Power on demand: Aggreko meets the challenge; "Our customers rely on us to deliver" says the MD of Aggreko, David Shepherd. African review spoke to him recently in Nairobi about the company's role as a provider of emergency power supply across Africa and throughout the world.

AR: CAN YOU GIVE us some background information about the company's origins, headquarters and manufacturing plants?

DS: Aggreko began as a small mobile generator rental business in The Netherlands in 1962 ('Aggreko' comes from the Dutch word for generator). Over the next decade, the company expanded its operations into other European market countries in continental Europe. In 1973, Aggreko opened an office in Glasgow, UK where the company's corporate headquarters are located.

Today, Aggreko has a presence on all six continents. The group operates through an international network of 118 service centres and offices in 29 countries around the world. Aggreko's own design and assembly facility is in Dumbarton, Scotland.

AR: What is your overall view of the African market and what percentage of your sales are to this continent?

DS: Africa is a very important market for Aggreko. Although the size of Africa's power sector is small in comparison with its geographic size and population, the demand for electricity is growing rapidly. In the period 2000-2004 net electricity consumption in Africa grew from 389 to 470 billion kWh, a compound annual growth rate (CAGR) of 5.4 per cent.

To meet the rapidly growing demand, an extensive expansion of installed generating capacity will be required. The bulk of the electricity produced in Africa (80 per cent) is from conventional thermal sources. Hydro-electricity contributes 18 per cent to the total electricity generated and the rest, two per cent, comes from a nuclear plant.

By count, however, 40 per cent of countries in Africa are reliant on hydro generation to meet over 50 per cent of their energy needs, which means these countries are vulnerable to shortages if rains fail.

Demand for temporary power is driven in part by rainfall patterns, in part by the relationship between economic growth and investment in permanent power generation and geo-political issues. A large proportion of the demand for temporary power from Africa has come from the utility sector and we expect strong demand from the sector to continue in the foreseeable future.

Also, high commodity prices have spurred exploration and production activities within the oil and gas and mining sectors and the two sectors should provide opportunities for growth in the region. In the year 2006, approximately 10 per cent of Aggreko's global revenue was generated from Africa.

AR: Which are the most popular models in the market and does this vary from country to country?

DS: If by this you mean 'business model', some original equipment manufactures (OEMs) who are also into rental power business rely on their dealer capabilities to win work and take on the project responsibilities. The OEMs tend to render technical support and the dealers with the help of sub-contractors install and operate the projects. We have also seen companies with no prior experience on rental power projects tying up with OEMs, sub-contractors and offering power services in the marketplace. Aggreko is a locally-focused business that has a global reach through an international network of service centres. For Africa, we have our sales offices in Dubai, France, the UK, Nigeria and South Africa.

Being close to our customers means we can be there in an emergency, able to respond quickly to their needs. At the same time, as a global business we can use our resources strategically, moving staff and equipment around the world--to wherever our customers need them.

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AR: You must frequently be called upon to react quickly to emergency situations, such as the flooding in Mozambique. Can you tell us about some especially challenging situations where you have acted speedily?

DS: Yes, we are often asked by our customers to react quickly in certain situations. Many times customers want us to mobilise our plants in just a few weeks or even days. Needless to say, such situations pose challenges and particularly so if we have not worked in a country before.

There are logistical difficulties we have to overcome and rough weather conditions or difficult terrain can become a hindrance. Swift movement of our personnel from our locations to a new site can be made more difficult due to security or other HR-related matters. Despite the challenges we have a reputation for delivering projects on time and this is a major consideration that sets us apart. Our customers rely on us to deliver.

AR: Is there a project of which you are especially proud?

DS: There isn't a single project. There are several projects which Aggreko has successfully executed in Africa that we are proud of. The most recent projects include 100MW in Kenya, 100MW in Uganda, 30MW in Gabon and 40MW gas power in Tanzania. Aggreko delivered all these projects well within the dates requested by our clients. But we are equally proud of our ability to deliver and operate to the same high standards 2MW deep into the Sahara desert or 1MW on an offshore platform in West Africa. We aim to deliver the same high standard of service for customer power requirements large or small throughout the African continent.

AR: Where are you distributors and agents based in Africa? Do they provide customers with an after-sales service and spares?

DS: Aggreko is a power generation service provider. Unlike other equipment manufacturers or suppliers, Aggreko does not sell power generation equipment. We provide turnkey temporary power plants; we meet the temporary power needs of our customers. We supply the necessary equipment, install, operate and maintain the plants ourselves and the ownership of equipment remains with Aggreko. A key benefit of our service is that the customers do not incur capital expenditure. They simply pay for the capacity and energy they need from us. So we do not operate through distributors or dealer networks. We have our own sales and operations personnel on the ground in Africa, and our sales effort and projects are supported from our central operations in Dubai and from our offices in Paris, Lagos and Johannesburg.

AR: What about the competition--in your view what is special about Aggreko's services and products?

DS: Several factors set Aggreko apart from other companies in its field: the quality of its solutions; the quality of its service delivery; the quality of its people; and the quality of its equipment.

Aggreko's ability to deliver total solutions and total service is made possible by the flexibility and reliability of its equipment and the calibre of its people. Training, planning and specialist knowledge are integral to Aggreko's business strategy and we continuously invest in the development of a high-quality global workforce. We are completely focused on the rental of power, unlike our competitors who mainly sell equipment but also offer rental power services. We have technical expertise, equipment, skills and experience on a scale, and to a depth, that we believe nobody else can rival.

AR: Do you see the boom in the genset rental market continuing?

DS: With demand for electricity increasing exponentially, the need for reliable and secure supply of power is ever more critical. Many utilities in the region are facing an uphill task of coping with the rapidly increasing demand. Reserve power margins are shrinking or disappearing altogether in certain markets.

The issue is exacerbated by the long lead times associated with large central, regional generation schemes as well as the existing transmission and distribution constraints. With the need for electricity more pressing than ever before, we expect the demand for rental power in the region to grow over the coming years.