Calculation and comparison of financial indicators)和2d(Sensitivity analysis)Step2,application ofTool Step4(Common practice Analysis)Step3,application ofTool Step5(Impact of CDM registration)。 |  | OK |
| /0/ | DR | DNV cross-checked that AM0029:-requires the build margin(BM)和 operating margin(OM) approach as specified in the EF |  | OK |

MoV = Means of Verification, DR= Document Review, I= Interview, CC= Cross-Checking

CDM Validation Protocol – Report No. 2010-9165, rev. 04

* * *

| Checklist Question |  | Ref | MoV | Assessment by DNV |
| --- | --- | --- | --- | --- |
|  | and/or CM when calculating baseline emissions for a project activity that substitutes grid electricity, i.e. where a project activity supplies electricity to a grid or a project activity that results in savings of electricity that would have been provided by the grid (e.g. demand-side energy efficiency projects)? |  |  | Tool(CDM-EB/50/)-requires the baseline emissions to be calculated by multiplying the electricity generated with a baseline emission factor EFBI,the lowest value calculated with the EF Tool among three optionsOption 1,the build marginOption 2,the combined margin using a 50/50OM/BM weightOption 3,the emission factor of the technology(and fuel) identified as the most likely baseline scenario. |
| B.2.6 | Is the selected baseline one of the baseline(s) described in the methodology and this hence confirms the applicability of the methodology? | /1/ | DR | Selected baseline(Power generation from NG using OCGT) fits in AM0029 alternative“Power generation using natural gas,but technologies other than the project activity”to be analysed inter alia. |
| B.3 | Project boundary(VVM para77-79) |  |  |  |
| B.3.1 | What are the project's system boundaries(components and facilities used to mitigate GHGs)?Are they clearly defined and in accordance with the methodology? | /1/ /94/ | DR I | Project boundaryin accordance withAM0029includes:-“the project site”i.e. components and facilities on Afam VI project site(GTS plus HRSG and ST checked)-“all power plants connected physically to the baseline grid”i.e.Nigeria power grid(Afam VI connection to existing PHCN Afam substation checked).Project boundaryis clearly defined(by DNV evaluated during physical site inspection/94/). |
| B.3.2 | Which GHG sources are identified for the project?Does the identified boundary cover all possible sources linked to the project activity?Give reference to documents considered to arrive at this conclusion. | /1/ /54/ | DR CC | GHG sources identified are in accordance withAM0029:-“in the calculation of project emissions,onlyCO2emissions from fossil fuel combustionat |

\\mathrm{C O\_{2}}

* * *

DET NORSKE VERITAS

| Checklist Question | R |
| --- | --- |
|  |  |
| B.3.3 Does the project involve other emissions sources not foreseen by the methodologies that may question the applicability of the methodology? Do these sources contribute with more than 1% of the estimated emission reductions of the project? | / |
| B.4 Baseline scenario determination(VVM para80-87,103-105) |  |
| B.4.1 Which baseline scenarios have been identified? Is the list of baseline scenarios complete? | / |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  | the project plant are considered"; project calculates CO2 with NG combusted at Afam VI(CCGT mode) |  |  |

- "in the calculation of baseline emissions, onlyCO2 emissions from fossil fuel combustion in power plant(s) in the baseline are considered"; project calculates CO2 with NG combusted at Afam VI(OCGT mode).
  Other emissions sources foreseen by AM0029(both leakage emissions):
- upstream fugitive methane is similar to both project activity and baseline scenario. Since amount higher in baseline scenario (thus leakage emissions<0), zeroed for conservativeness
- upstream CO2 emissions from LNG.N/A,Afam VI not fuelled by LNG since AlstomGT13E2 designed for gaseous fuels(see Alstom document/54/). \| \| \|
  \| / \| DR \| No other emission sources than foreseen inAM0029. \| \| OK \|
  \| \| \| \| \| \|
  \| / \| DR \| (AM0029 step 1)
  Scenarios identified amongst AM0029 a...d to be analysed inter alia:
  a.The project activity not implemented as aCDM project
  Option 1,“Natural gas power generation using combined cycle(CCGT) technology without \| (CL-2) \| OK \|

\\mathrm{C O\_{2}}

\\mathrm{C O\_{2}}

\\mathrm{C O\_{2}}

* * *

DET NORSKE VERITAS

| Checklist Question | Rating |
| --- | --- |
|  |  |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  | CDM. Efficiency: 50%. Lifetime: 20+ years”, but published PDD Sect.B.4 identifies 50-55% range, see CL2b. Power generation using NG, but technologies other than the project activityOption 2，“Natural gas power generation using open cycle(OCGT).Efficiency:36%.Lifetime:20+ years”，but published PDD Sect.B.4 identifies 36-40% range,see CL2c.Power generation technologies using energy sources other than NGOption 3，“Coal-fired power generation using conventional steam cycle.Efficiency:36-40%.Lifetime:20-30 years”.Not realistic&credible(Nigerian coal of poor quality)Option 4，“Oil-fired power generation using conventional steam cycle.Efficiency:36-40%.Lifetime:20-30 years”.Not realistic&credible(Nigerian refining capacity not sufficient)Option 5，“Large-scale hydropower plant (or cluster of smaller units).Lifetime:>50 years”.Not realistic&credible(no regional resources available)Option 6，“Large-scale array of grid-connected wind turbines.Lifetime:15-20 years”.Not realistic&credible(no regional resources available)Option 7，“Biomass;solar;tidal;wave.Lifetime:20 years”.Not realistic&credible(no regional resources available)Option8.“Nuclear power generation |  |  |

* * *

DET NORSKE VERITAS

| Checklist Question | R |
| --- | --- |
|  |  |
| B.4.2 How have the other baseline scenarios been eliminated in order to determine the baseline? | / |
| B.4.3 What is the baseline scenario? | / |
| B.4.4 Is the determination of the baseline scenario in accordance with the guidance in the methodology? | / / /1 /1 /1 /5 |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  | Efficiency: 30%. Lifetime: 40 years”. Not realistic & credible (Nigerian nuclear policy unresolved) |  |  |
| d. Import of electricity from connected grids, including the possibility of new interconnections |  |  |  |  |
| Option 9, “Import of electricity from connected grids, including new interconnections”. Not realistic & credible (Nigeria as well as linked Niger grid transmission capacity not sufficient). |  |  |  |  |
| Remark: "continuation of the current situation" not to be identified seen the basics of AM0029 (no grid displacement, but additional power generation in deficit power grid). Published PDD says that option “Off-grid diesel power generation” not considered since only for customers with sufficient capital (fuel cost considerably higher than in the case of grid-connected power generation). |  |  |  |  |
| List of baseline scenarios complete. |  |  |  |  |
| / | DR | (AM0029 step 2) |  |  |
| Option 2 identified as the economically most attractive scenario. |  | OK |  |  |
| / | DR | Scenario identified amongst mentioned AM0029 b. Power generation using NG, but technologies other than the project activity: |  |  |
| Option 2, “Natural gas power generation using open cycle (OCGT)”. |  | OK |  |  |
| / | DR | Determination as required in AM0029 since through an investment analysis of remaining alternatives after AM0029 step 1 (see Sect. |  |  |
| B.4.1): |  |  |  |  |
| Option 1, “Natural gas power generation using | CL3 |  |  |  |
| CL4 | OK |  |  |  |
| / |  |  |  |  |
| / |  |  |  |  |
| / |  |  |  |  |
| / |  |  |  |  |

CDM Validation Protocol – Report No. 2010-9165, rev. 04

* * *

DET NORSKE VERITAS

| Checklist Question | Rating |
| --- | --- |
|  | 10/1010/19 |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |  |
| --- | --- | --- | --- | --- | --- |
| 3/4/2 |  | combined cycle(CCGT)”,andOption 2.Details if investment analysis Option 1/2 in accordance with the guidance in the meth:- presented in published PDD Sect.B.4 and initial ER/IRR-Spreadsheet(ECA/9/)- financial indicator is(project-)IRR(before tax)- reasonable justification of input values for critical techno-economic parameters & assumptions as followslifetime20 yrs(Options' specific values)CapEx621.00/508.09MUSD.Option1value from2005EPC-contractPart1Sect.3.0/10/OpExexcl.fuel10.0/8.2MUSD/yr.Option1value calculated2010-06-03(initialER/IRR-Spreadsheet)on the basis ofLTSA(Agbajogu/92)/1.Option1CapExin addition to425.28MUSD(EPC-contractSect.3)includes estimate of extraordinary costs due to2007raid during construction.Thesecosts not relevant2.Option2values derivedfromOption1values throughgeneralOCGT:CCGTratio0.818deducedfrom2010CapExaverages900$/kW(OCGT)和1100$/kW(CCGT).2010Valuesnotacceptablesinceaccordingtosource“investmentcostofCCGThasincreasedfrom$800/kWein2002to$1,100/kWein2009”(ETSAP/56/)CL3)(Options'commonvalues)gasprice1.26USD/MWh,valuefrom2005 |  |  |  |

* * *

DET NORSKE VERITAS

| Checklist Question | Rating |
| --- | --- |
|  |  |
| B.4.5 Has the baseline scenario been determined using conservative assumptions where possible? | / /5 |
| B.4.6 Does the baseline scenario sufficiently take into account relevant national and/or sectoral policies, macro-economic trends and political aspirations? | / /6 /6 |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  | PPA/12/PLF90%,value based on availability factor of95%(as inNERC/63%),butin initialER/IRR-Spreadsheet8750 instead of8760hrs/yr(CL4)electricity price18.7USD/MW(hourly capacitypayment)plus0.50USD/MWh(commodity),values from2005PPAbenchmark is16%,value is approx.minimum ofPrime Lending rate2006-01to2010-03(CBN/64/)-cash flow before tax- preselection ofOption2(IRR17.3%),notOption1(IRR13.8%)-sensitivity analysis±10% forCapExgas priceelectricity price-selection ofOption2. |  |  |
| /8/ | DR | AboveETSAPbased on ratioOCGT:CCGTof0.818would be conservative since other sourceassumesOCGTcostsonly60%ofCCGT(IEA2008issue/58/).Impossible to evaluate sinceseeCL3. | (CL3) | OK |
| /0/1/ | DRCC | Taken into account,sufficientlyyes/no:1.Electric Power Sector Reform(laws® regulations2005),yes2.Gas Master Plan(2009),yes.Sources cross-checked:-Reforms in the power sector,since the newElectric Power Sector Reform legislationin2005,resulted in unbundling ofPHCNinto18companies(6generating,1transmission,and11 |  | OK |

MoV = Means of Verification, DR= Document Review, I= Interview, CC= Cross-Checking

* * *

| Checklist Question |  | Rating |
| --- | --- | --- |
|  |  |  |
| B.4.7 | Is the baseline scenario determination compatible with the available data and are all literature and sources clearly referenced? | / /1 /9 |
| B.4.8 | Is the baseline determination adequately documented in the PDD? |  |
| • All assumptions and data used by the project participants are listed in the PDD and related document to be submitted for registration. The data are properly referenced. |  |  |
| • All documentation is relevant as well as correctly quoted and interpreted. |  |  |
| • Assumptions and data can be deemed reasonable |  |  |
| • Relevant national and/or sectoral policies and circumstances are considered and listed in the PDD. |  |  |
| • The methodology has been correctly applied to identify what would occurred in the absence of the proposed CDM project activity | / |  |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  | distribution companies,Tallagprada/60/)In 2009,the Nigerian government developed a Gas Master Plan that would promote new gas-fired power plants to help reduce gas flaring and provide much-needed electricity generation(USIEA Country Brief/61/)。 |  |  |
| /2/2/2/ | DRCC | Available data, literature clearly referenced in published PDD exceptOpEx excl.fuel10.0/8.2MUSD/yr.Option1value,-Option1OpExvaluecalculatedonthebasis ofLTSA(Agbajogu/92/)notreferencedinpublishedPDD(CL5)-gas/electricitypricevaluesfromPPA/12/notreferencedinpublishedPDD(seeCL5)。 | €L5 | OK |
| / | DR | Baseline determination adequately documented:No,seeCL5No,seeCL3YesYesYes。 | (€L3)(€L5) | OK |

* * *

| Checklist Question |  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- | --- |
| B.5Additionality determination(VVM para93-119) |  |  |  |  |  |  |
| B.5.1What approach/tool does the project use to assess additionality?Is this in line with the methodology? | /1/47/ | DR | Approach is step assessment prescribed in AM0029:Step 1, benchmark investment analysisStep 2, common practice analysis.Approach not in line with AM0029,sinceStep 3, impact of CDM registration,not applied(CL6).Remark: published PDD explains omissionbythe fact that Step 3 requires application of a Step5 no longer described in latest version ofAdditionality Tool(CDM-EB/47/)。 | CL-6 | OK |  |
| B.5.2Have the regulatory requirements correctly been taken into account to evaluate the project activity and the alternatives? | /1/ | DR | N/A,requirements correctly taken into accountfor the baseline scenario determination(seeSects.B.4.1-2)。 |  | OK |  |
| B.5.3Is sufficient evidence provided to support the relevance of the arguments made? | /1/ | DR | N/A, sufficient evidence provided for thebaseline scenario determination(see Sects.B.4.4-7)。 |  | OK |  |
| B.5.4What is the project additionality mainly based on(Investment analysis or barrier analysis)? | /1/ | DR | Additionality based on investment analysis(barrier analysis not applied in accordancewithAM0029)。 |  | OK |  |
| Prior consideration of CDM(VVM para96-102) |  |  |  |  |  |  |
| B.5.5What is the evidence for serious consideration of CDM priorto the time of decision to proceed with the project activity? | /1/48/ | DR | Consideration mentioned:-2003,commissioning bySPDC of studyregarding benefitsin terms of emission reduction through anAfam power plant project-2003-2004, informal contacting betweenShell/SPDC and WB regarding anAfam powerplant project under theCDMbut,evidence not in accordance with involvedCDMEB requirements/48/(CAR2)。 | €AR-2 | OK |  |

CDM Validation Protocol – Report No. 2010-9165, rev. 04

* * *

| Checklist Question |  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- | --- |
| B.5.6 | If the starting date is after 2 August 2008 and before the global stakeholder consultation, has the DNA and UNFCCC confirmed that the project participants have informed in writing of the project's intention to seek CDM status? | /1/ | DR | N/A, since: |  |  |

- starting date 2005-12-09, see Sect. C.1.1
- global stakeholder consultation from 2010-07-16 to 2010-08-14. \| \| OK \|
  \| \| Continuous efforts to secure CDM status (only to be completed if starting date is before 2 August 2008) \| \| \| \| \| \|
  \| B.5.7 \| What initiatives where taken by the project participants from the starting date of the project activity to the start of validation in parallel with the physical implementation of the project activity? \| /1/ /21/ /48/ \| DR \| Initiatives mentioned:
- after 2008-06-27, instruction by SPDC towards ECA regarding PDD based on AM0029 (while basic contract dated 2005-12-07)
- 2010-07-14, signing of agreement with a DOE for validation services (SIEP /21/),
  but,
  initiatives not in accordance with involved CDM-EB requirements /48/ (see CAR 2). \| (CAR-2) \| OK \|
  \| B.5.8 \| When did the construction of the project activity start? \| /1/ /91/ \| I \| 2006-01 (Agbajogu /92/)。 \| \| OK \|
  \| B.5.9 \| When was the project commissioned? \| /1/ /94/ \| DR I \| Project not commissioned when physical site inspection (Agbajogu /94/)。 \| \| OK \|
  \| B.5.10 \| Does the timeline of the project confirm that continuous actions in parallel with the implementation were taken to secure CDM status? \| /1/ \| DR \| Timeline not sufficiently complete (see CAR 2)。 \| (CAR-2) \| OK \|
  \| \| Investment analysis(VVM para 106-112)
  The list of questions below must be adjusted to the parameters in the investment analysis relevant to the project under validation。 \| \| \| \| \| \|
  \| B.5.11 \| Does the project activity or any of the remaining alternatives generate revenues apart from CDM? Is this reflected in the PDD? \| /1/ \| DR \| No remaining alternatives (in accordance with AM0029).
  Revenues from sell of electricity generated.
  Reflected in published PDD Sect. B.5: indirectly, referred to IRR calculation in PDD \| \| OK \|

* * *

| Checklist Question |  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  | Sect. B.4. |  |  |
| B.5.12 | Do any of the alternatives to the project activity involve investment? Is this reflected in the PDD? | /1/ | DR | N/A, no remaining alternatives (in accordance with AM0029). |  | OK |
| B.5.13 | Is the choice of benchmark analysis, investment comparison or simple cost analysis correct? | /1/ | DR | Choice of benchmark analysis prescribed in AM0029. |  | OK |
| B.5.14 | What is the financial indicator? Is it on equity/project basis? Before/after tax? Is the financial indicator in correspondence with the benchmark? | /1/ /93/ | DR I | Indicator is the project-IRR before tax. Benchmark is CBN published rate, not generic project WACC nor corporate WACC (Shobayo /93/). |  | OK |
| B.5.15 | Is the benchmark/discount rate the latest available at the time of decision? | /1/ /49/ /64/ | DR CC | Time of decision (idem starting date) 2005-12-09, see Sect. C.1.1. Benchmark value is 16% i.e. approx, minimum of Prime Lending rate 2006-01 to 2010-03 (CBN /64/), but value not the latest available at the time of decision and not in accordance with involved CDM-EB requirements /49/ (CAR 3). | CAR-3 | OK |
| B.5.16 | Are the underlying assumptions appropriate, e.g. what is considered as waste in the baseline is considered to have zero value? | /1/ | DR | Both amount of output (electricity generated) and partly O&M costs (fuel) are based on PLF of 90%. Appropriate, but 8 750 hrs/yr (see CL 4). | (CL-4) | OK |
| B.5.17 | Does the income tax calculation take depreciation into account? Is the depreciation year in accordance with normal accounting practice in the host country? | /1/ | DR | N/A, indicator is the project-IRR before tax. |  | OK |
| B.5.18 | Is the time period of the investment analysis and operating time of the project realistic? Has salvage value been taken into account? Is working capital returned in the last year of operation? | /1/ /92/ | DR | Time period is 20 yrs idem operating lifetime, therefore realistic.No salvage value indicated, no working capital returned in accordance with announcement during interview (Agbajogu /92/, CL 7). | CL-7 | OK |
| B.5.19 | When a feasibility study report or similar approved by the government is used as the basis for the investment analysis: | /1/ | DR | N/A, no FSR or similar. |  | OK |

* * *

| Checklist Question |  | Rating |
| --- | --- | --- |
|  | Can it be confirmed that the values used in the PDD are fully consistent with the FSR and is the period of time between finalization of the FSR and the investment decision adequate? |  |
| B.5.20 | How was the amount of output (e.g. sales of electricity) assessed? Remember to include all the data sources used and list all the projects that have been used for cross-checking in accordance with VVM paragraph 95. | / /6 /9 |
| B.5.21 | How was the output price (e.g. electricity price) assessed? Were the data available and valid at the time of decision? Remember to include all the data sources used and list all the projects that have been used for cross-checking in accordance with VVM paragraph 95. | / /1 |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
| /3/1/ | DR I | Amount of output is 5118750MWh i.e. electricity generated from650MW installed net capacity and90%PLF.However,8750hrs/yr(seeCL4).☐The plant load factor provided to banks and/or equity financiers while applying the project activity for project financing,or to the government while applying the project activity for implementation approval☐The plant load factor determined by a third party contracted by the project participants(e.g. an engineering company)☑Other approach. |  |  |
| Provide details on how the load factor was validated:project is about additional power generation capacity in a deficit power grid,what explains PLF of90%being close to(technically acceptable)availability factor of95%(as inNERC/63/).Difference between two percentages is due to external factor of grid accessibility not being100%(Agbajogu/91/)。 | (CL4) | OK |  |  |
| /2/2/ | DR CC | Output price is electricity price of18.7USD/MW(hourly capacity payment)plus0.50USD/MWh(commodity),values fromPPA/12/.☐Cross-check against third-party or publicly available sources(e.g.invoices or price indices)☑Review of feasibility reports,public |  | OK |

* * *

| Checklist Question |  |
| --- | --- |
|  |  |
| B.5.22 | How were the investment costs assessed? Were the data available and valid at the time of decision? Remember to include all the data sources used and list all the projects that have been used for cross-checking in accordance with VVM paragraph 95. |
| B.5.23 | How were the O&M costs assessed? Were the data available and valid at the time of decision? Remember to include all the data sources used and list all the projects that have been used for cross-checking in accordance with VVM paragraph 95. |

|  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- |
|  |  |  | announcements and annual financial reports related to the project and the project participants.Provide details on how the output price was validated:electricity price imposed by 2005 PPA and fixed for 20 yrs. |  |  |
| Cat M | /1/ /10/ /49/ /56/ /59/ | DR CC | Investment costs are CapEx 621.00 MUSD, but- CapEx in addition to 425.28 MUSD(EPC-contract Part 1 Sect.3/10/) includes estimate of extraordinary costs due to 2007 raid during construction(see CL3)-value not the latest available at the time of decision and not in accordance with involved CDM-EB requirements/49/(see CAR3).Cross-check against third-party or publicly available sources(e.g.invoices or price indices)Review of feasibility reports, public announcements and annual financial reports related to the project and the project participants.Provide details on how the investment costs were validated:CapEx 425.28/621.00 MUSD is 625/955 USD/kWe.ETSAP/56/range is 800(2002)to1100 USD/kWe(2009),specific construction costs for gas-fired generating technologies are between400and800USD/kWe according to NEA/IEA/59/(2005 issue). | (CAR3)(CL3) | OK |
| able l en ph | /1/ /9/ /12/ /49/ /51/ | DR CC | O&M costs are:- OpEx excl.fuel 10.0 MUSD/yr, value calculated 2010-06-03(initial ER/IRR-Spreadsheet,ECA/9/)on the basis ofLTSA(Agbajogu/92/) | (CAR3) | OK |

* * *

DET NORSKE VERITAS

| Checklist Question |  | Rating |
| --- | --- | --- |
|  |  | /5/5/9 |
| B.5.24 | Describe the assessment of the other input parameters.Were the data available and valid at the time of decision?Remember to include all the data sources used and list all the projects that have been used for cross-checking in accordance with VVM paragraph 95. | / |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
| 6/9/22 |  | -gas price 1.26 USD/MWh, value from PPA /12/, but OpEx value not the latest available at the time of decision and not in accordance with involved CDM-EB requirements /49/(see CAR 3).Cross-check against third-party or publicly available sources (e.g.invoices or price indices)Review of feasibility reports, public announcements and annual financial reports related to the project and the project participants.Provide details on how the O&M costs were validated:-OpEx 10.0 MUSD/yr is2.4/1.6% of CapEx 425.28/621.00 MUSD.ETSAP /56/value for gas-fired power is4%15 USD/kWe.2010 Specific annual O&M costs range for gas-fired power plants is4.92-47.36USD/kWe according to NEA/IEA /59/-gas price imposed by 2005 PPA and fixed for20 yrs,1.26 USD/MWh being0.35 USD/GJ.2010 Gas price range is3.5-4.5 USD/GJ according to NEA/IEA. |  |  |
| / | DR | No other input parameters:- taxes N/A, indicator is the project-IRR before tax-other costs:none.Cross-check against third-party or publicly available sources(e.g.invoices or price indices)Review of feasibility reports,public announcements and annual financial reports related to the project and the project participants. |  | OK |

* * *

| Checklist Question |  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  | Provide details on how other input parameters were validated: | (CAR3) (CL4) | OK |
| B.5.25 | Was the financial calculation spreadsheet verified and found to be correct? | /1/9/49/ | DR | Initial ER/IRR-Spreadsheet(ECA/9/)verified,but not correct:-input values not the latest available at the time of decision and not in accordance with involvedCDM-EB requirements/49/(see CAR3)-8750hrs/yr(see CL4).Conclusion of investment analysis is that project activity is not financially attractive(IRR13.8%comparedwith16%benchmark). |  | OK |
| B.5.26 | Sensitivity analysis:Have the key parameters contributing to more than 20% of the revenue/costs during operating or implementation been identified?Has possible correlation between the parameters been considered? | /1/93/ | DR | Parameters identified:-CapEx- gas price-electricity price(hourly capacity payment plus commodity).OpEx not identified seen correlation betweenOpEx and CapEx(Shobayo/93/). |  | OK |
| B.5.27 | Sensitivity analysis:Is the range of variations is reasonable in the project context? | /1/ | DR | Range of variations reasonable:-CapEx, IRR16.04%when-10%-gas price, IRR14.2%when-10%-electricity price, IRR16.4%when+10%。 |  | OK |
| B.5.28 | Have the key parameters been varied to reach the benchmarkand the likelihood of this to happen been justified to be small? | /1/ | DR | Parameters not varied to reach the benchmark(CAR4)。 | CAR4 | OK |
| Barrier analysis(VVM para113-116) |  |  |  |  |  |  |
| B.5.29 | Are the barriers identified complimentary to a potential investment analysis?Does the barrier have a clear impact on the financial returns so that it can be assessed in an investment analysis?Each barrier is discussed separately. | /1/ | DR | N/A, barrier analysis not applied in accordance withAM0029。 |  | OK |
| B.5.30 | How were the investment barriers assessed to be real?Are the investment barriers substantiated by a source independent | /1/ | DR | N/A。 |  | OK |

MoV = Means of Verification, DR= Document Review, I= Interview, CC= Cross-Checking

CDM Validation Protocol – Report No. 2010-9165, rev. 04

* * *

| Checklist Question |  | Ref | MoV | Assessment by DNV |  | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | of the project participants? |  |  |  |  |  |  |
| B.5.31 | How does CDM alleviate the investment barriers? | /1/ | DR | N/A. |  |  | OK |
| B.5.32 | Is the project activity prevented by the investment barriers and at least one of the possible alternatives to the project activity is feasible under the same circumstances? | /1/ | DR | N/A. |  |  | OK |
| B.5.33 | How were the technological barriers assessed to be real? Are the technological barriers substantiated by a source independent of the project participants? | /1/ | DR | N/A. |  |  | OK |
| B.5.34 | How does CDM alleviate the technological barriers? | /1/ | DR | N/A. |  |  | OK |
| B.5.35 | Is the project activity prevented by the technological barriers and at least one of the possible alternatives to the project activity is feasible under the same circumstances? | /1/ | DR | N/A. |  |  | OK |
| B.5.36 | How were the barriers due to prevailing practise assessed to be real? Are the barriers due to prevailing practise substantiated by a source independent of the project participants? | /1/ | DR | N/A. |  |  | OK |
| B.5.37 | How does CDM alleviate the barriers due to prevailing practise? | /1/ | DR | N/A. |  |  | OK |
| B.5.38 | Is the project activity prevented by the barriers due to prevailing practise and at least one of the possible alternatives to the project activity is feasible under the same circumstances? | /1/ | DR | N/A. |  |  | OK |
| B.5.39 | How were the other barriers assessed to be real? Are the other barriers substantiated by a source independent of the project participants? | /1/ | DR | N/A. |  |  | OK |
| B.5.40 | How does CDM alleviate the other barriers? | /1/ | DR | N/A. |  |  | OK |
| B.5.41 | Is the project activity prevented by the other barriers and at least one of the possible alternatives to the project activity is feasible under the same circumstances? | /1/ | DR | N/A. |  |  | OK |

* * *

| Checklist Question |  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- | --- |
| Common practice analysis(VVM para 117-119) |  |  |  |  |  |  |
| B.5.42 | What is the geographical scope of the common practice analysis?Is this justified? | /1/ | DR | No geographical scope indicated(CAR5). | CAR-5 | OK |
| B.5.43 | What is the scope of technology and size(e.g. capacity of power plant) for the common practice analysis and how has this been justified? | /1/ | DR | No scope of technology or size indicated(see CAR5). | (CAR-5) | OK |
| B.5.44 | What is the data source(s) used for the common practice analysis? | /1/ | DR | No data source indicated(see CAR5). | (CAR-5) | OK |
| B.5.45 | How many similar non-CDM-projects exist in the region within the scope? | /1/ | DR | None,but see CAR5. | (CAR-5) | OK |
| B.5.46 | How were possible essential distinctions between the project activity and similar activities assessed? | /1/ | DR | N/A,no similar activities,but see CAR5. | (CAR-5) | OK |
| B.5.47 | What is the conclusion of the common practice analysis? | /1/ | DR | Impossible to evaluate since see CAR5. | (CAR-5) | OK |
| Conclusion |  |  |  |  |  |  |
| B.5.48 | What is the conclusion with regard to the additionality of the project activity? | /1/ | DR | Impossible to evaluate since see CARs and CLs. | (CAR-2)(CAR-3)(CAR-4)(CAR-5)(CL-3)(CL-4)(CL-6)(CL-7) | OK |
| B.6Calculations of GHG emission reductionsData and parameters that are available at validationand that are not monitored(VVM para 198-200) |  |  |  |  |  |  |
| B.6.1 | How was the emission factor of electricity generationverified? | /1/ /13/ /50/ /65/ | DRCC | Parameter available at validation is EFBI forcalculation of baseline emissionsBE:BE=EG\*EFBI withEFBI for emission factor of electricity | CAR-6CL-8 | OK |

\\mathrm{B E}=\\mathrm{E G\ ^{\*}}

* * *

DET NORSKE VERITAS

| Checklist Question | Rating |
| --- | --- |
|  | /0 |
|  | /0 |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |  |
| --- | --- | --- | --- | --- | --- |
| 6/7/ |  | generation.Ex-ante EFBI should be determined in accordance with AM0029 i.e. the lower value of3 following Options for calculation.Explanationin published PDD Sect.B.6.1 as followsOption 1,BMEF of the power grid according tothe EF Tool(CDM-EB/50)/Published PDD explains that- since large capacity deficit,Nigeria BMhowever not of the power grid but confined tooff-grid generation(cross-checked Triple-E/65/WB/66/-EF(diesel generation)>> EF(NG generation)based on fuel EFs(cross-checked 2006 IPCCGuidelines/67/)However,determination not clear- choice of Option II as in EF Tool Step 2 not sufficiently substantiated- application of data collection procedures as inEF Tool Annex 2 not described- resulting BMEF value not reported(CAR 6).Option 2,CMEF of the power grid.Published PDD explains that since largecapacity deficit and grid BM none,OM confinedto off-grid diesel generation.Results in CMEFof 0.713tCO2/MWh based on EF of diesel oil of0.0741tCO2/GJ(cross-checked 2006 IPCCGuidelines)和 generation net efficiency of37.4%(ECA/13%).However,determination not in accordance with EF Tool(data collection procedures as inAnnex 2, |  |  |  |

* * *

|  | Checklist Question | Rating |
| --- | --- | --- |
| 2 | How was the oxidation factor of NG verified? | / /6 |
| Baseline emissions(VVM para 88-92) |  |  |
| 3 | Are the calculations documented according to the approved methodology and in a complete and transparent manner? | / / |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  | OMEF calculation as in Steps 3 and 4, CMEF calculation as in Step 7, see CAR 6).Option 3, EF of technology/fuel of baseline scenario selected (“Natural gas power generation using open cycle (OCGT)”) being3.6\*COEFB1/ηBl withCOEFB1 EF of NG(0.0561tCO2/GJ,cross-checked2006IPCCGuidelines)ηBl OCGT net efficiency(36%,project value).Results in0.561tCO2/MWh.Howeverin publishedPDD Sect.B.6.2,OCGTnetefficiencyvalueincluded insteadofEFB1value(CL8). |  |  |
| /7/ | DRCC | Parameter available at validation isOXID for determination ofNG emission coefficient COEFforcalculationofprojectemissions:COEF=NCV _EF_ OXIDwithOXIDforoxidationfactorofNG.OXIDestimatedas0.995according toECA“asperlatestIPCCguidelines”,butcross-checked2006IPCCGuidelines/67/do notmentioncitedvalue(CL9). | CL9 | OB |
| / / | DR | Ex-postcalculationdocumentedinpublishedPDDandinitialER/IRR-Spreadsheet(ECA/9/):BE=EG\*EFB1withEGforelectricitygeneratedEFB1for emissionfactor perunit of electricity.AccordingtoAM0029,yes.Mannercompleteandtransparent,yes/no:EFB1determinedex-ante,seeSect.B.6.1,noseeCAR6,seeCL8 | (CAR6)(CL8)CL10 | OB |

\\mathbf{t C O\_{2}/M W h}.

\\mathrm{t C O}\_{2}/\\mathrm{G J}

* * *

| Checklist Question |  |
| --- | --- |
|  |  |
| B.6.4 | Have conservative assumptions been used when calculating the baseline emissions? |
| B.6.5 | Are uncertainties in the baseline emission estimates addressed? |
| Project emissions (VVM para 88-92) |  |
| B.6.6 | Are the calculations documented according to the appropriate methodology and in a complete and transparent manner |

|  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- |
|  |  |  | EG monitored, see Sect. B.7. |  |  |
| Ex-ante estimate documenting complete and transparent, yes/no: |  |  |  |  |  |
| EG estimated 5118750 MWh/yr from global capacity(650MW,project value) |  |  |  |  |  |
| PLF(90%,reflects the lack of capacity on the Nigeria power grid)and |  |  |  |  |  |
| -8750hrs/yr(CL10),not complete since not documented in published PDD Sect.B.6.3(see CL10) |  |  |  |  |  |
| EFB1 estimated0.561tCO2/MWh(determined ex-ante),yes. |  |  |  |  |  |
| Above result in ex-ante BE of2874901tCO2/yr. |  |  |  |  |  |
| rating | /1/ | DR | No assumptions found that can be considered not conservative.Remark: according to AM0029“for construction of large new power capacity additions under the CDM,there is a considerable uncertainty relating to which type of other power generation is substituted by the power generation of the project plant”.Ex-ante EFB1 determined in accordance with AM0029(see Sect.B.6.1)guarantees that this uncertainty is addressed in a conservative manner. |  | OK |
| perly | /1/ | DR | No uncertainties addressed explicitly.However,see remark in Sect.B.6.4. |  | OK |
| served? | /1/ |  |  |  |  |
| /9/ |  |  |  |  |  |
| /6/ | DRCC | Ex-post calculationdocumented in publishedPDD and initial ER/IRR-Spreadsheet(ECA/9/):PE=FC\*COEFwith | (CL10) | OK |  |

MoV = Means of Verification, DR= Document Review, I= Interview, CC= Cross-Checking

\\mathrm{P E=F C;^{\*},C O E F}

CDM Validation Protocol – Report No. 2010-9165, rev. 04

* * *

DET NORSKE VERITAS

| Checklist Question | Rating |
| --- | --- |
|  | /6 |
|  | /6 |
|  | /9 |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
| 7/8/4/ |  | FC for NG combustedCOEF for emission coefficient of NG, beingNCV \* EF \* OXID withNCV for NCV of NGEF for emission factor of NGOXID for oxidation factor of NG.According to AM0029, yes.Manner complete and transparent, yes/no:FC monitored, see Sect. B.7NCV monitored, see Sect. B.7EF monitored, see Sect. B.7OXID determined ex-ante, see Sect. B.6.1.Ex-ante estimate documenting complete and transparent, yes/no:FC estimated 1 053 000 000 m³/yr from- global capacity (650 MW, project value)- PLF(90%, reflects the lack of capacity on the Nigeria power grid)-8 750 hrs/yr(see CL 10),- CCGT net efficiency(50%, project value)and- NCV of NG(0.035 GJ/m³, cross-checkedEnibe /68)/,not complete sincenot documented in published PDD Sect.B.6.2(see CL 10)NCV estimated 0.035 GJ/m³(Enibe),yesEF estimated 0.0561 tCO₂/GJ(cross-checked2006 IPCC Guidelines /67/),yesOXID estimated 0.995(determined ex-ante),yes.Above result in ex-ante PE of 2 069 928tCO₂/yr.Remark on NCV estimate:Performance Test |  |  |

\\mathrm{t C O}\_{2}/\\mathrm{G J}

\\mathrm{t C O\_{2}/y r}

CDM Validation Protocol – Report No. 2010-9165, rev. 04

* * *

| Checklist Question |  | R |
| --- | --- | --- |
|  |  |  |
| B.6.7 | Have conservative assumptions been used when calculating the project emissions? | / |
| B.6.8 | Are uncertainties in the project emission estimates properly addressed? | / |
| Leakage (VVM para 88-92) |  |  |
| B.6.9 | Are the leakage calculations documented according to the approved methodology and in a complete and transparent manner? | / |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  | Report for CC/6 contains average figure of48.1 MJ/kg for the“LHV(Fuel Lower Heating Value)”(approx.42.3MJ/Nm3).Figure is calculated from actual composition(2010-05-15/16).During physical site inspection(2010-08-19,Agbajogu/94)/,on-line gas chromatographs in control room indicated resp.40.2MJ/m3and44.4MJ/m3for the2GTs actually in operation. |  |  |
| / | DR | No assumptions found that can be considered not conservative. |  | OK |
| / | DR | No uncertainties addressed. |  | OK |
| / | DR | Assessment(in accordance withAM0029)documented in publishedPDD:-“fugitiveCH4emissions associated with fuel extraction,processing,liquefaction, transportation,re-gasification and distribution of natural gas used in the project plant and fossil fuels used in the grid in the absence of the project activity”;term calculated in accordance withAM0029would result invalue<0since650MWinOCGT mode(baseline scenario)requires higher amount ofNGthaninCCGTmode(project activity)-“in the case LNGisused in the project plant,CO2emissionsfrom fuel combustion/electricity consumptionassociatedwiththeliquefaction,transportation,re-gasificationandcompressionintoa naturalgas transmissionordistribution system”;noLNGusedin theprojectplant. |  | OK |

\\mathrm{C H\_{4}}

\\mathrm{C O\_{2}}

* * *

| Checklist Question |  | R |
| --- | --- | --- |
| B.6.10 | Have conservative assumptions been used when calculating the leakage emissions? | / |
| B.6.11 | Are uncertainties in the leakage emission estimates properly addressed? | / |
| Emission Reductions(VVM para 88-92) |  |  |
| B.6.12 | Algorithms and/or formulae used to determine emission reductions: |  |
| • All assumptions and data used by the project participants are listed in the PDD and related document submitted for registration.The data are properly referenced |  |  |
| • All documentation is correctly quoted and interpreted. |  |  |
| • All values used can be deemed reasonable in the context of the project activity |  |  |
| • The methodology has been correctly applied to calculate the emission reductions and this can be replicated by the data provided in the PDD and supporting files to be submitted for registration. | / / |  |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
| / | DR | Since term calculated in accordance with AM0029 would result in value<0,fugitiveCH4emissions are zeroed. |  | OK |
| / | DR | N/A,fugitiveCH4emissions are zeroed. |  | OK |
| / | DR | Algorithms and/or formulae used: |  |  |
| • Assumptions and data listed in publishedPDD,yes.However,see CAR6,CL8,CL10,and related document submitted for registration,yes(initialER/IRR-Spreadsheet,ECA/9/).Data properly referenced,yes.However,see CL9 |  |  |  |  |
| • Documentation correctly quoted and interpreted,yes.However,see CAR6 |  |  |  |  |
| • Values deemed reasonable,yes |  |  |  |  |
| • Methodology correctly applied to calculate the emission reductions,yes.Howeversee CAR6,CL10. |  |  |  |  |
| Therefore this can be replicated by the datain the PDD and supporting files to be submitted for registration,no. |  |  |  |  |
| Algorithms and formulae result in ex-ante ER of804972tCO2/yr.Butsee aboveCARs&CLs. | (CAR6)(CL8)(CL9)(CL10) | OK |  |  |

\\mathrm{C H\_{4}}

* * *

| Checklist Question |  | Rating |
| --- | --- | --- |
| B.7 Monitoring plan(VVM para 120-122) |  |  |
| Data and parameters monitored |  |  |
| B.7.1 | Do the means of monitoring described in the plan comply with the requirements of the methodology? | / /1 |
| B.7.2 | Does the monitoring plan contain all necessary parameters,and are they clearly described? | / |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  |  |  |  |
| /5/ | DR | Means of monitoring in accordance with AM0029, yes/no:(baseline emissions)annual EG(electricity generated)is based on measurements,yes(project emissions)annual FC(NG combusted)is based on measurements,yesaverage NCV and EF(of NG)are based on measurements,yes。 |  | OK |
| / | DR | Parameters clearly described,yes/no(remark that measured parameters are numbered1 to6and indicatedin publishedPDDAnn.4Fig.A.4.1):(baseline emissions)forEG-EG5generatedbyGTs (“Electricity producedbygas turbines”),yes-EG6generatedbyST (“Electricity producedbysteam turbine”),yes(project emissions)forFC-FC1combustedNGglobally (“Annualquantityoffuel(natural gas)combustedinprojectactivity”),yes-FC2,FC3,FC4combustedNGbyGT1,GT2,GT3 (“Annualquantityoffuel(natural gas)combustedingasturbine#1,#2,#3”),yesother-NCVofsuppliedNG (“Thenetcalorificvalue |  | OK |

* * *

| Checklist Question |  |
| --- | --- |
| B.7.3 | In case parameters are measured, is the measurement equipment described? Describe each relevant parameter |
| B.7.4 | In case parameters are measured, is the measurement accuracy addressed and deemed appropriate? Describe a relevant parameter. |

|  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- |
|  |  |  | (energy content) per volume unit of natural gas used in the calculation of project emissions“), yes- EF of supplied NG (“CO2 emission factor per unit of energy of natural gas used in the calculation of project emissions”), yes.Necessary parameters complete (EG5, EG6, FC1, NCV, EF). |  |  |
|  | /1/ | DR | Measuring equipment described, yes/no:(baseline emissions)for EG5, EG6, main/back-up electricity metersin export point to bus-bar, no sinceno meter type indicated(CL11)(project emissions)for FC1, main/back-up flow meter at gas reception point, no sinceno meter type indicated(CL12)for FC2, FC3, FC4, orifice-plate flow meter at turbine inlet, yesfor NCV and EF, gas chromatograph for chemical analysis of gas reception point sample,yes. | CL11CL12 | OK |
| each | /1/ /16/ | DR | Measuring accuracy addressed/appropriate,yes/no:(baseline emissions)for EG5, EG6,no meter class indicated(see CL11)(project emissions)for FC1,no meter accuracy indicated(see CL12)for FC2, FC3, FC4,no meter accuracy indicated(see CL12)for NCV and EF, sampling/gas chromatograph | (CL11)(CL12) | OK |

(^{\ 6mathrm{{C C}\_{2}}}

* * *

| Checklist Question |  | Rating |
| --- | --- | --- |
|  |  |  |
| B.7.5 | In case parameters are measured, are the requirements for maintenance and calibration of measurement equipment described and deemed appropriate? Describe each relevant parameter. | / /1 |
| B.7.6 | Is the monitoring frequency adequate for all monitoring parameters? Describe each parameter. | / |
| B.7.7 | Is the recording frequency adequate for all monitoring parameters? Describe each parameter. | / |
| Ability of project participants to implement monitoring plan |  |  |
| B.7.8 | How has it been assessed that the monitoring arrangements | / |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  | operation in accordance with O&M Manual /16/, yes. |  |  |
| / 6/ | DR | Maintenance and calibration requirements described/appropriate, yes/no:(baseline emissions)for EG5, EG6,no requirements indicated(see CL11)(project emissions)for FC1,no requirements indicated(see CL12)for FC2,FC3,FC4,no requirements indicated(see CL12)for NCV and EF,sampling/gas chromatograph operation in accordance with O&M Manual /16/,yes. | (CL11)(CL12) | OK |
| / | DR | Monitoring frequency adequate, yes/no:(baseline emissions)for EG5, EG6,continuous measuring, yes(project emissions)for FC1, continuous measuring, yesfor FC2,FC3,FC4, continuous measuring, yesfor NCV and EF, fortnightly sampling, yes. |  | OK |
| / | DR | Recording frequency adequate, yes/no:(baseline emissions)for EG5, EG6,daily,yes(project emissions)for FC1,daily,yesfor FC2,FC3,FC4,daily,yesfor NCV and EF, fortnightly,yes. |  | OK |
| / | DR | a. Location of electricity meters & fuel meters as |  | OK |
|  | described in the monitoring plan are feasible within the project design? | /1/1/1/9 |  |  |
| B.7.9 | Are procedures identified for day-to-day records handling(including what records to keep, storage area of records and how to process performance documentation)? | /1/1/9 |  |  |
| B.7.10 | Are the data management and quality assurance and quality control procedures sufficient to ensure that the emission reductions achieved by/resulting from the project can be reported ex post and verified? | /1/9 |  |  |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
| /4/4/4/4/ | I CC | in published PDD, cross-checked with appropriate SLD (EG5, EG6) /14/ and PID(file)/15/(FC1,NCV and EF). |  |  |
| b. Accuracy levels are as in the national standards(PPA) or industrial standards,cross-checked with Performance Test Report for ST/8/,that indicates“current transformers of accuracy class0.2and voltage transformers of accuracy class0.2”.Therefore accuracy class per industrial standard IEC60688. |  |  |  |  |
| c.Logging system is Afam VI PCS,checked during physical site inspection.Archiving system is Afam VI CCMS(Agbajogu/94/),also for data reporting/ER calculation. |  |  |  |  |
| /6/4/4/ | DR I | According to published PDD Sect.B.7.2,all procedures are outlined in documents called“Afam VI Power Project Operations and Maintenance Reports”:documents contain identification and briefing of responsible personnel regarding meter locations,calibration requirements,monitoring frequency,recording method,...Documents are taken up in O&M Manual/16/,referred to in SPDC’s EMS under ISO 14001(Agbajogu/94/). |  | OK |
| /4/4/ | DR I | Procedures taken up in above mentioned CMMS. |  |  |
| Data management procedures sufficient,since according to published PDD Sect.B.7.2,data management will be performed as follows:-data will be stored on Afam VI CCMS and backed up regularly |  | OK |  |  |

* * *

DET NORSKE VERITAS

| Checklist Question | Rating |
| --- | --- |
|  |  |
| B.7.11 Will all monitored data required for verification and issuance be kept for two years after the end of the crediting period or the last issuance of CERs, for this project activity, whichever occurs later? | / |
| Monitoring of sustainable development indicators/environmental impacts |  |
| B.7.12 Is the monitoring of sustainable development indicators/environmental impacts warranted by legislation in the host country? | /9/9/9 |
| B.7.13 Does the monitoring plan provide for the collection and | / |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
|  |  | \- data will be recorded in a purpose built spreadsheet. |  |  |
| Measured data are logged with Afam VI PCS and recorded/stored in above mentioned CCMS (Agbajogu /94/). |  |  |  |  |
| Procedures for QA/QC sufficient, yes/no:(baseline emissions) |  |  |  |  |
| for EG5, EG6, records to be checked withPHCN's measurements at substation, yes(project emissions) |  |  |  |  |
| for FC1, records to be checked with- supplier's measurements at Okoloma Gas Plant-daily records for FC2, FC3, FC4,yes |  |  |  |  |
| for NCV and EF, records to be checked withSPDC's estimate using SPDC's fortnightly sampling at gas reception point& subsequent analysis with gas chromatography in on-site laboratory.Sampling openings, see PID(photograph)/15/. |  |  |  |  |
| / | DR | Yes as stipulated in published PDD Sect.B.7. |  | OK |
|  |  |  |  |  |
| / | I | According to interviews, development indicators/environmental impacts are monitoredby SPDC as part of their EMP(Okoro/97/)andby FMEnv,and outcome is compared(Fodeke/98/). |  | OK |
| / | DR | No provision in the monitoring plan. |  | OK |

MoV = Means of Verification, DR= Document Review, I= Interview, CC= Cross-Checking

CDM Validation Protocol – Report No. 2010-9165, rev. 04

* * *

| Checklist Question |  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- | --- |
|  | archiving of relevant data concerning environmental, social and economic impacts? |  |  |  |  |  |
| B.7.14 | Are the sustainable development indicators in line with stated national priorities in the host country? | /1/ | DR | N/A, no provision in the monitoring plan. |  | OK |
|  |  |  |  |  |  |  |
| C Duration of the project activity / crediting periodC.1 Start date of project activity(VVM para 96-97,102) |  |  |  |  |  |  |
| C.1.1 | How has the starting date of the project activity been determined?What are the dates of the first contracts for the project activity?When was the first construction activity? | /1//51//92/ | DRI | Published PDD Sect.C.1.1 includes(provisional)starting date in 2010-07(expected commissioning date of steam turbine).However,date of first contracts<2009-01 since 2009-01start of operation in OCGT mode Therefore,2010-07 not in accordance with Glossary ofCDM terms(CDM-EB/51)/According to introductory interview(Agbajogu/92)/-starting date is 2005-12-09(signing date ofEPC-contract)-first construction activity was in 2006-01. |  | OK |
| C.1.2 | Is the stated expected operational lifetime of the project activity reasonable? | /1/ | DR | Stated lifetime is 20 yrs,reasonable. |  | OK |
| C.1.3 | Is the start date,the type(renewable/fixed)和the length of the crediting period clearly defined and reasonable? | /1/ | DR | Crediting period info defined and reasonable,yes/no:-start date is 2010-09-10,yes since 2009-04expected start of operation in CCGT mode-type is fixed,yes-length is 10 yrs,yes. |  | OK |
|  |  |  |  |  |  |  |
| D Environmental Impacts(VVM para 129-131) |  |  |  |  |  |  |
| D.1.1 | Are there any host country requirements for an | /1/ | DR | According to published PDD Sect.D.2, |  | OK |

CDM Validation Protocol – Report No. 2010-9165, rev. 04

* * *

| Checklist Question |  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | Environmental Impact Assessment(EIA), and if yes, is an EIA approved? Does the approval contain any conditions that need monitoring? | /17/ /18/ /22/ /69/ /97/ | I CC | requirements for an EIA exist within the FMEnv. In fact according to interview(Okoro /97/),EIA is governed by a number of host country laws and regulations (amongst others Petroleum Act from 1969,EIA Act No.86 from 1992). These are gathered in documents from:-DPR,the cross-checked EGASPIN /69/-SPDC,the Shell EIA Manual /22./EIA Report by CORDEC /17/,EIA implicitly approved by EIA Certificate(FMEnv /18).Conditions that need monitoring concern FMEnv(authority should monitor impact mitigation in collaboration with other competent authorities and with facilitation from SPDC). |  |  |  |
| D.1.2 | Does the project comply with environmental legislation in the host country? | /1/ /98/ | DR I | According to FMEnv interview,full compliance(Fodeke /98/)。 |  | OK |  |
| D.1.3 | Will the project create any adverse environmental effects? | /1/ /18/ | DR | Adverse effect in water compartment:EIA-certificate /18/ requires SPDC to put in place adequate wastewater treatment to prevent pollution of Imo River。 |  | OK |  |
| D.1.4 | Have identified environmental impacts been addressed in the project design? | /1/ | DR | Yes,otherwise no issuing of EIA-certificate。 |  | OK |  |
| D.1.5 | Has an analysis of the environmental impacts of the project activity been sufficiently described? | /1/ /70/ /97/ | DR I | Analysis based on EIA,sufficiently described,yes/no(details explained during interview,Okoro /97/)-3 phases described,yesa. constructionb. operationc. demolition-per phase described environmental compartmentsa. construction,yes |  | OK |  |

* * *

| Checklist Question | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |  |
| --- | --- | --- | --- | --- | --- | --- |
|  |  |  | workforce/communities health(emphasis on correct use of PPEs), landscape, soil & groundwater, water(Imo River), air, human health(emphasis on SPDC's upgrade of NEPA clinic in Afam quarter), ecosystems, noise nuisance(with reference to EHS Guidelines /70/for noise nuisance)b. operation, yes workforce/communities and human health(emphasis on above mentioned NEPA clinic and SPDC's first-aid training course), soil & groundwater, water(Imo River, EHS Guidelines for water), airc. demolition, yes workforce/communities(see above mentioned PPEs, NEPA and first-aid training), air, human health. |  |  |  |
| D.1.6 Are transboundary environmental impacts considered in the analysis? | /1/ | DR | No transboundary impacts considered. |  | OK |  |
| E Stakeholder Comments(VVM para 126-128) |  |  |  |  |  |  |
| E.1.1 Have relevant stakeholders been consulted? | /1/ /17/ /19/ /20/ /22/ /96/ | DR I | Stakeholders consulted representative,yes/no(details explained during interview,Okoro /96):a.(past consultation events)yes,events in accordance with the EIA requirement,as especially the Shell EIA Manual /22/,amongst others-EIA Scoping Workshop on 2003-06-19,with representatives of 8 Communities within Oyigbo LGA,of competent authorities(FMEnv,Rivers and Abia State Ministries of Environment,Oyigbo LGA)和 of NGOs |  | OK |  |

MoV = Means of Verification, DR= Document Review, I= Interview, CC= Cross-Checking
CDM Validation Protocol – Report No. 2010-9165, rev. 04

CDM Validation Protocol – Report No. 2010-9165, rev. 04

* * *

DET NORSKE VERITAS

| Checklist Question |
| --- |
| E.1.2 Have appropriate media been used to invite comments from local stakeholders? |
| E.1.3 If a stakeholder consultation process is required by regulations/laws in the host country, has the stakeholder consultation process been carried out in accordance with the relevant laws and regulations? |

|  | Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- | --- |
|  |  |  | -EIA Feedback Session on 2004-09-14, with above mentioned representatives plus one of the National Inland Waterways Authority. |  |  |
| b.(actual consultation events) |  |  |  |  |  |
| yes,events in accordance with the EMP(Chapter6of/17/)and especially the Stakeholder Engagement Plan/19/,i.e.to four levels of engagement |  |  |  |  |  |
| 1.for the quarterly Youth Forum,the Youth leaders and Council counsellors from major Communities |  |  |  |  |  |
| 2.for the annual Grassroots Forum,the representatives of all Community segments |  |  |  |  |  |
| 3.annually for the active leaders in the field,the representatives of governmental focal points(State,LGA,...) |  |  |  |  |  |
| 4.annually for the top level leaders,the representatives of Rivers and Abia State. |  |  |  |  |  |
| c.(one further consultation event regarding the CDM) |  |  |  |  |  |
| yes,event on 2010-03-18in order to evaluate the benefits of CDM status for the project.Event attended by53leaders and representatives from Communities affected by the project(including Okoloma,Egberu,Komkom,Afam-Nta,Ayama,Izuoma,Umuosi,Mgbosi,Oyigbo,...).Report involved is/20/. |  |  |  |  |  |
| boy | /1/ |  |  |  |  |
| /19/ |  |  |  |  |  |
| /22/ | DR | Yes,in accordance with Shell EIA Manual /22/(past consultation events)和Stakeholder Engagement Plan/19/(actual events)。 |  | OK |  |
| crh | /1/ |  |  |  |  |
| /17/ | DR | Consultation process is one EIA requirement,see above past consultation events for the project's EIA。 |  | OK |  |
| Cross-Checking |  |  |  |  |  |

CDM Validation Protocol – Report No. 2010-9165, rev. 04

* * *

| Checklist Question |  | Rating |
| --- | --- | --- |
|  | such regulations/laws? | /1 |
| E.1.4 | Is a summary of the stakeholder comments received provided? | /1/9 |
| E.1.5 | Has due account been taken of any stakeholder comments received? | /1/1/9 |

| Ref | MoV | Assessment by DNV | Draft Concl. | Final Concl. |
| --- | --- | --- | --- | --- |
| 19/ |  | Actual consultation events are being carried out in accordance with the project's EMP (Chapter 6 of /17/) and Stakeholder Engagement Plan /19/. |  |  |
| 18/5/ | DR I | Published PDD Sect. E.2 contains the summary for the 2010-03-18 event. Main concerns seem to pertain to: |  |  |

- electricity supply problems(technical items)
- remaining gas flaring, increased noise nuisance(environmental)
- influx of people(social).
  Actual concerns by DNV recorded during the meeting with 4 local representatives(2010-08-19,Ithunokhe/95/):
- repair of damaged landlines in Oyigbo(remark that not SPDC,but PHCN responsibility)
- upgrade of NEPA clinic(cf.Sect.D.1.5)
- availability of Afam VI fire fighting services.In general however,project is improvement locally(electricity supply,less diesel generator noise,better air quality,enhanced employment/business opportunities). \| \| OK \|
  \| 18/5/ \| DR I \| Yes for the original comments from the EIA process,since implicitly evidenced by EIA-certificate(FMEnv/18/).
  Yes for the actual comments,as experienced by DNV during the 2010-08-19 meeting(Ithunokhe/95/). \| \| OK \|

* * *

Table 3 Resolution of corrective action requests and clarification requests

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
| CAR1 The project participants are requested to provide evidence that the project complies with the meth criterion that“the geographical/physical boundaries of the baseline grid can be clearly identified and information pertaining to the grid and estimating baseline emissions is publicly available”. | B.2.2 |
| CAR2 The project participants are requested to provide appropriate evidence for the serious consideration of the CDM prior to the decision to proceed with the project activity e.g. minutes and/or notes related to the consideration of the decision by the Board of Directors, or equivalent, of the project participants, to undertake the project as a CDM project activity(in accordance with the involved requirements,CDM-EB/48/).The project participants are requested to report and evidence appropriate initiatives taken in parallel with the physical implementation of the project activitye.g. documentation related to the sale of the potential CERs, publication in newspapers, interviews with DNA, earlier correspondence on the project with theDNAor theUNFCCC | B.5.5B.5.7B.5.10B.5.48 |

| Response by project participants | Validation conclusion |
| --- | --- |
| Adapted PDD /1/ Sect. A.4.1.2 contains new Fig.3 (“Map of Nigeria baseline grid”) that shows the delineation of the Nigeria power grid. Sources of info:-2009 report by GTZ /71/-2010 article in Int. Journal of Acad. Research /72/.Information pertaining to the power grid is available on IEA website /73/. | Fig.3(geographical/physical boundaries) and IEA website (public information) are sufficient evidence for the fulfilment of the involved meth criterion. |
| OK, CAR closed. |  |
| Bullets in list of adapted PDD Sect.B.5 were explained if corresponding to one of the steps mentioned in the CDM-EB requirements and documents were provided accordingly.Involved bullets/documents for(a) providing evidence for serious consideration of CDM prior to decision(b) reporting and evidencing initiatives parallel with implementation,as follows.(a) Prior to decision:-2003, contract with Triple-E /23/ as the consultant to perform oneNEPA/SPDC cooperative study targeted at constructing transparent and robust Nigerian power sector baseline-2003-11,e-mails between WB’sGGFR and SPDC /24/ on how flaring | Evidence assessed and confirmed to be in accordance with involved CDM-EB requirements(for“existing project activities”since starting date before2008-08-02),with the following remarks.(a) Prior to decision:(awareness of CDM prior to starting date)-performance by (consultant) Triple-E resulted in Triple-E study from 2005/65/-communication between GGFR and SPDC resulted ina.early 2005,RFP from GGFR /27/for one“Nigeria: Carbon CreditDevelopment for Flared Gas to PowerProject”(ultimate submission date2005-08-22) |
| secretariat (in accordance with the involved requirements, CDM-EB/48/) |  |

| Response by project participants | Validation conclusion |
| --- | --- |
| and venting reduction projects can utilize the Kyoto mechanisms to attract carbon credits |  |
| -2004-02-26,e-mail from SIG to SPDC/25/regarding“Afam”as suitable candidate for above GGFR list |  |
| -2004-10-25,letter from SIPC to GGFR/26/with the decisive factors to submit“Afam”as a CDM projecta. the NEPA/SPDC cooperative study(letter says“preliminary evaluation based on Afam generating electricity with lower carbon intensity than other generating options”)b. the investment cost of equipment to perform in CCGT mode(letter says“present consideration of the CDM opportunity of a 600-700 MW CCGT power plant”)c. the possibility of WB support(letter says“successful application of Afam as a GGFR CDM project”)-2005-06-29,PIN for“Afam”/31/from SPDC to PIC-CDM-2005-08-19,LoE for“Afam”from PIC-CDM to SPDC/32/.Evidence provided for starting date is EPC-contract Part 1 Sect.1 signed2005-12-09/10/.(b)Parallel with implementation: | b.2005-05-21,EoI from ECA to-GGFR/28/c.2005-05-25,LoI from GGFR to ECA/29/and subsequent proposal from ECA to GGFRd.2005-12-13,GGFR contract with ECA/30/(CDM benefits decisive factor in decision to proceed)-2004-10-25,letter announcesa.the Board of Directors meeting on2004-10-29 when decision to undertake the project as a CDM project activityb.the final investment decision to be expected in1$^{st}$ half of 2005.Concluded that the project participants have sufficiently indicated-awareness of the CDM prior to the starting date-that CDM benefits were a decisive factor to proceed with the project.(b)Parallel with implementation:-GGFR contracta. amongst others to prepare PDD/new methb.regarding PDD/new CDM meth setup-ECA contract with(DOE)SGS regarding new CDM meth submission to EB |

* * *

DET NORSKE VERITAS

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
|  |  |
| CAR3The project participants are requested to | B.5.15B.5.22-23 |

| Response by project participants | Validation conclusion |
| --- | --- |
| -2005-12-07 to 2006-12-31, ECA performing the GGFR contract for the “Nigeria: Carbon Credit Development for Flared Gas to Power Project”-2006-06-16, ECA contract with SGS/34/ to submit new meth and PDD-2007-01-19, contract with ECA to finalize PDD/new meth-2007-01-30, LoA from PIC-CDM to SPDC/37/-2007-02-05 to 2008-08-02, correspondence with UNFCCC regarding NM0208-2009-08-05, instruction to ECA/40/ to proceed with PDD based on AM0029-2010-04-29, contract with DNV/21/for validation of PDD. Chronology ends up with validation start on 2010-07-16.Adapted PDD Sect.A.4.3 contains new Table 1 (“Background to generating units at Afam power plant”):- existing units which are not operational, date of commissioning, date since when not in operation and the reasons thereof- commissioning dates of Afam VI equipments. | -contract with (consultant) ECAa. followed 2007-01 proposal /35/b. regarding PDD/new CDM meth set-upc. resulted in PDD/new meth NM0208/36/-correspondence with UNFCCC summarized/concluded ina. 2008-06-27, Meth Panel summary recommendation /38/b. 2008-08-02, CDM-EB non-acceptance decision /39/-instruction to (consultant) ECAregarding PDD set-up- contract with (DOE) DNV regarding validation services.Concluded that the project participants have reported and evidenced appropriate initiatives taken in parallel with the physical implementation of the project activity OK,CAR closed.Info in new Table 1 adequate to be taken over in Sect.4.2. |
| Adapted PDD Sect.B.5(as well as adapted ER/IRR-Spreadsheet, ECA/9/) | New details on how adapted values were validated as latest available values |
| utilize the latest available values at the time of the decision for the investment analysis(in accordance with the involved requirements,CDM-EB/49/).Remark:time of decision(idem starting date)2005-12-09,see Sect.C.1.1. | B.5.25B.5.48 |

| Response by project participants | Validation conclusion |
| --- | --- |
| utilizes the following values. |  |
| B.5.15 (benchmark value) |  |
| Adapted benchmark is 17% i.e. downrounded 20053rdquarterly average of Prime Lending rate(CBN). |  |
| B.5.22(investment costs) |  |
| Adapted investment costs are423.80MUSD i.e.SPDCvalue forEPCcontract in Bid Sheet dated2005-10-05/41/.Valuecalculated with“Thermoflow”power industry cost estimating tool. |  |
| B.5.23(O&Mcosts) |  |
| AdaptedO&Mcostsare30.2MUSD/yri.e.CEAvalueforannualLTSArelatedamountinBidSheet.Valuecalculatedwithlowerof3bidsi.e.Siemensinfo(scheduledLTSAcostsof132.64MUSDplusunscheduledof1.68MUSDover15yrsplus26.70MUSDimportduties)andabove17%PrimeLendingrate. |  |
| Conclusion of adapted investmentanalysisis thatprojectactivityisnotfinanciallyattractive(IRR15.8%comparedwith17%benchmark). |  |
| Adaptedsensitivityanalysis: |  |

- CapEx,IRR18.2%when-10%
- OpEx,IRR16.9%when-10%
- gasprice,IRR16.2%when-10% \| plusaccepted,asfollows.
  B.5.15(benchmarkvalue)
  20053rdquarterlyaverageisminimumofPrimeLendingrateinperiod2004-2005(CBN/74/75/).
  Latestavailablequarterlyvaluebefore2005-12-09.
  B.5.22(investmentcosts)
  CapEx423.80MUSD.
  Latestavailablevaluebeforethe2005-12-09value(425.28MUSD,seeEPC-contractPart1Sect.3/10/).
  Acceptedsince423.80MUSDisactualvalue(noestimate)和equalto652USD/kWe.DNVassessmentasfollows:a specificconstructioncostsforgas-firedgeneratingtechnologiesarebetween400and800USD/kWeaccordingtoNEA/IEA/59/(2005issue)
  b.CCGTcapitalcostis500USD/kWaccordingtoIEA2005issue/76/
  c.totalcapitalrequirementwithoutcaptureforanewNGCCplantisbetween515and724USD/kWaccordingto2005IPCCSpecialReport/77/
  d.capitalcostprojectionsforgasturbinepowerplantsvarywithin20%accordingtoa2006WBTechnicalandEconomicAssessment/78/showing \|

* * *

DET NORSKE VERITAS

| Corrective action and/or clarification requests | Reference to Table 2 | Response by project participants | Validation conclusion |
| --- | --- | --- | --- |
|  |  | \- electricity price, IRR 19.5% when+10%.Additional info provided for B.5.23 (gasprice of 1.26 USD/MWh):- a 2004 expectation regarding Nigeriaproducers' price in 2008(World Energy/81%), see [http://www.worldenergysource.com/articles/text/economides\_WE\_v7n1.cfm-](http://www.worldenergysource.com/articles/text/economides_WE_v7n1.cfm-) the US average wellhead price andHenry Hub price in 2005, see [http://en.wikipedia.org/wiki/Natural\_gas\_prices](http://en.wikipedia.org/wiki/Natural_gas_prices). | 2005 capital cost projection forcombined cycle between 570 and 720USD/kWe.(relatively low) capital costs forCCGT typically 570 USD/kWaccording to a 2006 WBCSD IssueBrief /79/.Moreover, checked that ThermoflowInc.is provider of well established andrespected GT thermal modelling andcost estimating software packages( [http://www.thermoflow.com/)).B.5.23](http://www.thermoflow.com/)).B.5.23)(O&M costs)OpEx 30.2 MUSD/yr.Latest available value before the 2005-12-09 value(38.1 MUSD/yr,seeLTSA/33%).Accepted since 30.2 MUSD/yr is actualvalue(no estimate)and equal to-7% of CapEx-47 USD/kWe.DNV assessment as follows:a.% of CapEx for gas-fired powerwould be4% according toETSAP/56/.This value not considered appropriatesince estimate for OECD area andnotreflecting situation in non-OECDcountries e.g.Nigeriab. specific annual O&M costs range forgas-fired power plants would be4.92- |

* * *

DET NORSKE VERITAS

| Corrective action and/or clarification requests | Reference to Table 2 | Response |
| --- | --- | --- |
|  |  |  |

| by project participants | Validation conclusion |
| --- | --- |
|  | 47.36 USD/kWe according to NEA/IEA/59/. This range considered appropriate since from a specialized source, from a 2005 forecast for 2010 and reflecting that O&M costs for gas-fired units vary widely from country to country. Project at high end of range can be illustrated by- most recent existing unit of Afam Power Plant (Afam V, commissioned in 2001) failed due to lack of maintenance in 2005- Afam VI being victim of militant attack and subsequent shutdown in 2007.Regarding additional info provided for B.5.23(gas price of 1.26 USD/MWh):- expected Nigeria producers' price in 2008 was 0.30 USD/mcf(1.26USD/MWh corresponds to 0.35USD/mcf)- US average wellhead price in 2005 was 250-300 USD/1000m³(1.26USD/MWh corresponds to 12USD/1000m³i.e.23x lower)- Henry Hub price in 2005 was 6-8USD/MMBtu(1.26USD/MWh corresponds to 0.37 USD/MMBtu i.e.19x lower).OK,CAR closed. |

* * *

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
| CAR4 The project participants are requested to determine the value of the parameters in the sensitivity analysis at which the IRR value attains the benchmark value. | B.5.28 B.5.48 |

| Response by project participants | Validation conclusion |
| --- | --- |
| Adapted PDD Sect. B.5 contains the following values at which the IRR attains the benchmark. |  |
| CapEx, IRR 17% when -5.3%. |  |
| Condition considered unlikely seen EPC-contract calculation in Bid sheet/41/ with “Thermoflow” tool does not include unforeseen payments (any deviations from the base CapEx would in reality be upward, not downward). |  |
| OpEx, IRR 17% when -11%. Condition considered unlikely seen LTSA related amount not an estimate, but the subject of a contractual agreement and the lower of 3 bids in above Bid Sheet(remark that the project owner has actually chosen a different and higher bid). |  |
| Gas price, IRR 17% when-26%. Any deviation theoretical seen price not an estimate, but the subject of a contractual agreement(remark that the gas price was already imposed by the PPA/12/on 2005-12-09, date of the decision to proceed with the project activity). |  |
| Electricity price, IRR 17% when+3.3%. Condition considered unlikely givena. political sensitivityb. history of low power prices in Nigeria | CapEx upward deviation confirmed in SPDC’s report dated 10 Jun 10/42/(see“Milestones Total”,“Standby Total”being additional costs due to 2007 raid).It is confirmed that the determination of the value of the parameters in the sensitivity analysis at which the IRR value attains the benchmark value does not jeopardize the outcome of the investment analysis. |
| OK,CAR closed. |  |

* * *

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
|  |  |
| CAR5The project participants are requested to provide a common practice analysis in accordance with the Additionality Tool (CDM-EB/47)/, taking into account that:a. an appropriate scope should be chosen for the geography(country/region),the technology(broadly similar),the scale(similar),the environment(laws&regulations, investment climate,access to technology and financing,...)b. appropriate documented evidence should be provided(data source(s)used,...)c.the project activity should be compared to similar activities if anyd.the comparison should result in an appropriate conclusion of the common practice analysis. | B.5.42-48 |

| Response by project participants | Validation conclusion |
| --- | --- |
| c. difficulties with bill collection in Nigeria and Rivers State.Furthermore, electricity price imposed by 2005 PPA. |  |
| Adapted PDD Sect.B.5 shows an elaborated common practice analysis.Performance of Additionality Tool Sub-step4a(analysis of other activities)1. With scopes chosen:- for the geography(national laws & regulations),Nigeria power grid- for the technology(and access to technology),grid connected CCGT power plants actually in operation- for the scale,325-975 MW- for the environment(local laws&regulations,investment climate,access to financing,...),Nigeria,other activities are10 i.e.Alaoji,DeltaII,Egbema,Geregu,Kolo Creek,Obita,Okitipupa,Okpai,Omoku phase II,Sapele.Documented evidence:- general data source is the NCCOsogbo Reports(PHCN/82/)-data source for Alaoji,DeltaII,Egbema,Geregu,Kolo Creek,Okpai isPlatts UDI World Electric Power PlantsData Base [http://www.industcards.com/cc-](http://www.industcards.com/cc-) | Adapted common practice analysis is confirmed to be in accordance with theAdditionality Tool.DNVchecked/retraced elements as follows.a.Scopes chosen:- for geography,justifiable since scope nationwide,not regional- for technology,in accordance withAM0029 since OCGT is baseline scenario type of power plant- for scale,acceptable since±50% of capacity- for environment,acceptable since idem geography.b.Documented evidence provided is appropriate since data from dedicated sources(e.g.Platts,well-known large independent team of journalists dedicated to energy industry, [http://www.platts.com)和](http://www.platts.xn--com)-321g/) official sources(PHCN,CDM-EB regarding Okpai,Nigerian government regarding Geregu).c.d.Comparison to similar activities makes part out of Sub-step4b performance.Conclusion that there are |

* * *

DET NORSKE VERITAS

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
|  |  |

| Response by project participants | Validation conclusion |
| --- | --- |
| nigeria.htm |  |

- data source for Obita is [http://www.total.com/en/ourenergies/natural-gas/power-generation-940907.html](http://www.total.com/en/ourenergies/natural-gas/power-generation-940907.html)
- data source for Okitipupa is [http://www.africancrisis.co.za/Article.php?ID=94582](http://www.africancrisis.co.za/Article.php?ID=94582)&
- data source for Omoku phase II is [http://www.ng.total.com/06\_total\_nigeria\_press/0608\_2Nov2010\_tepng\_news1.htm](http://www.ng.total.com/06_total_nigeria_press/0608_2Nov2010_tepng_news1.htm)
- data source for Sapele is [http://www.ijar.lit.az/pdf/6/2010(4-6).pdf](http://www.ijar.lit.az/pdf/6/2010(4-6).pdf).

2. Since:

- Alaoji, Egbema, Obita, Okitipupa, Omoku phase II actually not in operation
- Delta-II, Kolo Creek < 325 MW
- Sapele > 975 MW, similar activities are 2 i.e.
- Geregu, 414 MW grid-connected of which 276 MW CCGT
- Okpai, 480 MW grid-connected CCGT.
  Performance of Sub-step 4b (discussion of similar activities)

3. Since:

- Geregu was entirely financed by \| essential distinctions regarding financing between project activity and similar activities is justifiable on the basis of evidence provided.
  Application of §47:
- project activity confirmed to be measure b of §6 since switch of technology (OCGT to CCGT) without change of energy source (natural gas)
- 325-975 MW acceptable as applicable output range since +/-50% of project's 650 MW installed net capacity
- Nigeria power grid acceptable as applicable geographical area since covers host country
- determination of Nall (5), Ndiff (5) and F (0) confirmed to be correct
- concluded that F<0.2 and Nall-Ndiff<3 and therefore project no “common practise”.
  OK, CAR closed. \|

* * *

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
|  |  |

| Response by project participants | Validation conclusion |
| --- | --- |
| federal government funds |  |

- Okpai operator is project participant in Kwale CDM-project (gas flaring reduction project, Reg. nr. 0553) and activity is set up to create a market for the Kwale gas, essential distinctions regarding financing between project activity and similar activities.
  Documented evidence:
- additional data source for Geregu is [http://www.nigeriaelectricityprivatisation.com/wp-content/uploads/downloads/2011/01/Geregu-Genco-2011-01-13.pdf](http://www.nigeriaelectricityprivatisation.com/wp-content/uploads/downloads/2011/01/Geregu-Genco-2011-01-13.pdf)
- additional data source for Okpai is [http://cdm.unfccc.int/Projects/DB/DNV-CUK1155130395.3/view](http://cdm.unfccc.int/Projects/DB/DNV-CUK1155130395.3/view).
  Application of §47(four step determination of F and Nall-Ndiff)
  4.(Step 1) applicable output range is 325-975 MW
  (Step 2) Nall is 5 out of 19 plants based on applicable geographical area(Nigeria power grid,Nesco excluded), operation start >project activity(>2005-12-09,6 plants excluded)和CDM registration(Okpai excluded)
  (Step 3) Ndiff is 5 based on different technology(hydropower,OCGT) \| \|

* * *

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
|  |  |
| CAR6The project participants are requested to perform the determination of EFBl in full accordance with AM0029:a. choice of Option II as in EF Tool Step 2 should be sufficiently substantiatedb. application of data collection procedures as in Step 1 of EF Tool Annex 2 should be describedc. resulting BMEF value should be reportedd. OMEF should be calculated as in EF Tool Steps 3 and 4e. CMEF should be calculated as in EF ToolStep7. | B.6.1B.6.3B.6.12 |

| Response by project participants | Validation conclusion |
| --- | --- |
| (Step 4) Nall = Ndiff, therefore F is 0 and Nall-Ndiff is 0. |  |
| Adapted PDD Sect. B.6.1 and also provided EF-Spreadsheet (ECA /43/) contain a determination of EFB1 intended to be in accordance with AM0029 (and the EF-Tool) and resulting in the lower value of 3 Options that are fully elaborated. Adaptation details regarding Options 1 and 2 as follows. |  |
| a.(substantiation of choice of Option II in EF Tool Step 2) |  |
| Off-grid capacity in 2009 would be a minimum of 6 GW according to an estimate in the PTFP Roadmap /80/, grid capacity 8.175 GW according to the 2009 NCC Osogbo Report(PHCN/82/). |  |
| b.(data collection of data in accordance with Step 1 of EF Tool Annex 2) |  |
| Data are statistically evaluated based on sampling(option b in Step 1 of Annex 2).See new Table 10 (“Step by step approach for off grid data collection”): |  |

- Step 1.1, data collected are CAP(global),TECH,FUEL,GRID(true)和SWITCH(true).No additional data available/collected
- Step 1.2, classification according to \| Determination of EFB1 is confirmed to be in accordance with AM0029:
- EF-Spreadsheet refers to EF Tool version 2.2.1 instead of 02(version 2.2.1 is actual since valid from 2011-09-29)
- DNV checked/recalculated items in EF-Spreadsheet, see DNV file AfamPDD Baseline EF calculationsv2\_annotated.xlsx.
  a.By PTFP Roadmap is confirmed that inclusion of off-grid power plants in EFB1 is allowed since in accordance with EF Tool Annex 2,“total capacity of off-grid power plants is at least 10% of the total capacity of grid power plants”(it is approx.73%).See worksheet “off-grid 1”.
  b.Table 10 and additional text sufficiently explain that Step 1 data collection procedures regarding off-grid generation have been applied.
  c.Resulting BMEF is checked to be in accordance with EF Tool and cited sources are cross-checked:
- for Option I determination of samplem& calculation of 0.519 tCO2/MWh in worksheet“GRID ONLY Option 1” \|

\\mathrm{t C O\_{2}/M}

* * *

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
|  |  |

| Response by project participants | Validation conclusion |
| --- | --- |
| CAP, TECH, FUEL in residential, commercial and industrial generators with average 302 kW(CAP), reciprocating engine(TECH)and diesel oil(FUEL).See worksheet“off-grid2”Step 1.3，data is collected for the whole economyStep 1.4N/A，no own surveyStep 1.5，no own surveyby project participants，but use of existing data froma)Tyler article in Findings221from2002/83/b)Triple-E study from2005/65/in particular the Lagos area database.See worksheet“off-grid2”，c)University of Chicago study from2006/84/d)above PTFP Roadmap from2010.c.(resultingBMEF)Option1chosen i.e.ex-ante calculation based on most recent info available on power units already built.BMEF calculated through∑(EGm\*EFelm)/∑EGm，whereEGm net electricity generatedEFelm emission factor of electricity generation.sample group of units)-for grid power units，identification of18 plants fromNCC Osogbo Reports,i.e.3 hydropower，14 gas(incl.Okpai, | -for OptionIIof0.613tCO2/MWhin worksheet“INCL OFF GRID Option1”.dcalculation ofOMEFis checked to be in accordance with EF Tool. Step3，simple OM method allowed since from worksheet“GRID ONLY Option2”，2005to2009 average low cost/must run generation%是32%(EF Tool requires<50%).DNVhas verified the involved worksheet“GRID ONLY Option2”和 has found the calculation to be correct. Step4，OMEFis checked to be in accordance with EF Tool and cited sources are cross-checked:-for OptionIcalculation of0.573tCO2/MWhin worksheet“GRID ONLY Option2"-for OptionIIof0.585tCO2/MWhin worksheet“INCL OFF GRID Option2".e.Calculation ofCMEFis checked to be in accordance with EF Tool Step7:-for OptionIcalculation of0.546tCO2/MWhin worksheet“GRID ONLY Option2"-for OptionIIof0.599tCO2/MWhin worksheet“INCL OFF GRID Option“INCL OFF-GRID Option2”. |
|  |  |

| Response by project participants | Validation conclusion |
| --- | --- |
| CDM registered), 1 diesel (Geometric) - for off-grid generation, 3 vintage classes, <5yrs, 5-to-10yrs, >10yrs from capacity addition assessment based on above Triple-E study(1974 to 2002)& interpolation up to total capacity6 GW from PTFP Roadmap(2003 to 2009). Determination of a BMEF sample group for both calculation Options I (inclusion of only grid plants) and II (grid plus off-grid plants). For Option I, determination of SETsample-CDM comprising8 grid plants (SET≥20% excluding plants>10yrs-one, Shiroro-,but including CDM plants-one, Okpai-). Calculation result is0.519tCO2/MWh with-EGm, net electricity generated in2009(from2009NCCOsogboReport)-EFelm, emission factor of electricity generation using eitherFCm _NCV_ EFCO2/EGm(gas consumption FCfromNAOC data/85/-Okpai-or2009NCCOsogboReport,net calorific valueNCV0.035GJ/m3fromEnibe/68/,CO2emission factorEFof56.1tCO2/TJfrom2006IPCCGuidelines/67/)or3.6\*EFCO2/η(average net energy | Regarding the additional adaptation of theOption3value,DNVhasverifiedworksheets“GRIDONLYOption3”and“INCLOFF-GRIDOption3”:39.5%fromEFToolAnnex1(forplantsinopencycle>2000)是in accordancewith methrequirementsinceappropriateforthetechnology(andfuel)ofthebaselinescenario (“Naturalgaspowergenerationusingopencycle(OCGT))”.AdapteddeterminationofEFB1resultsinanex-anteERof550234tCO2/yr insteadofpublished804972tCO2/yr.OK,CARclosed. |

\\mathrm{S E T}\_{\\mathrm{s a m p l e-C D M}}

\\mathrm{(SET\_{\\geq 20%}}

\\mathrm{t C O\_{2}/y r}

\\mathbf{t C O\_{2}/M W h}

92\\;\\mathrm{t C O\_{2}/y r}.

\\mathrm{C m,^{ _},N C V,^{_},\\dot{E F}\_{C00}/E G m,}

\\mathrm{C O\_{2}}

\\mathrm{G J/m^{3}}

\ 6.1,\\mathrm{t{C0}}/\\mathrm{{}Gamma!,r i o,\\2{006},\ {!P P C!}}

3.6,^{\*},{\ \ {E}F\_{C o2}/\\up{up}}

* * *

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
|  |  |

| Response by project participants | Validation conclusion |
| --- | --- |
| conversion efficiency $\\eta$ from EF Tool Annex 1 i.e.39.5% for plants in open cycle>2000,60% in combined cycle>2000).For Option II,determination of SET≥20% comprising7 grid plants and2 off-grid vintage classes.Calculation result is0.613tCO2/MWh with additionally for the off grid classes-EGm,net electricity generated usingCAPm _PLFdefault,off-grid_ 8760(class total capacity CAP from above capacity addition assessment,default plant load factor PLF of300hrs/yr full capacity)-EFelm, emission factor of electricity generation of0.673tCO2/MWh using3.6\*EFCO2/η(CO2 emission factor EF of74.1tCO2/TJfrom2006IPCCGuidelines,average net energy conversion efficiency$\\eta$ based on weighted average capacities from Lagos area database& default efficiencies from EF Tool Annex1i.e.33%/37%/42% for residential/commercial/industrial generators with reciprocating engine & nominal capacity of30/121/905kW).BMEF calculated as0.519tCO2/MWh(only grid plants)and0.613tCO2/MWh(incl.off-grid plants). |  |

\\mathrm{S E T}\_{\\geq20%}

\\operatorname{C A P m\ _L P F\_d e f a u l t,o f f-g i i d}_\

3.6,^{\*},{\\mathrm{E F\_{C O0}/n}},{\\mathrm{n}\ (\\mathrm{C O\_{2}}}

0.519,\\mathrm{t C O\_{2}/M W h}

0.613,\\mathrm{t C O\_{2}/M W h}

* * *

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
|  |  |

| Response by project participants | Validation conclusion |
| --- | --- |
| d. (OMEF calculation in accordance with EF Tool Steps 3 and 4) |  |
| Simple OM method is applied(low cost/must run i.e. hydro counts for approx.32% of 2005-09 average generation). |  |
| For Option I,calculation covers identified 14 gas plants(diesel plant Geometric not being operated)and result is0.573tCO2/MWhwith |  |
| -EGm,net electricity generated in2007-2009(from NCC Osogbo Reports) |  |
| -EFelm, emission factor of electricity generation,see abovec. |  |
| For Option II,calculation covers14 gas plants and identified3 off-grid vintage classes and result is0.585tCO2/MWhwith additionally for the off grid classes |  |
| -EGm,net electricity generated,see abovec |  |
| -EFelm, emission factor of electricity generation being above0.673tCO2/MWh. |  |
| e.(CMEF calculation in accordance with EF Tool Step 7) |  |
| CMEF calculated for both calculation OptionsI andIIby averaging BMEF and OMEF.CMEFof: |  |
| -0.546tCO2/MWhforOptionI |  |
| -0.599tCO2/MWhforOptionII. |  |

* * *

DET NORSKE VERITAS

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
|  |  |
| CL1 The project participants are requested to:- replace the aerial view of the plant with a map of the surroundings(PDD Sect.A.4.1.2)- include a layout of the plant(PDD Sect.A.4.3)- possibly supplement the layout with said aerial view. | A.2.4A.4.1 |
| CL2 The project participants are requested to replace the efficiency ranges in PDD Sect.B.4 for Option1(50-55%)andOption2(36-40%)with the project specific values(50 and | A.2.6B.4.1 |

| Response by project participants | Validation conclusion |
| --- | --- |
| Additional adaptation details regarding Option 3 as follows. |  |
| Published value of 0.561 tCO2/MWh recalculated to be 0.511 tCO2/MWh through 3.6\*COEFBl/ηBl with ηBl of 39.5% from EF Tool Annex 1 (for plants in open cycle>2000) instead of 36%(project value). |  |
| Adapted value does not alter conclusion that Option 3 EF should be chosen since 0.511 tCO2/MWh still the lower value of the 3 Options. |  |
| Adapted PDD Sect.A.4.1.2 contains the following information regarding the plant's location: |  |

- new Fig.1(“Map of the Afam VI project site and surrounding area”) shows a map of the project site and its surrounding area
- new Fig.2(“Plot plan showing layout of the Afam VI project site”) shows a plot plan of the site
- new Fig.3(“Map of Nigeria baseline grid”) shows a map of the Nigeria power grid and its clear delineation. \| Fig.3(covering Nigeria)和Fig.1(covering Okoloma) are sufficiently suitable for a clear project location.
  Fig.2(covering Afam VI) is sufficiently suitable as a layout of the plant.
  OK,CL closed. \|
  \| Adapted PDD Sect.B.4 indicates the following values:
- 50% for Option1
- 36% for Option2.
  Adapted PDD Sect.B.4 also contains \| It is checked if PDD was corrected with project values instead of ranges.
  OK,CL closed. \|

\\mathbf{t C O\_{2}/M W h}

\\mathfrak{t C O\_{2}/M W h}

* * *

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
| 36%) |  |

| Response by project participants | Validation conclusion |
| --- | --- |
| adapted Table 5 (“Consideration of baseline scenario options”). Not realistic or credible: |  |

- (Option 3, “Coal-fired power generation using conventional steam cycle”) since a. only limited involvement from Nigerian Government in stimulating coal-fired power generation (PTFP Roadmap from August 2010/80/)
  b. higher capital costs than gas-fired CCGT(2200 USD/kW compared to 1100,ETSAP/87/compaired to/56/)
- (Option4,“Oil-fired power generation using conventional steam cycle”) since insufficient oil refining capacity in Nigeria.See USIEA Country Brief/61/update Aug 11,cited in article on OilGasArticles website [http://www.oilgasarticles.com/articles/88/1/Downstream-Oil-and-Gas-and-Refining-in-Nigeria/Page1.html)Insufficiency](http://www.oilgasarticles.com/articles/88/1/Downstream-Oil-and-Gas-and-Refining-in-Nigeria/Page1.html)Insufficiency) illustrated in articles on AllAfrica website [http://allafrica.com/stories/201108081342.htmlhttp://allafrica.com/stories/201102110404.htmlRefined](http://allafrica.com/stories/201108081342.htmlhttp://allafrica.com/stories/201102110404.htmlRefined) products would need to be imported at a much higher cost \| \|

* * *

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
|  |  |

| Response by project participants | Validation conclusion |
| --- | --- |
| compared to domestic fuel(s) such as natural gas. Oil price illustrated in article on BusinessDay website [http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/18992-companies-profits-jobs-in-danger-as-diesel-price-hits-roof-](http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/18992-companies-profits-jobs-in-danger-as-diesel-price-hits-roof-) (Option 5,“Large-scale hydropower plant(or cluster of smaller units)”) since no regional resources available(Nigeria Vision 2020 Program /88/) and limited involvement from Nigerian Government(see PTFP Roadmap)- (Option 6,“Large-scale array of grid-connected wind turbines”) since no regional resources available and limited involvement from Nigerian Government(see Nigeria Vision 2020 Program)- (Option 7,“Biomass; solar; tidal; wave”) since no regional resources available and higher capital costs(see Nigeria Vision 2020 Program)- (Option 8,“Nuclear power generation”) since limited involvement from Nigerian Government(see Nigeria Vision 2020 Program)- (Option 9,“Import of electricity from |  |

* * *

DET NORSKE VERITAS

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
|  |  |
| CL3The project participants are requested to provide a straightforward investment analysis for the baseline scenario determination:1. CCGT CapEx should not include extraordinary costs above the typical CCGT CapEx(e.g. an additional estimate taking into account the cost due to the 2007 raid during construction)2. project specific values for the critical techno-economic parameters & assumptions(e.g. the 2005 CapEx for CCGT according to the EPC-contract)should not be mixed-up with general projected values(e.g. the 2010ETSAP ratio OCGT:CCGT). | B.4.4-5B.4.8B.5.16B.5.22B.5.48 |

| Response by project participants | Validation conclusion |
| --- | --- |
| connected grids, including new interconnections”) since Nigeria grid as well as linked Niger grid transmission capacity not sufficient. See WB Report No. 32149 /89/. Zero import of electricity illustrated on Index Mundi website [http://www.indexmundi.com/g/g.aspx?c=ni&v=83](http://www.indexmundi.com/g/g.aspx?c=ni&v=83). |  |
| Adapted PDD Sect. B.5 (as well as adapted ER/IRR-Spreadsheet) utilizes the following values:1. CCGT CapExAdapted investment costs are 423.80MUSD i.e. SPDC value for EPC-contract estimate in Bid Sheet dated2005-10-05/41/2. ratio OCGT:CCGTAdapted Option 2 values are derived from Option 1 values through generalOCGT:CCGT ratio 0.70 deduced from350(OCGT)和500 USD/kW(CCGT)capital cost values according toIEA2005 issue/76/. | Checked/reassessed items as follows:1. CCGT CapExEstimate based on 2005 value, therefore before 2007 raid2. ratio OCGT:CCGTValue based on capital cost averages issued 2005, therefore acceptably connected to 2005 CapEx.Seen new input values for critical techno-economic parameters & assumptions in investment analysisOption 1/2,new assessment ofa. reasonable justification of parameters& assumptions:(Options’ specific values)CapEx 423.80/296.66 MUSDOpEx excl.fuel 30.2/21.2 MUSD/yrOption 1 values from 2005 Bid Sheet,Option 2 values derived from Option 1values through generalOCGT:CCGTratio 0.70 deduced from IEA 2005 issue |

* * *

| Corrective action and/or clarification requests | Reference to Table 2 | Response by project participants | Validation conclusion |
| --- | --- | --- | --- |
|  |  |  | (Options' common values)Not adaptedb. preselection of Option 2(IRR27.6%), not Option 1(IRR15.8%).Adapted investment analysis for the baseline scenario determination is confirmed to be sufficiently straightforward and to result in selection of Option 2 as the baseline scenario.OK, CL closed. |
| CL4The project participants are requested to correct the annual amount of electricity(generated)和 fuel (combusted) through adaptation of the erroneous8750hrs/yr in the IRR calculations. | B.4.4B.5.16B.5.20B.5.25B.5.48 | Adapted ER/IRR-Spreadsheet utilizes the correct8760hrs/yr in the IRRCalculations.PDD Sect.B.4 Table 5 isadapted accordingly:Option 1/2 fuel requirement according to amount ofoutput of5124600MWh. | It is checked ifER/IRR-Spreadsheetand PDD were corrected for erroneoushrs/yr value.OK, CL closed. |
| CL5The project participants are requested to include the full references in the PDD:-the EPC-contract- the LTSA- the PPA. | B.4.7-8B.5.23B.5.26B.5.48 | Adapted PDD does not include fullreferences.References can be deduced frominvolved documents/document partsprovided:-for theEPC-contract(Part1Sect.3/10/&Sect.4/3/)short)Daewoo Nigeria Limited,The ShellPetroleum Development Company ofNigeria Limited:ContractNo.E-16681A.EPC forAfamVI650MWPowerProject(long) | It is confirmed that lack of fullreferences in PDD does not jeopardize transparency.OK, CL closed. |

* * *

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
|  |  |

| Response by project participants | Validation conclusion |
| --- | --- |
| Daewoo Nigeria Limited, The Shell Petroleum Development Company of Nigeria Limited:Contract No.E-16681A. Engineering, Procurement, Construction and Commissioning, For Afam VI Combined Cycle Power Generation Plant, BetweenThe Shell Petroleum Development Company of Nigeria Limited,and Daewoo Nigeria Limited, in association withDaewoo Engineering and Construction Incorporated.-for the LTSA/33(short)Alstom Power O&M Limited, Alstom Nigeria Limited, The Shell Petroleum Development Company of NigeriaLimited:Contract No.E-16681B.LTSA for Afam VI 650 MW Power Project(long)Alstom Power O&M Limited, Alstom Nigeria Limited, The Shell Petroleum Development Company of NigeriaLimited:Contract No.E-16681B.LongTerm Services Agreement,ForAfam VI Combined Cycle PowerGeneration Plant,BetweenThe Shell Petroleum DevelopmentCompany of Nigeria Limited,andAlstom Power O&M Limitedand |  |
|  |  |
| CL6The project participants are requested to apply Step3, impact of CDM registration, in order to complete their assessment of the additionalityRemark:“latest version”of the Additionality Tool as in AM0029to be interpretedas“latest version includingStep5”。 | B.5.1B.5.48 |

| Response by project participants | Validation conclusion |
| --- | --- |
| Alstom Nigeria Limited. |  |

- for the PPA/12/
  Power Holding Company of NigeriaPLC, The Shell Petroleum DevelopmentCompany of Nigeria Limited: PowerPurchase Agreement Relating toA276MW Power Generation Facility and APower Generation Facility Of Between630&650MW InAfam,Nigeria.AfamV Purchase Agreement Relating toA276MW Power Generation Facility.AfamI-IV Purchase Agreement,9December 2005. \| \|
  \| Adapted PDD Sect.B.5 contains theconclusion of the Step3 assessmentrequired byAM0029:CDM revenueswould support the continuing operationof the project activity.Evidence is to befound in the adaptedER/IRR-Spreadsheet:IRR calculationwithout/with the CDM resultsin15.8/16.8%,17% being the benchmark.IRR with the CDM makes use of:-a CERs price of7.04 USD/tCO2beingthe primary market transactions averageof2005(WB/90/)-the EFB1value of0.511tCO2/MWh,giving ex-ante ER estimate of550234tCO2/yr.IRR calculation with the0.561tCO2/MWh value determined at the \| AdaptedER/IRR-Spreadsheet isverified and found to be correct,CERsprice source is found to be sound.OK,CL closed. \|

\ {bf t t C} _\\mathrm{O}_{\\mathrm{2}}/{\\bf M W h},

\\mathrm{t C O\_{2}/y r}

\\mathrm{t C O\_{2}M/}

* * *

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
|  |  |
| CL7The project participants are requested to clarify why in the investment analysis:- no salvage value is indicated- no working capital is returned. | B.5.18B.5.48 |
| CL8The project participants are requested to include the value for EFB1 in PDD Sect.B.6.2 instead of the OCGT net efficiency value. | B.6.1B.6.3B.6.12 |
| CL9The project participants are requested to check the value for OXID, oxidation factor of NG,and possibly correct it or its source.Remark: according to PDD Sect.B.6,the | B.6.2B.6.12 |

| Response by project participants | Validation conclusion |
| --- | --- |
| validation start, giving ex-ante ER estimate of 804972tCO2/yr, resulted in 15.6/17.1%, the latter IRR above the 17% benchmark. |  |
| According to adapted PDD Sect.B.4, no salvage value indicated nor working capital returned for two reasons:- the returned working capital would very likely be negligible-a sensitivity analysis for a range of salvage values indicates that IRR is hardly affected(varying between0%和20%ofCapEx results inIRR deviation of maximum1.1%) | It is confirmed that the lack of input for the salvage value and the returned working capital in the IRR calculation does not jeopardize the validity of the investment analysis.OK,CL closed. |
| Adapted PDD Sect.B.6.2 mentions EFBl value determined in accordance with AM0029(Option3,0.511tCO2/MWh)as available at validation instead of the OCGT efficiency(36%) | EFBl value can be considered available at validation since calculated using values available at the validation:-EF of NG(0.0561tCO2/GJ,2006IPCC Guidelines/67/) -ηBl OCGT net efficiency(36%,projectvalue).See CAR6for the correctionto39.5%,default%for gas-firedOCGT units>2000fromAnnex1of theEF Tool(CDM-EB/50/) OK,CLclosed. |
| Adapted PDD Sect.B.6(as well as adaptedER/IRR-Spreadsheet)indicates anOXIDvalue of1being sourced fromthe2006IPCCGuidelines.Ex-anteestimate of the project emissionsPE(as | OXIDvalue of1instead of0.995canbeacceptedas thevalue“asperlatestIPCC guidelines”since one of thechangesin theactual(2006)againsttheformerIPCCGuidelinesversion(1996). |

\\mathbf{t C O\_{2}/M W h}}

* * *

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
| value for OXID“as per latest IPCC guidelines”is estimated as0.995. |  |
| CL10The project participants are requested to correct the ex-ante estimate of EG and FC and to fully document the estimated values in PDD Sect.B.6.3. | B.6.3B.6.6B.6.12 |
| CL11The project participants are requested to provide sufficiently detailed information regarding the measurement of the electricity generated:- meter type-meter class-maintenance and calibration requirements. | B.7.3-5 |
| CL12The project participants are requested to provide sufficiently detailed information regarding the measurement of the NG combusted: | B.7.3-5 |

| Response by project participants | Validation conclusion |
| --- | --- |
| well as emission reductions ER) is corrected accordingly. | It is checked if ER/IRR-Spreadsheet and PDD were corrected for the updated OXID value. |
| OK, CL closed. |  |
| Adapted ER/IRR-Spreadsheet utilizes the correct 8760 hrs/yr in the ex-ante estimate of EG (adapted value 5124600MWh/yr) and FC(1054203429m³/yr).PDD Sect.B.6.3and Sect.B.6.4Table13 are adapted accordingly(550234tCO₂/yr),as well as the PDD Sect.B.7.1Table. | It is checked if ER/IRR-Spreadsheet and PDD were corrected for erroneous hrs/yr value. |
| OK,CL closed. |  |
| Detailed information provided: |  |

- meters are static meter type(EDMI Mk6E)
- class is0.2S,accuracy0.2%
- maintenance and calibration in accordance with requirements in PPA i.e.testing every180days and calibration if difference from any backup system>0.5%.
  PDD Sect.B.7.1Tableiscorrected/completed accordingly. \| It is confirmed that the electricity measuring equipment is appropriate based on provided as well as supplier's information(EDMI [http://www.edmi-meters.com/Products.aspx](http://www.edmi-meters.com/Products.aspx)):
- meter type indicated(static meter)
- accuracy appropriate(0.2%)
- requirements for maintenance and calibration appropriate.
  Testing/calibration frequency appropriate(2x/yr).
  OK,CLclosed. \|
  \| Detailed information provided:
- all flow meters are turbine meter type(Elster-InstrometSM-RI-X).Remarks:a. regarding the meter at gas reception point,PID /15/erroneously indicates ultrasonic meter type \| It is confirmed that the NG flow measuring equipment is appropriate based on provided as well as supplier's information(Elster-Instromet [http://www.elster-instromet.com/en/products\_and\_service](http://www.elster-instromet.com/en/products_and_service)) \|

\\mathrm{t C O\_{2}/y r}

* * *

| Corrective action and/or clarification requests | Reference to Table 2 |
| --- | --- |
| (flow meter at gas reception point) |  |

- meter type
- meter accuracy
- maintenance and calibration requirements
  (flow meter at turbines’ inlet)
- meter accuracy
- maintenance and calibration requirements. \| \|

| Response by project participants | Validation conclusion |
| --- | --- |
| b. in published PDD Sect. B.7.1, orifice-plate meter type is mentioned for the meters at turbines’ inlet. Meters were originally meant to be of this type(see Part 1 Sect.4 of the EPC-contract/3/) but eventually, meters of turbine meter type have been installed- meter at gas reception point is connected to separate flow computer(Elster-Instromet Model 2000)- all meters are“hi accuracy”seen“no specific value indicated”- all meters undergo annual maintenance in accordance with O&M Manual /16/.PDD Sect.B.7.1 Table is corrected/completed accordingly. | s.html):- meter type indicated(turbine meter)- accuracy appropriate(Elster-Instromet“Turbine Gas Meter Handbook” indicates that total uncertainty of turbine meters can be as low as 0.5% and that repeatability can be close to 0.1%)- requirements for maintenance and calibration appropriate.Maintenance frequency appropriate(2x/yr).OK,CL closed. |

* * *

## DET NORSKE VERITAS

**Table 4 Forward action requests**

## Forward action request Reference Response by project participants

## to Table 2

None

- o0o -
  CDM Validation Protocol – Report No. 2010-9165, rev. 04 A-71

* * *

DET NORSKE VERITAS

# APPENDIX B

## CURRICULA VITAE OF THE VALIDATION TEAM MEMBERS

* * *

## DET NORSKE VERITAS

## Validation team members

## Michael Lehmann holds a Master Degree in Environmental Sciences with a specialisation in

environmental chemistry. He has an overall working experience of around 13 years. Since 1999 he has worked in the climate change field and has closely followed the international response to the climate change challenge (UNFCCC, Kyoto Protocol) and the responses by national governments (EU ETS, UK ETS) and business. He has managed the validation and verification of many CDM and JI projects and thas carried out the technical review of numerous climate change project validations and verifications. Through his extensive work with validation and verification of CDM and JI projects, he has aquired sectoral competence within energy generation from renewable energy sources. He has also experience with verifying corporate greenhouse gas emissions and emission reductions from verifying the emissions of the Norwegian process, paper & pulp and oil & gas industry. Earlier, he has managed DNV Research’s R&D activities with the objective to build and to enhance DNV's knowledge in the field of CO2 capture and storage. He also conducted R&D to conclude on measuring systems and reporting formats necessary to accurately and trustworthy report greenhouse gas emission reductions, especially addressing uncertainties. He also provided technical environmental advisory services to clients within the process industry, above all in the field of air emissions. Among others, he developed a methodology for Environmental Risk Assessment for accidental releases of chemicals. **Jan Van Evercooren holds a PhD Degree in Chemistry. Having an overall experience of** around 40 years. Prior to joining DNV having 4 years experience in iron and steel industry covering sampling & analysis of solid bulk materials and assessment of their quality as raw material for pig iron and steel. Also having more than 25 years experience in environmental consulting in various technical areas covering set-up of air pollutant emission inventories, air pollutant emission & immission measuring, air pollution dispersion modelling and environmental impact assessment (EIA). Acknowledgment for actually 20 years as Flemish EIA expert in the domains air pollution and climatological effects. He has experience of around 5 years in validation and verification of CDM/JI projects and other 3rd party validation/verification services. His qualification, industrial experience and experience in CDM demonstrate his sufficient sectoral competence in “Iron and Steel”, “Metal production”, “Coke” and “Waste handling and disposal”. **Ricardo Díaz holds a Bachelor's Degree in Mechanical Engineering and has done an Energy** Savings Systems Master Degree and a Business Administration Master Degree. Having an overall experience of around 10 years. Prior to joining DNV having 8.5 years experience in Power generation facilities (thermo power plants, wind and hydro power plants, energy efficiency process and energy demand. Responsible for operation, maintenance, project management and evaluation for energy facilities (fossil fuel and renewable sources) as well as energy efficiency improves. In addition, experience with limited scope to operation and maintenance duty for hospitality facilities and water treatment process. He has experience of around 1.5 years in validation and verification of numerous CDM projects. His qualification, industrial experience and experience in CDM demonstrate him sufficient sectoral competence in “Thermal energy generation from fossil fuels and biomass including thermal electricity from solar”, “Energy Generation from renewable energy sources” and “Energy demand”.

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## DET NORSKE VERITAS

## Technical reviewer

## Venkata Raman Kakaraparthi holds a bachelor degree (B.Tech) in Chemical Engineering

and a Diploma in Management. He has an overall experience of 18 years in the Chemical Process Industry-Fertilisers and Chemicals industry (FACT). His main areas of work include

a) Technical Services (for Ammonia, Urea, Co-generation thermal power plants (captive), and complex fertilizers plants) - 10 years;
b) Erection, commissioning and hands-on operation of state of art HTAS Ammonia plant - 4 years;
c) Management and operation of Sulphuric acid plant as Plant Manager - 2 years; and
d) two years in management Information System operation and assisting of top management in planning of operations. While in FACT he has completed the ISO14001 EMS LA course and also involved in implementation of Environmental Management Systems and in conducting internal audits. Experience prior to joining Fertiliser industry include six months experimental work on charcoal manufacture in Karnataka Regional Engineering college. He has experience of around 5 years in validation and verification of numerous CDM projects. His qualification, industrial experience and experience in CDM demonstrate him sufficient sectoral competence in areas of
(a) Thermal energy generation from fossil fuels and biomass including thermal electricity from solar
(b) Energy generation from renewable energy sources
(c) Chemical Processes Industries and
(d) Waste handling and disposal.