Elsewedy Electric sees major potential in East Africa’s energy market, as Regional Director Ibrahim Qamar tells James Gavin
What is special about the East African energy sector?
There’s so much potential in the energy sector in this region. First, look at the size of the population we are serving. Taking in large countries like Sudan and Ethiopia, you’re looking at a market with more than 220m inhabitants. There’s a large number without energy access, which means there are a lot of opportunities in the power sector, whether in generation or in transmission & distribution (T&D).
There are many big projects underway now in power generation and some of them have been already commissioned. For example, there are major generation projects such as the Renaissance dam in Ethiopia and the Julius Nyerere hydropower plant in Tanzania. There are so many generation projects happening, we could even have a surplus of energy.
The region is looking for massive funds for T&D and this is one of our priorities at Elsewedy Electric in the coming five years. We will be heavily concentrated on the T&D sector. And we do believe that East Africa will have a very special place in this strategy.
What is Elsewedy’s presence in this market?
We are Africans and this is our main interest and in a sense, our backyard. Like most multinational companies, we use Kenya as our regional hub. We started out exporting from Egypt with an office in Nairobi serving the demand. The region is the biggest market we have for cable and transformers. However, we also built our own factories in Ethiopia, with a cable factory that has been operating successfully for 10 years.
Being African and understanding the needs of the market gives us a privilege over some other competitors. We are not new to the market, we have been in there for last 15 years and have a presence in most countries.
Which power projects in the region would you like to highlight?
There are two main dimensions to this. In projects we participate in we go with EPC plus Finance (EPC+F). This is our long-term history of participating in most African countries. We have a successful story in Ethiopia, where we have undertaken some large projects under EPC+F terms. And we have invested large amounts in Ethiopia, where we have big expansion plans.
One of our recent success stories is the Julius Nyerere hydropower plant in Tanzania, which we consider a landmark of our success in penetrating the African market. This single project represents hundreds of MW. It’s still only the early stages, but we expect this will be a very important focus for us.
We also have expansion plans in Uganda, which has real potential considering the exploration of oil and gas resources there and the impact that will have on the country’s GDP, which should allow for better growth in the power sector.
How do you see prospects for renewables? What is your activity in this space?
Renewables for us is one of the main business units – it’s got a very high priority in our overall strategy. And East Africa is very advanced compared to other parts of the continent. It’s a good base for us to be a part of.
At Elsewedy Electric we have many projects in Egypt and Sudan and we’re aiming for IPP projects in Kenya that appear very promising. In the next few year we will be pursuing several projects in solar and wind. We have increased our expertise and know-how in renewables and that has allowed us to go global.
What about your plans in the T&D sector in East Africa?
Most companies have given special attention to generation for the last few years and now the focus is shifting back to the T&D sector, which is hugely important. Unfortunately it is lagging behind and perhaps should have been given more attention years ago in order to cope with all the generation plans coming on stream. The countries with the highest expectations are Ethiopia, Tanzania and Uganda. They have huge plans to cover rising demand, and we are looking at 4-5,000 MW of new generation capacity not just from the Renaissance Dam but from a number of other schemes. And in countries like Ethiopia, where populations are widely scattered, that means there will be a need for many more T&D projects spread across the countryside.
Look at Tanzania. It has recently introduced 400 kV transmission lines to work alongside the Julius Nyerere hydro plant, and that will require lots of lower voltage lines too. Last but not least, in Uganda, the Simba and Karuma plants will also require more T&D investment.
What are the biggest challenges and opportunities in the region?
There are many challenges. The state of infrastructure is one, and bureaucracy and governance is another. Then there’s the lack of availability of materials and skilled labour, and delayed public expenditures.
These countries have the plans, but sometimes there is there is a delay in implementation. And in some countries, there are security issues.
Efforts are taking place to create a regional customs union. In regard to the guidelines for movement of goods and labour, that could create a real boom for us, which is why we are trying to create a strong regional hub serving the whole regional community from Zambia to Kenya. It’s a very promising region and there are a lot of opportunities for us there.
How about the impact of coronavirus? What impact will it have on the region’s electricity sector?
It goes without saying that coronavirus has impacted everybody, everywhere. And definitely there is an impact at the country level because it has lowered GDP rates, which in turn will reflect on the power sector. All of these have a reflection on the shorter term business cycle. But we are expecting things to come back by the second quarter of 2021.
There is also a job loss significance which will have some impacts on social stability. Furthermore, we are seeing a sharp rise in inflation in some countries, which is something you have to consider when you have an investment in these countries.
How is regional energy integration progressing?
There are big plans for regional integration and that starts out from Egypt, which is linked to Sudan in the south. The main connections are between Egypt and Sudan, Ethiopia and Kenya and Rwanda and Uganda. Others in the region have existing connections that will be reinforced in future, such as between Ethiopia and Kenya. That will be a very important process. We are creating up to 2,000 MW interconnection transmission lines on 500 kV, which will be really a big project on completion. And Ethiopia is planning to serve southern connections. This is almost finished and will be integrated by year-end 2020.
Overall, I see that the regional energy integration process is really strong. Our East Africa board is doing a very good job in terms of integrating power and supporting the interconnection of power between countries in the region. We believe that East Africa will be a real role model for energy integration in the very near future.