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ABB studies investing in infrastructure, logistics in Suez Canal - Daily News Egypt

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ABB studies investing in infrastructure, logistics in Suez Canal

ABB studies the plan to invest infrastructure and logistics projects in the Suez Canal projects; we may provide developed ship motors equipment with ABB’s products

Daily News Egypt talked to Naji Jreijri, CEO of ABB Egypt, North and Central Africa, on the company’s contribution in new projects announced in the Economic Summit.

What is the size of ABB’s business in Egypt?

We have five factories in 10th of Ramadan [City] on 100,000 sq metres, an export assembly factory in Nasr City free zone, a regional machines service workshop in Obour City, a regional services centre for turbo systems in the Suez free zone and a regional services centre in 10th of Ramadan City.

Besides these activities, we have had projects in electricity distribution stations for 40-45 years, established and provided in Egypt, which about 100 engineers and designers work on.

ABB has two main activities; the first is power generation solutions and the other is power plant controls.

ABB Service division covers industries like oil and gas, minerals, metals, pulp and paper, etcetera. In addition, the company provides solutions for renewable energy such as solar, wind and hydro.

ABB’s Power Products division offers a range of products, systems and services to help customers increase power capacity, enhance grid reliability and improve energy efficiency, which are the key components to transmit and distribute electricity. The division incorporates ABB’s manufacturing network for transformers, switchgear, circuit breakers, and cables and associated equipment. It also offers all the services needed to ensure products’ performance and extend their lifespan. The division is subdivided into three business units, which are Power Systems, Discrete Automation and Motion, and Low Voltage Products.

Which of the projects announced in the Economic Summit will ABB participate in?

ABB will work on the power generation projects announced in Economic Summit through providing and expanding the electricity networks in Egypt, because the loss of energy is currently 20% is due to old networks.

ABB will also participate in the New Cairo Capital concerning the project’s electricity needs. We have great experience in this field through providing compact substations. ABB provides 10,000 compact substations to distribute electricity in the Madinaty project.

There is a project to convert coal to fuel to generate electricity with less CO2 emissions; we can work on this project through process solutions, as we are interested in this project. We are negotiating with Italcementi Group on their project submitted in the Economic Summit to launch a solar energy station to provide electricity to their cement factory in Egypt.

In the New Suez Canal project, we have two roles; one as investors to work in the free zone area and the other as technology provider for construction, which requires power, water and infrastructure. The company can provide energy solutions to the projects’ facilities.

Our contribution as technology leaders consist of consultations and recommendations on right power and water use to avoid waste.

We study the plan to invest infrastructure and logistics projects in the Suez Canal projects; we may provide developed ship motors equipment with ABB’s products.

What is the size of ABB’s capital investment in Egypt?

Our investments increased during the revolution in 2011-2012 as the company focused on developing its exporting capacity and developing product quality.  ABB recently opened two new manufacturing facilities producing compact substations and medium voltage switchgear to add to its current facilities in 10th of Ramadan City. The capital investment in 2014 amounted to $120m and the volume of orders received in 2014 reached $241m.

How many countries has ABB exported to and what is the volume of exports?

ABB exports to the entire Africa and Middle East region, including Jordan, Iraq, Lebanon and Gulf countries like Qatar, Oman, the UAE and Kuwait. In addition, it exports electrical panels to Saudi Arabia and a number of counties, reaching over 40 countries. Moreover, we have a joint solution manufactory in Saudi Arabia.

Our export share increased by 25% and our export growth is 27% in 2013-2014.

Is the company listed on the Egyptian Stock Exchange?

The company is listed in the Swiss, Indian, Swedish, American stock markets as a multinational company.

The government recently decided to ban importing materials, which have an equivalent produced inside Egypt to promote local industry.  Does this affect your work?

We are manufacturers and don’t have this problem, copper used in panels comes from Egyptian companies and the steel we use is not available in Egypt, so we have to import it from outside.

Do you have problems with dollar liquidity?

We have problems with our customers as they face the issue of access to foreign currency to pay us the product prices. Sometimes they delay paying and we have to wait or we have to be paid in Egyptian pounds instead of dollar; that is our problem with hard currency.

We hope the Central Bank of Egypt (CBE) will find solutions to the dollar supply for the companies through providing SMEs with dollars, instead of large companies, which have enough foreign currency due to their exports or foreign partners.

Do you think legislative reforms will contribute to boosting investments in Egypt?

I think the new investment law is a good step and there is no problem with that law, but what is not clear is the nature of the tax itself. We wait for the clarifications as we don’t like to follow rumours.

To what extend will Egypt succeed in implementing the announced projects in the March Economic Summit?

Egypt can succeed 100%, but the period of implementation is not suitable. I understand the ambition but there are long procedures. The obstacles will not come from the side of foreign companies but will lay in Egypt, and every minister responsible has to work on solving these problems. Time is an important element in implementing projects; otherwise, they will lose their customers.

Do you think that the government will manage to handle the problem of electricity cuts?

In Egypt, power outages come from the waste of power, which I estimate at about 10 % to 15%, in addition to an increase of the population and insufficient electricity supply.

How many employees work for ABB?

1,818 employees.

Who are your partners and stakeholders in Egypt?

We work in 50% of our business with government institutions, and 50% with the industry sector.

What is the expected volume of investments in the upcoming period in light of the declared mega projects?

We work on increasing the capacity of production and increasing productivity and labour, and we expect the increase of volume of investments to be 50% to 60%.

The company mentioned before that the Grand Ethiopian Renaissance Dam would affect the capacity of the Egyptian Aswan Dam. Is this true?

We did not say this before and we don’t have any information about the Renaissance Dam, so we don’t know the effect. However, I think that cooperation between Egypt and Ethiopia will help companies to invest.

We conducted the renewal of the Aswan High Dam and we signed the contract in 2011, and we are close to handing over the project with investments of $24m.

What are the planned projects in cooperation with the government?

We are currently working on expanding the power infrastructure of the Cairo International Airport, and ABB won a bid for an electricity power station in the new metro in March.

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