ABB promises to turn Egypt into an exporting hub for Africa and lend a hand in solving the power crisis

Egypt has always had attractive investment facets: a central location that gives it access to the African, European and Asian markets and a number of trade agreements to go with them, a large consumer market, abundant raw materials, low-cost labor and energy, investment incentives and the list could go on.

These incentives still stand, but today there is an ever-increasing stress on Egypt's potential in and of itself and on its potential to become a hub and gateway to Africa.

In these times of domestic economic difficulty and Egypt's shortage in energy supplies, Swiss technology-based power and automation products provider ABB has announced plans to strengthen its position in Egypt to better serve the domestic market and to position Egypt as an export hub for Africa.

"Plans are in place to build on the knowledge and manufacturing capability within our Egyptian operations so that ABB can undertake larger projects in the African continent," says ABB Egypt and Central Africa CEO Naji Jreijiri.

The company began its operations in Egypt in 1926, with its first manufacturing facility coming on line in 1979. Globally organized in five divisions -- Power Products, Power Systems, Discrete Automation and Motion, Low Voltage Products and Process Automation -- ABB has recently invested in a number of new technologies in Egypt including the dry-type transformers production line, the secondary switch gear (UniSec assembly line, CSS) UniPac production line (under construction) and a Robot for sheet metal workshop.

Africa's growth prospects

Jreijiri describes the potential demand for power in the African markets as very high, given that access to power in several African nations stands at between 15% and 20% of the population, which leaves room for investment in the full cycle -- from power generation to distribution to every consumer's home.

"In a market [where] you have 80% needs, even if the budgets would allow for just 10%, 15% or 20% of investment, our interest in the market still stands," he states, adding that ABB plans to focus on 22 countries in Africa including Benin, Central African Republic, Côte d'Ivoire, Djibouti, Eritrea, Ethiopia, Gambia, Liberia, Mali, Nigeria, Sierra Leone and South Sudan.

Prospects for stronger ties between Egypt and its African neighbors have taken center stage following the January 25 Revolution. Jreijiri -- who seems very optimistic about these prospects -- speaks of a particular mega-project that could bring power from Johannesburg to Cairo and could enhance cooperation among African states.

"It's a grid where [power is shared] with Africa; it's a very long term, ambitious project that requires a lot of funds," Jreijiri explains. "If you look at the two countries; they are the strongest in Africa, lying at either ends of the continent where people have almost 100% access to power, if they link up together they can distribute the power into the continent with less investments from smaller countries, fewer plants and at same time without abusing, polluting or destroying the nature of this continent. It's a project that's on the table of African leaders to discuss when they meet, there's a vision and a base for this project what they need is put the fund together for it needs much international funding and engagement."

ABB has financing solutions to offer to get the ball rolling on this project. According to Jreijiri, if ABB presents a solid feasibility study with good returns on investment, it would be possible to find investments through private banks interested in investing in Africa.

"At the world economic forum in March in Ethiopia, [almost more] than 40% of the attendees were financing institutions interested in investing in Africa, mainly in power, and they spoke much about their interest and enthusiasm," he claims.

With the funds available, Jreijiri points out that the decision to invest is political as banks require sovereign guarantees to allocate funds.

Nevertheless, he's eager to state clearly that ABB is on board: " we are interested in all [power] projects, not specifically in one country or another, and the references that we have -- the successful projects that we have executed in Ethiopia, Ghana and most of the central Africa down to South Africa -- give us a good idea of [what's to come] and the potential. We are ready to contribute when the opportunity arises," he says.

Solutions for the local market

Egypt is facing a power shortage with its production capacity at almost 23,000 megawatts and demand at about 27,000 megawatts. According to Jreijiri, Egypt could opt to build four to five new power plants to cover the 3,000 megawatt shortage -- bearing in mind that demand is increasing as industrial investors are waiting to get access to power in order to move ahead with their investments and expand their manufacturing facilities.

Each power plant will require at least 18-24 months to become operational.

Alternatively, ABB could offer solutions to reduce losses on the power grids. "ABB has successfully employed [these] solutions in other parts of the world [to] reduce losses [at] power plants and  reduce losses on the distribution network as well," Jreijiri says, adding that ABB is already in negotiations with local authorities to apply these solutions to save an estimated 10-15% of lost power -- the equivalent of almost two power plants' capacities -- and will take six to nine months to carry out.

In October 2012, the Minister of Energy and Electricity at the time had launched a similar solution, dubbing it 'The Fast Track Project' in which many companies showed interest. The ministry wanted to finance the project by their own means, but it was shelved.

"We had started to work with some turbine suppliers to bid for one of the power plants, and then we stopped because of the political decision.

I don't know the reason it stopped, maybe it was a matter of priorities."

Over the last three decades, ABB has successfully executed several projects in Egypt including providing 35% of equipment used in Egypt's power stations and the electrification infrastructure of the Grand Egyptian Museum.

ABB has also been involved in the expansion of the use of solar energy in powering remote areas.

"If you want to expand to  very remote areas, alternative energy is the solution because you don't need to install cables -- power can be generated at independent power plants in these areas," Jreijiri explains.

These are the potential cities of the future with less consumption of power, less pollution and built using construction technology intended to save energy and insulate homes.

Jreijiri stresses that ABB is looking for stability from an investor's point of view. The company has invested a lot of money over the last two years on the basis that it could export out of Egypt and counting on the hope that the country is coming back and opportunities would emerge. Otherwise, the situation will be fragile. 

"On the other hand, we are optimistic because we find the right grounds for investment here in terms of skills, in terms of the number of engineers that are capable of carrying our technology and working on our technology to develop it. We find it an excellent ground for our investments; it just needs some stability," he said.

ABB's worldwide investments in scientific research have reached more than $1.3 billion (LE 8.75 billion) per annum. In Egypt, the company has an R&D facility for developing locally manufactured products.

It employs 7,500 scientists and engineers and collaborates with Cairo and Ain Shams universities in R&D in new technologies and applications. Recently, ABB has fully equipped and furnished a new Control Lab at Ain Shams University with a similar lab under construction at Cairo University's Faculty of Engineering.

© Business Today Egypt 2013