Cigr 2009

6th Southern Africa

Regional Conference

Paper C103
21 rue dArtois, F-7508 PARIS
http://www.cigre.org

ESKOM EXPRIENCE IN PROCURING SYSTEM TRANSFORMERS OUTSIDE

SOUTH AFRICA

N.V. BUTHELEZI
Eskom Holdings Limited
(South Africa)

R. CORMACK
Eskom Holdings Limited
(South Africa)

SUMMARY
In order to address the challenges for a reliable, efficient and sustainable supply of electricity now
and into the future, Eskom Transmission has been obliged to purchase network transformers from
outside the country, this strategy has presented many unexpected challenges which are addressed in
this paper.
The drivers for the strategy to procure transformers outside the country include:
Poor performance of local manufacturers,
Insufficient local manufacturing capacity
Risk reduction
The strategy includes an open tender procurement policy which evaluates tenders on manufacturers
capability, factory evaluation, tender evaluation and is based on the Total Cost of Ownership. A rigid
repeatable process is followed to produce the most suitable manufacturers.
The tender evaluation process is followed by a rigorous design review and monitored manufacturing
and testing process.
Over and above the strict process followed above many challenges became apparent during the
procurement process, these include the following:
Material defects, New technologies, Test failures, Manufacturing processes not adequate,
Manufacturing defects, Test equipment insufficient, Inadequate design skills, Failing to adhere to
agreed designs, Inability to monitor processes overseas, Problems experienced with overseas travel,
Sea and road transport accidents, Failures, Misinterpretation of specifications,
Lack of skilled resources
One by one the above inefficiencies had to be overcome in order to get low risk transformers.
This paper describes the challenges and how they were overcome.
KEYWORDS
Transformers, Total Cost Of ownership, National Grid, Procurement and Supply Chain
Management, Life cycle costing.

INTRODUCTION

Eskom has embarked on a Capital Expansion Programme on its networks. This is due to the fast
growing loads nationally (and more particularly on the Western and Southern Grid Networks). As a
result, a central Procurement and Supply Chain Management (PSCM) Department was established. It
was implemented to optimise the supply chain for all strategic commodity requirements across the
various Eskom Divisions.
Equipment lead times play a major role in ensuring that projects are completed timeously. One of the
major stumbling blocks of the past has been Transformer lead times (which were in the region of 18
months). This has been addressed by forming PSCM which looks after the procurement of
Transformers by direct negotiation with suppliers looking at Group Requirements, and involving
technical and project specialists. By having these role-players around the table, it is possible to ironout issues that would have normally taken months to resolve, while still keeping the project
requirements in mind.
2

THE PROCUREMENT PROCESS AS ADOPTED

The procurement process has not been taken as just the process of buying a transformer or shunt
reactor, a lot of effort have been put in place by the divisional team players i.e. Technical,
Commercial, Financial (Treasury) and Project Management Specialists. This process starts from the
planning where a new transformer requirement is identified, preparation of the specification,
compiling the schedule A- employers requirements and B- Manufactures guarantees. Once that is
completed the tender documents will be sent out on an open enquiry. Eskom Transmission is currently
in a position where potential suppliers have been identified per factory for various MVA, and voltage
class ratings. Currently we have suppliers for 132kV up to 800kV and from 40MVA up to 2000MVA
(single phase units).
The process further goes to tender adjudication, mandate to negotiate from Senior management,
contract negotiations, contract award, design reviews, manufacture, testing, delivery, site installation,
commissioning and hand over period to the custormer.
The Strategic Sourcing strategy involves the application of a thorough methodology that leads to an
appropriate sourcing strategy to deliver best cost (Total Cost of Ownership TCO), quality and
performance for Eskom.
The Total Cost of Ownership (TCO) was evaluated with the following information provided by each
manufacture:
Description
Evaluation Tender Price (P)
Cost of No load losses per kW (A)
No load loss in kW (E)
Evaluated cost of load loss /kW (B)
Load loss in kW (L)
Evaluated loss cost/ kW: X=P+(A*E)+(B*L)
Guarantee in service
Guarantee in storage
Factory Failure Rate Factor : FFR Factor
On Time Delivery Rate Factor OTDR Factor
R/MWh lost
Benefit of guarantee: G=(P8 x 1.5% x Guarantee period (years))
FFR Risk: F=FFR Factor x 90days x 24hrs x MVA x R/MWh lost
OTD Risk: O=OTDR Factor x 30days x 24hrs x MVA x R/MWh lost
Lifecycle evaluation value: LCC=X+G+F+O
Less: Capital Cost - Per Treasury Instruction:
Lifecycle Additional Costs: LCC=X+G+F+O

Currently most of the Eskom orders are placed with overseas suppliers some which have tendered for
the first time. The contract includes the design, detailed engineering, manufacture, supply, delivery,
off-loading, installation, erection, testing, commissioning of each transformer. Some of these units are
destined for storage at strategic stores and various sites in the National Grid.
Eskom has proposed doubling its generation capacity within the next 20 years 40GW to 80GW. This
requires that Eskom has sufficient approved transformer suppliers in place and ready to supply its
needs before we set out on this big build.
3

STRATEGY FOLLOWED DURING THE OPEN TENDER

The Eskom cross divisional power transformer evaluation team has been put together to ensure
consistency between manufacturers during factory Evaluation and Assesment. The purpose of these
evaluations is to establish whether various manufacturers manufacturing capabilities, capacities and
methods could comply with international standards as well as Eskom Transformer specifications.
4

QUALITY PERSPECTIVE

This portion covered the physical construction of the transformer and the quality processes that are
followed during manufacturing. This includes checking the storage and handling of materials, the
production processes, clarifying the hold points required which are defined in the Inspection and Test
Plans ( I&TP), verifying testing procedures and the capability of the factory to perform the various
type of tests such as Type and Routine tests which are required to prove the various withstand
capabilities i.e. insulation withstand capability, thermal profile without exceeding the guaranteed
temperature limits and finally the packaging the transformers for road/ rail and sea transport.
5

TECHNICAL PERSPECTIVE

To ensure that quality products leave the factory, the factory were evaluated by a cross-divisional team
with the inputs from internationally renowned transformer expert(s). The report from this evaluation
is then kept as reference for future audits. The electrical design, manufacturing, testing, handling and
physical design of the transformers are evaluated by relevant people in their area of specialisation.
This includes ensuring that the design process is according to internationally accepted norms and that
the final proposed layout of core, windings and physical transformer is acceptable. The ability of the
manufacturer to meet Eskoms specifications requirements were also assessed.
Areas of evaluation:
Quality systems
Manufacturing Methods
Tank manufacturing
Winding methods
Vapour Phase
Paper lapping and copper wire methods
Core methods
Assembly methods
Tanking methods
Workshop practices
Design Practices and Application
Testing Facility and Practices
Raw Material Procurement, Storage and Sub-Contractor Practices
Site and Other Services
Commercial Assessments
Factory Performance
Logistics
Paint/ Corrosion treatment

Auxiliaries
Management of resources such as staff, equipment etc.
Compliance with health and safety practices and procedures
By engaging into this drive, Eskoms goal is being realised and the following benefits have been
achieved.

Secure supply with best suppliers.

Optimised Total Cost of Ownership
Timeous hedging against volatile CPA & RoE
Prevent delays of orders and subsequent deliveries
Provide for urgent requirements and business support
Expand supplier base & exercise flexibility
Maintain competition amongst suppliers
Expand supplier base
Introduce competition
Introduce opportunity for investment in local manufacturing
Support expansion drive

Figure 1. Below on Annexture A shows the flow chart that has been used as a guide and a process
flow for various local and International manufactures.
6

6.1

TECHNICAL CHALLENGES FACING ESKOM DURING THIS PROCUREMENT

PROCESS
Misinterpretation of specification

During the tender stage the manufactures are all given the opportunity to send all the queries related to
the specification for clarification. A number of manufactures exploited that opportunity and the
queries were resolved to their satisfaction, however, there are items which can be left open for
clarification at the design review stage. Experience has showed that badly designed or inferior quality
auxiliary equipment has been used which have a negative impact on the reliability and performance in
the long run. Such components are mainly related to the maintenance which negatively impact on the
field staff. Eskom has rejected quite a number of auxiliary equipments and has engaged field staff to
evaluate them in the factory whilst changes can still be made before the unit is completed. Certain
modifications had to be made on site to correct the shortcomings and during this process Non
Comformance Reports (NCRs) are also raised against the relevant suppliers to provide the reason for
not complying. We are now seeing a positive improvement on these actions. Typical examples of
auxiliary equipment are the tank design and construction, corrosion proofing, bushings, on-load tap
changers, protective devices, cooling equipment, oil preservation system, breathers, oil level indicators
and cabling ystems, etc.

6.2

Inadequate design skills

A design review meeting is required before procurement of any materials or manufacturing proceeds.
The purpose of the design review is to allow Eskom to understand the basic design, construction and
installation of the transformer. During this period an Independednt design consultant is engaged to
assist. The design review is done following the guidelines for conducting design reviews for
transformers 100 MVA and 123 kV and above, August 2002- Cigr WG 12.22
The manufacturer shall design the transformer to be able to perform satisfactorly under all service
conditions as specified. During the design reviews, the manufacture has to demonstrate that all the
decisive design parameters are well within the manufacturer design limits, or relevant limits specified
in standards or international criteria.

Eskom reserves the right to reject the design when manufactures fail to demonstrate the capability for
design and manufacturing the transformer under review.
This happens when the presented design does no meet international accepted criteria and the
manufacturer cannot prove his design by previously tested transformers of the same concept and
voltage class. Common failures to comply have been observed on the short circuit withstand
capability, dielectric stresses and high stray flux losses which cannot be proven around the winding
block. Failing to adhere to agreed designs has also created a great concern as some manufactures
failed to prove by calculations using their available tools and some inconsistances in applying their
design rules on different types of transformer designs.
6.3

New Technologies

It is always assumed that new technology products will always meet the customer requirements and
if not, the original manufacture remain responsible for the consequncial damage. Contractually its
correct but if it is not picked up until its too late, it has serious repurcusions for both the manufacture
and the customer in terms of time and money. Currently some of these technologies have caused
problems on new transformers. This due to the fact that there has not been a sufficient long-term
history of in service operation resulting in a number of customers becoming guinea pigs for the new
product.

6.4

Test failures

There have been a number of transformers failing during high voltage testing more pronounced
especially during the dielectric tests. It is an issue of great concern because the manufacture and the
subsupplier have had a long standing relationship and to cut the relationship and look for new supplier
has a negative impact on the long lead time items. However, during the design review process Eskom
insists on approved product when evidence of good quality product cannot be provided by the
transformer manufacture. These material defects are normally caused by manufacturing processes
which are not adequate or exposure to contamination (humidity or particles)
6.5

Test equipment insufficient

During the tender stage it is a common practice for some manufactures to declare that they have
sufficient capability to meet all our test requirements. However, during the factory acceptance tests it
becomes apparent that they do not have sufficient energy for supply. Some tests have destroyed certain
equipment in their testing station as they were running their testing station to the limit. At some stage
Eskom had to grant special concession to test the units at a lower level of testing and extrapolate the
results by calculation to the 100% of the test level. This is normaly done when the delivery of the
transformer to site is critical. Non comformance reports are issued to them for explaination and future
orders are stopped until the manufacturers upgrade their facilities to supply enough energy required.
6.6

Inability to monitor processes overseas and problems experienced with overseas travel

Due to the nature of the distance from South Africa to other countries as well as budget constrains, it
becomes almost impossible to monitor all the processes in overseas factories. Unlike locally where the
factories are within reach. There is also great concern related to the manufacturing schedules which
all the time are changing at the short notice due to either the delays in material supply or changes in
production line or as a result of other factory related constrains. To deal will this problem Eskom
Transmission has consultants available to assist in overseas factories. This process has not gained
sufficient momentum to monitor every stage during manufacturing but plans are in place to attend
special hold points during the manufacturing which are defined in each factory inspection and test

plan. If the hold point is critical and requires an Eskom Transformer specialist, a notification is
required from the relevant factory 8 to 10 weeks in advance to plan for overseas visit.
6.7

Sea and road transport accidents

Most overseas transformers are transported by ships to South African habours depending on the
location of site as well as the weight of the transformer. Eskom is currently experiencing a number of
problems where transformers are bumped during shipment. These units are fitted with two impact
recorders, one internally and the other externally. Some of the units are shipped with impact recorders
which are not working during shipment and with no records it becomes a great concern when no
history record is available to make a decision. Monitoring of positive pressure during shipping is also
a grey area at this stage as some of the records are not handed over in time to the customer for
verification and approval.
In local harbours when the units are removed from the ships, a number of them have been bumped/
dropped with their associated auxiliary containers failing the megger test. Local transport is also a
concern as quite a large number of units have been bumped under the bridges and dropped during offloading on site. Site internal inspection has been geared to verify and confirm if there is any movement
that has taken place during the impact (G-force) i.e. longitudinal, vertical or transversal direction, as
well as performing SFRA to verify winding movements.

6.8

Lack of skilled resources

As declared by manufactures in the contract to meet Eskoms contractual obligations, local

contractors are used for transportation, site installations and commissioning. It appears that some
manufactures have employed semi-skilled sub-contractors to assist during site installations. The
majority of them have not been trained by the overseas factories and acreditation before they can
perform the field work. In a number of site installations it appears that only the supervisor from the
overseas factory is allowed to do the connections inside the transformer. This has resulted in a
number of incidents where a number of short commings were observed. It is such a high risks as
nobody can double check on his job. This has been evidenced by some units which started gassing and
the transformer had to be drained for further investigation. The findings revealed that supervisor had
left some loose connection on the bushing stress shield, causing it to float and started to discharge
during operation. In an attempt to mitigate against this, an Eskom Transformer Specialist is now in
charge of doing internal inpections together with the factory site supervisor in order to verify all the
connections to the tap-changers, bushings, stress shields and general cleanliness inside the active part.
Currently it is still shocking to see that at every inspection shortcomings are found and the trend is still
very high.

CONCLUSION
It has been a challenge and a learning curve for Eskom team to procure a bulk number of
transformers from overseas. One major component has been the fact that Eskom had a long standing
relationship with local manufactures which resulted in a number of problems to be reduced over the
years. Eskom is exposed to international suppliers, who are currently not familiar with Eskoms
traditional requirements and in order ensure that Eskom gets what it wants, a team of technical
expects should always monitor and verify all the manufacturing, installation and Commissioning
procedures as well as installing Hold point wherever possible in the inspection and tests plans for
each stage before completion of work and handing over units to Eskom.

BIBLIOGRAPHY/ REFERENCES
1. Specification for large Power Transformers, TSP-41-87, February 2007
2. SC A2 & D1 Colloquium Bruges 2007, PS2 Reliability/ Risk Assesment of Transformers in
service.
ANNEXTURE A