Energy & utilities

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Energy & utilities ISSUE 1

The power people Eskom is undertaking a massive construction and development programme to satisfy South Africa’s rampant demand for electricity

ESKOM @ WORK 31% 35%


coming on stream 2014

But we’re not stopping there. South Africa’s future depends on longterm solutions. So we’re coming up with new ways to generate clean, renewable energy. We’re ensuring that our new coal stations are more efficient. We’re also about to begin construction of Africa’s largest wind farm and one of the most advanced solar power stations in the world. But, as you can appreciate, it all takes time. That’s why starting right now, if every South African, all 49 million of us and counting, works to save as much electricity as we can at home, at work, everywhere… together, we’ll all have as much as we need.

For dozens of really simple ways to save electricity give one of our Eskom Energy Advisors a call at 0800 ESKOM (37566) or visit our website at




Just to give you an idea, we are currently in the process of building three new power stations that will be amongst the largest in the world. We’re also re-building and re-equipping power stations that have been out of action for years. And we have already laid hundreds of kilometres of new transmission and distribution lines.

of additional capacity added in 2010, 5031MW since 2004

1st unit coming on stream in year 2012

278KM of new transmission lines installed in 2010, 3103km since 2004

15670 MVA of substation transformers added since 2004




1st unit coming on stream in year 2014


CAMDEN returned to service in 2009 currently generating 1520MW

GROOTVLEI returned to service 1200MW being expected back on stream 2011



KOMATI returned to service 1000MW being expected back on stream 2011


your power is our power. Eskom Holdings SOC Limited Reg No 2002/015527/06


Many people have been asking how we plan to meet our country’s increasing electricity needs. Right now, you will find Eskom employees working 24/7 to ensure that we are supplying enough electricity to do just that.

Editor’s letter


Managing Editor Becky Done Editor In Chief Martin Ashcroft

Potential energy


Production/Creative Director Zachary Smith Production Design

BUSINESS Director of Sales Sean Brett Sales Manager James Martin Assistant Research Directors Vincent Kielty Sam Howard Richard Halfhide Robert Hodgson Administration & Operations Alice Doran Chief Executive Andy Turner

Energy is one of the major issues of the modern age, whether from the point of view of the green lobby in the industrialised world, the safety of nuclear power, the search for alternative sources or simply keeping the lights on in parts of the world where energy infrastructure has yet to catch up with demand.

This special issue of Business Excellence, dedicated to energy and utilities, delivers first-hand accounts from all sides of these debates from the people on the coal face, as it were. Senior executives from some of the world’s most forward thinking companies tell us exclusively what they are doing to satisfy our unquenchable thirst for energy, water and telecommunications, wherever in the world we might live.

We also have an exclusive account from Dr Willie de Beer, former COO of the now disbanded EDI Holdings, the agency set up by the South African government to modernise the country’s electricity distribution network. When EDI Holdings was established in 2003, de Beer told me, electricity was supplied in South Africa by the national electricity utility Eskom, and no less than 187 redistributing municipalities. “South Africa’s energy distribution system is deteriorating at a rapid rate and service delivery is becoming a major challenge for many of the municipalities,” he said.


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Contents Eskom

The power people

South Africa’s state-owned utility company Eskom is undertaking a massive construction and development programme.

EDI Holdings

Random distribution

Urgent action is required to restructure the electricity distribution industry in South Africa, says Dr. Willie de Beer.

Electricidade de Moçambique Powering aspirations

After civil war, Mozambique’s growth is hugely dependent on electricity, putting pressure on the state-run national supplier.

Botswana Power Corporation Plan B

The African nation of Botswana is a shining example of how a country can use its natural resources to reverse its fortunes.


A smart future

Vermont’s power transmission company is preparing for another phase of development as it migrates to the smart grid.

14 32 40 50 58


Contents ENMAX Corporation Canned heat

A vertically integrated utility company owned by the City of Calgary, Alberta, pioneering combined heat and power.

Bujagali Energy Limited Powering opportunity

Uganda is about to benefit from a reliable source of clean energy for its grid, as well as a boost to its economic growth.


Harnessing hydroelectricity

The world is waking up to the idea of green power—and power utility ZESCO is at the forefront of the changes.


A cleaner state of affairs

This power corporation is tackling the social and environmental challenges of sustainable power generation.


The low cost link in the chain

Iceland has little in the way of natural resources with the exception of clean energy, which it is putting to good use to boost the economy.

70 78 86 96 102


Contents Shaw AREVA Mox Services, LLC Swords into plowshares

An inspiring project to de-fuel weapons of mass destruction and convert the fuel for use in commercial nuclear power plants. Â

E.ON Climate & Renewables UK: Robin Rigg Switched on to alternative power

This wind farm has been successfully steered through the choppy waters of design, construction and final operation.

Genera Energy

From farm to filling station

The Biomass Innovation Park could become a model for the rest of the country and alter the economics of non-food biofuels.

Ras Laffan Port

World capital in 20 years

As the self-declared energy capital of the world, Ras Laffan in Qatar is pouring investment into its port.

Oil & Gas Development Company Ltd Oil exploration the hard way

As a training ground, the oil and gas industry of Pakistan offers entrants plenty of scope for learning their trade.

110 122 134 142 150


Contents Technip KT India Limited Based on technology

Innovation and a determination to stay ahead of the competition has resulted in phenomenal growth for this company.

MEO Australia

The wonder of discovery

Creative thinking is crucial to the process of building value through the exploration and commercialisation of hydrocarbon resources.

Engen Petroleum New frontiers

This petroleum products marketing company is managing change and ensuring future growth by understanding its customers’ needs.

City Telecom (Hong Kong) Networking Hong Kong

This company has not been shy about taking risks to achieve its goal of dominating the local broadband market.

Telecom Namibia

Building the infrastructure

The award-winning national telecommunications operator is committed to the country’s economic growth and development.

158 166 174 186 194



MTN South Africa

In the back of the net

The massive potential of mobile telephony is beginning to be unlocked in South Africa thanks to careful investment and marketing.


New connection

The future looks bright for this telecoms provider, thanks to ongoing investment and an organisational restructuring.


The desalination option

Namibia’s water utility is rising to the challenge of nearly doubling its water supply in order to meet the country’s growing needs.

Department of Water Affairs, SA Water for everyone

This government department is charged with helping to improve South Africa’s water quality, supply and security on a limited budget.

206 216 226 238




To keep up with South Africa’s rapidly growin system in need of modernisation, state-owne massive construction and development progr




ng demand for electricity, and a distribution ed utility company Eskom is undertaking a ramme



By burning less coal per megawatt, we will also be emitting less CO2 and other gases into the atmosphere

emand for power in South Africa has been growing rapidly for some years, finally outstripping capacity in 2008, with blackouts all too common around the country. Power generation and distribution company Eskom, established in 1923, has been pulling out all the stops to increase its power generation capacity and to improve the nation’s distribution infrastructure to keep up with this demand. Phase one of the programme includes the construction of three new power stations, the first of which has been named Medupi, which means ‘rain that soaks parched lands, giving economic relief’. It will be Eskom’s first new coal-fired power station in 20 years, the fourth largest coal plant in the world and the largest dry-cooled power station ever built. Costing some R125.5 billion, Medupi will incorporate the very latest technologies. Its supercritical boilers will operate at higher temperatures and pressures than traditional boilers. “This will give us significantly higher efficiencies,” explains project manager Roman Crookes. “And by burning less coal per megawatt, we will also be emitting less CO2 and other gases into the atmosphere.”


The site for this prestigious project was carefully chosen. Thorough screening and feasibility studies of a number of sites identified a former farm at Lephalale, Limpopo Province, close to the border with Botswana, as the most suitable location. A range of criteria were assessed, including the availability of primary resources, the ability to connect to the Eskom grid, environmental acceptability and cost of production. Lephalale benefits by being just a few kilometres from the Exxaro coal mine and close to the existing Matimba power station, which already has access to the grid. The licence to build was granted in 2006 and construction commenced in May 2007. The first of the six units of the power plant is scheduled for commissioning during the first half of 2012 and the remaining five units will follow at six- to eight-month intervals. Once fully commissioned, the plant will contribute 4,764 megawatts to the grid and is expected to have an operational life span of at least 50 years. The second new coal-fired power station, Kusile, is now under way at Delmas, Mpumalanga Province, close to the existing Kendal power station. Kusile will have a prodigious appetite for fuel and is projected to consume 17 million tons over its 47 year lifetime. To supply this demand, Eskom has reached an agreement with Anglo Coal South Africa for the coal to be supplied through Anglo’s empowerment subsidiary, Anglo Inyosi Coal. The first coal supplies are scheduled to be delivered in 2013 ahead of the commercial operation of the first unit in 2014, to allow the creation of on-site stockpiles. One of the greenest and most efficient aspects of the entire project is the ability to deliver the bulk of the 17 million tons by conveyors direct to the power station. This will save an unnecessary burden being placed on the province’s stressed road network.


Normally, long distance transmission networks operate at 275 or 400kV but the further you go, the greater the loss of power. By increasing the potential of the transmission line to 765kV, the network operates more efficiently


Kusile is being built on a huge greenfield site covering 5,200 hectares of what was once farmland located between the N4 and N12 freeways not far from the existing Kendal station. Kusile will be the first power station in South Africa to be fitted with flue gas desulphurisation, which is designed to remove oxides of sulphur (SOx) from the exhaust flue gases. This state-ofthe-art emission reduction technology consists of a totally integrated chemical plant that uses limestone as feedstock and produces gypsum—an ingredient used in the manufacture of dry walls and ceilings—as a by-product.


Considering that South Africa is floating on a bed of coal, it’s not surprising that the vast majority of the country’s electricity is derived from that source. Wherever minable amounts of coal have been found, an Eskom power station will be nearby. Coal fired power stations represent 87 per cent of Eskom’s current capacity, and nuclear power contributes a further 5.5 per cent, which leaves the balance made up of a collection of other options such as hydro, wind and pumped storage. At this stage, Eskom has found no role for solar, although tests continue and some prefeasibility studies are being planned.

Nobody is more attuned to the scale and importance of the project than Abram Masango, executive project manager of the Kusile Power Station Project. “Kusile is unique, not just in terms of its size but because it is incorporating some of the most advanced technology available. This means it will not just be an immensely impressive plant in terms of its extent and technology, but one of the most operationally efficient and environmentally responsible too.” The construction phase has already presented some problems that have had to be overcome, says Masango. “One of the technical challenges we have met relates to the geo-technical conditions that exist across this extensive site. Building six units is not just a matter of doing the same thing six times: for example, on unit one we needed to install piles, but only unit six will reproduce that method for supporting the unit.” Units two to five will use a different technical solution involving shallow foundations.” The first 800 MW unit is planned to start commercial operation in December 2014; thereafter, the second unit will follow in 12 months with units three through six following at eight month intervals. When fully up and running, the power station will have an installed nominal capacity of 4,800 megawatts of base load power.

The alternative option of choice for Eskom is pumped storage. At just a smidge over one per cent of annual energy production, the absolute contribution to the grid from the two existing installations is small, but it is valuable by virtue of its ability to fill in during peak periods. And when the third power station to be constructed in this phase of development, known as Ingula, is complete, this contribution will be upped by a further percentage point.

The Ingula pumped storage scheme consists of two dams with the capacity to carry 22 million cubic metres of water each. The dams are 6.6 kilometres apart, one located higher than the other, and the two will be linked by four underground waterways running through an underground powerhouse that will be fitted out with four pump turbines. The idea is that when demand for power peaks and exceeds the base load supply, water can be released from the upper dam through the turbines to the lower dam, generating electricity. Then when demand is low, the turbines are used to pump the water from the lower dam back up to the upper dam—essentially storing energy for future use. A pumped storage system is a ‘hybrid hydro’ scheme which relies on water head differential. In other words, water under gravity flows downwards to a turbine and generates electricity much as any other hydro scheme would do. The difference is, though, that instead of using the water once, it is recycled time and again by pumping it back to the upper storage dam. Within 10 minutes of a peak in demand, a power station such as Ingula can be pushing electricity into the grid. “Coal, and to a lesser extent nuclear,” explains Avin Maharaj, project manager for the Ingula pumped storage plant, “provide the base load for the country’s needs. But twice a day, while the country wakes up or then settles down for the evening, demand shoots up. This means of generation is ideally suited to meeting short term demand.” The head reservoir, called the Bedford Dam, lies on the Vaal River system in the Free State and the lower reservoir, called the Braamhoek Dam, is on the uThukela River system, 468 metres below in KwaZulu Natal. Between them is a series of tunnels varying in diameter from five metres to nine metres, depending on the exact role the tunnel has to play. From the Bedford Dam reservoir, water will travel two kilometres at up to eight metres per second down the two headrace tunnels which branch and reduce in diameter in order to power the four 333MW turbines. Construction of the infrastructure began in January 2007, while the main underground work began in September 2008. The power station should come on line in 2013, with one unit being commissioned each quarter of that year.

Coal, and to a les the base load for twice a day, while then settles down shoots up. This me suited to meeting

sser extent nuclear, provide the country’s needs. But e the country wakes up or n for the evening, demand eans of generation is ideally short term demand


Our role is to design, procure and manage. T supply and construction of the transmissio substation work is left to specialist c

The actual n line and contractors


An extensive programme to improve South Africa’s transmission line network has also been underway for the past few years, under the control of Eskom’s Power Delivery Projects department which is entrusted with a massive budget stretching to tens of billions of rand. PDP is currently working on 22 projects and schemes, all in different phases of development and execution, on 51 sites around the country. PDP was established in 2005 and is divided into four portfolios—three based on geographical coverage: Northern, Central and Cape, and the fourth responsible for the new 765kV integration. This includes the integration of the new power stations into the national grid. Power transmission is the movement of electricity from the point of generation to a substation from which it can be distributed to consumers, so PDP builds new lines and substations and refurbishes others; it also has the task of building the popular 765kV transmission network which will benefit the transfer of power from Mpumalanga down to the Western Cape.

Acting general manager for PDP Johan Bornman explains: “Normally, long distance transmission networks operate at 275 or 400kV but the further you go, the greater the loss of power. By increasing the potential of the transmission line to 765kV, the network operates more efficiently. It’s an expensive exercise because everything needs to be built on a much larger scale and it’s the sort of solution only justified where particularly long distances are involved or where a huge quantity of energy needs to be transmitted. To the best of our knowledge, we are one of only seven countries in the world that utilises the 765kV platform extensively.” It is important to note that Eskom does not construct the line itself but carries out detailed design and procurement and management functions. In order to save costs, Eskom procures all its conductor, hardware and insulators to be used by the various contractors. “Our role is to design, procure and manage,” Bornman says. “In line with our contracting strategy, we put together a complete bill of quantities and a construction package that specifies all the necessary details for the construction tender. The actual supply and construction of the transmission line and substation work is left to specialist contractors.” With much of the work on the 765kV lines being carried out at heights of 50 metres, there is a greater risk of accidents and injuries. Therefore great emphasis is placed on working with contractors to ensure that they carry out the proper procedures and supervision of work so that incidents are avoided. “At some point our LTIR ratio (lost time incident rate) was unacceptably high. We have a target of 0.4 and at its worst the figure hit 0.74. However, through hard work and partnerships with our contractors, the efforts we have put in are bearing fruit as the current figure is down to 0.3. This is testimony that safety is a priority in all our projects.”



Apart from focusing on making sure that new transmission lines and substations are built, PDP, together with its contractors, always gives back to the communities. A number of corporate social investment projects have benefited communities and improved the lives of local people. PDP constantly partners with contractors to identify needs in rural communities, with

initiatives executed through the contractors. Bornman concludes: “This is part of the legacy to South Africa that our teams are delivering. These projects are in the interest of the country and we have the duty to execute them in a professional and safe manner, building Eskom’s image and reputation.� BE



Electricity supply is a crucial ingredient of urgent action is required to restructure th as Dr. Willie de Beer explains exclusively t 32

Energy & utilities

EDI Holdings


f any supply chain, but in South Africa, he electricity distribution industry (EDI), to Martin Ashcroft Energy & utilities 33


Energy & utilities

EDI Holdings


Holdings was set up in 2003 by the South African government to address the issue of energy distribution. Until its disbandment on 31 March this year, Dr. Willie de Beer was the organisation’s chief operations officer. “South Africa’s energy distribution system is deteriorating at a rapid rate and service delivery is becoming a major challenge for many of the municipalities in South Africa,” he told Business Excellence. To put this into perspective, de Beer explained that when EDI Holdings was established, electricity was supplied in South Africa by the national electricity utility Eskom, and no less than 187 redistributing municipalities (since reduced to 175). In a nation with over nine million customers, Eskom supplied about 60 per cent of its sales by volume directly to end-customers (approximately 40 per cent of total customers by number), while the remaining 40 per cent of its sales volume was supplied to the redistributing municipalities for onward sales to the remaining 60 per cent of customers. It does not sound like a recipe for the most efficient of systems.

Energy & utilities



Energy & utilities

EDI Holdings

In 2001, after extensive consultation and business modelling, the South African Government concluded that the electricity distribution industry should be consolidated into six regional electricity distributors (REDs). EDI Holdings, a company wholly owned by the South African Government, was established in 2003 through the then Department of Minerals and Energy, to facilitate the process of restructuring the electricity distribution industry in South Africa. The main object of the company was to restructure the electricity distribution industry and invest into financially viable independent REDs in South Africa to ensure a more effective and efficient electricity distribution industry capable of providing affordable and accessible electricity to consumers. The restructuring of the EDI in South Africa is required to ensure the ongoing financial viability and sustainability of the electricity distribution sector; to guarantee equitable treatment of customers in respect of prices and quality of supply and service; to remove existing inefficiencies resulting from a fragmented distribution sector; to recapitalise the currently under funded electricity distribution network assets; and to ensure that amongst others the national electrification programme is undertaken in a co-ordinated manner. The specific objectives of the EDI restructuring are : • to provide low cost electricity to all consumers, with equitable tariffs for each customer segment; • to provide a reliable and high quality supply and service to all customers, in support of the government’s economic and social development plans; • to meet the country’s electrification targets in the most cost-effective manner, and so ensure that electrification is contributing to social and economic development; • to meet the legitimate employment, economic and social interests of all employees in the sector, and ensure their safety; and • to operate in a financially sound and efficient manner, in order to provide a reliable and sustainable future for both consumers and employees.

Restructuring of the electricity supply industry is a worldwide phenomenon, by no means exclusive to South Africa. This task, however, proved to be less straightforward in South Africa than it might have been in countries like Australia, New Zealand, the United Kingdom, United States, Switzerland and Germany, which are regarded as the leaders in electricity industry reform. In most of these countries the reform process took between 10 to 15 years to complete. These countries conducted the reform process in a legally enabled environment, however, which is perhaps the fundamental difference between the approach adopted internationally and the approach adopted in South Africa. In the case of South Africa the reform journey was engaged without the required minimum legal enablers in place. Political will and the cooperation of the current asset owners are also mission critical, to support the reform process and to endure the ups and downs of such a long journey. “An initial pilot implementation (RED 1) was attempted in Cape Town on 01 July 2005,” said de Beer. “Though the concept was sound, however, RED 1 failed and was dissolved on 23 February 2007, mainly due to the absence of legislation to facilitate the transfer of assets from the City of Cape Town to RED 1.” One of the key lessons from that exercise, he said, is that restructuring an industry such as the EDI without the enabling legislation is not sustainable. Furthermore, he added, the Constitutional landscape, particularly the allocation of powers and functions among the three spheres of government, poses a huge challenge to any proposed reform that seeks to give a national character to concurrent functions.

1 Source: Department of Minerals and Energy: “Reform of the Electricity Distribution Industry (EDI) in South Africa: Strategy and Blueprint, February 2001”.

Energy & utilities 37

South Africa’s energy distribution system is deteriorating a a rapid rate and service delivery i becoming a majo challenge for many of the municipalitie in South Africa


Energy & utilities

y m at d is or y es a

EDI Holdings

The EDI is, by its very nature, an asset centric business with a replacement asset value estimated at R260 billion at 2008 values. While pockets of excellence in the current EDI are recognised, the viability of the industry is at risk due to the underinvestment in infrastructure by the current asset owners. Through the Approach to Distribution Asset Management (ADAM) study, conducted by EDI Holdings in 2008, it was revealed that the estimated maintenance, refurbishment and strengthening backlog in the distribution network was calculated at R27.4 billion (2008 values). The study also confirmed that most of the current practices in the EDI do not guarantee business sustainability and economic growth, while the associated increased operation of under-maintained plant was posing a significant risk to the industry. The EDI Holdings study further revealed that a major contributor to the backlog was the shortage of competent technical skills in the industry, which posed a significant sustainability challenge to the EDI. A co-operative agreement, dated 18 January 2002, which commenced on 1 April 2002, had been introduced to give EDI Holdings the authority to restructure the EDI, and the company successfully negotiated the accession to the co-operative agreement with a significant number of the relevant municipalities, albeit despite the absence of progress in the enabling legislation. As at 15 February 2011, a total of 154 out of the 175 municipalities licensed to distribute electricity had signed the accession to the co-operative agreement. (During the past couple of years the number of municipalities licensed to distribute electricity reduced from 187 to 175). So it can be seen that EDI Holdings made significant progress in respect of RED establishment and RED operational related readiness. Since its inception EDI Holdings successfully completed 72 per cent of all the projects required for the successful establishment of the REDs. However, despite strong evidence that the

structure of the electricity distribution industry leads to, among other things, sub-optimal outcomes, and despite the ‘in-principle’ political support for restructuring, EDI Holdings was not able to facilitate significant progress towards changing the operational realities of electricity distribution in South Africa over the past seven years. However, on 23 and 24 February 2011, EDI Holdings hosted South Africa’s first ever electricity distribution operational benchmarking conference, which was also addressed by internationally recognised benchmarking experts, and during which performance baselines, the current industry performance, local performance score cards and international benchmarks were shared. This conference laid the foundation for significant change in the operational effectiveness and sustainability of the electricity distribution industry in South Africa. The decision had already been made a few months earlier, however, to dispense with the services of EDI Holdings, instead of giving it the legislative teeth to finish its job. On 8 December 2010 the Cabinet of South Africa passed a resolution, after consultation, to close EDI Holdings on 31 March 2011 and to review the EDI restructuring process within the context of a review of the total electricity supply value chain. “It is essential that the work done by EDI Holdings over the past seven years continues in the interest of the electricity distribution industry,” said de Beer. “The accountability, as from 1 April 2011, will reside with the Department of Energy to ensure that the electricity distribution industry in South Africa is reformed into a sustainable industry in the interest of the economy of the country.” BE

Energy & utilities 39




Energy & utilities


Electricidade de Moรงambique

aspirations Mozambique has emerged from the hardships of civil war to become a fast-developing economy, but hugely dependent on electricity. This has put pressure on national supplier Electricidade de Moรงambique to expand, as Carlos Yum, director of the Corporate Performance unit and Business Development, explains to Andrew Pelis

Energy & utilities 41


Energy & utilities

Electricidade de Moçambique


fter years of civil war, Mozambique is a country on a mission to develop into a 21st century economic powerhouse. Power supplies play an important role in building a sustainable future and central to that drive is Electricidade de Moçambique (EDM), the state-run electricity supplier. EDM’s past, present and future are intrinsically linked to politics in the southern African country. The company was established in 1977, just two years after Mozambique gained its independence from Portugal, and was transformed into a public company in 1995 following economic restructuring. At the time of its launch, EDM faced a mountain of operational challenges to deliver a trio of objectives aimed at generating, transmitting and distributing electricity to a growing

nation. While that may have seemed a straightforward plan, achieving these goals was anything but easy in one of Africa’s largest countries, which spans an area of 800,000 square kilometres. Throughout the 1970s and 1980s, EDM embarked on an extensive programme to rebuild and expand transmission lines across Mozambique, many of which had been destroyed, simply did not exist, or did not link the regions prior to independence. “One of our first jobs was to merge all of the generation centres across the country and create a centralised system as industry and household consumption increased,” explains Carlos Yum, director of the Corporate Performance unit and Business Development at EDM. “Before and during the war, the south of the country used a lot of coal

Energy & utilities



Energy & utilities

Electricidade de Moçambique

power and the transmission grid was still very limited with lots of diesel isolated generation schemes. We therefore had to extend transmission lines to enable the electrification programme to be implemented.” One of EDM’s main projects was the creation of the Central Northern transmission system that connected all the central and northern provinces with more than 1,000 kilometres of transmission lines. The company also developed a 500 MW interconnection power line between Mozambique and Zimbabwe, as well as an interconnection to South Africa and Swaziland through the Motraco System. A shortage in qualified technical staff in the early days presented a further problem for EDM, resulting in the creation of an in-house training department based in Maputo and Chimoio, which to this day provides training in areas such as management, customer service and commerce, as well as technical skills. “The planning of courses is usually carried out by each business unit, according to present and future needs,” says Yum. The establishment of a national electricity transmission network has laid the foundations for hydroelectric power in Mozambique; and financial support from overseas investment has helped to bankroll a number of key projects to aid the growth of power supply. The investment is timely, as Mozambique has an abundance of natural energy resources, including approximately 10,000 MW in the Zambezi valley alone (hydroelectric); and there is also coal potential beyond 4,000 MW. EDM itself is facing increasing power demand every year as the country’s economy grows, which puts added pressure on its operations. “A national effort has been made to expand and intensify new household connections; and by the end of 2011 we expect to have over one million customers,” says

Yum. “At the same time, over the last three to four years we have seen the arrival of a number of industrial customers who require medium and high voltage supply which has needed us to deliver on reliability and quality of supply as well. “Overall demand is growing on average by 15 per cent each year and we expect this to continue for at least the next five years. That puts pressure on how we deal with customers commercially as well as our approach to infrastructure improvements and medium

and long term development plans.” In order to develop resources, mainly for export, the government of Mozambique has launched several major initiatives, including the development of generation projects and an extra-high voltage transmission system for the evacuation of power to neighbouring countries within the Southern African Power Pool. In this environment and tasked with raising capital, EDM recently received a commitment from the World Bank of US$100 million, and the European Investment Bank of up to €100 million. Part of the funding is currently being used to finance the project’s development activities,

Energy & utilities



Energy & utilities

Electricidade de Moçambique

including a strategic regional environmental and social assessment; a strategic regional environmental and social framework; an environmental and social impact assessment; a technical and economic feasibility study; and an institutional capacity assessment and capacity building programme. Meanwhile, to meet current demand, EDM operates two isolated power systems—the Central Northern system and Southern system—with a total installed generating capacity of 233 MW nominally; plus a 2,075 MW hydroelectric power station at Cahora Bassa, which sells electric power mainly to EDM and Eskom. Operations at Cahora Bassa are working at higher capacities following the restoration of the transmission link to South Africa, while other large hydroelectric plants in Mozambique have continued to operate

at less than full capacity including Mavuzi, Chicamba and Corumana. The challenge is to increase that capacity, which Yum says is where so much of the current planning and investment is concentrated. “There is pressure on both infrastructure and operations,” he says, “and we will have to look at greater automation in the future as our customer base becomes bigger and more mature. The challenge will be our institutional development and infrastructure; and we have to attach financing issues to this when making long term decisions. It is a good problem to have, mind you.” Over the next five years EDM is looking at an investment programme that will extend

Energy & utilities



Energy & utilities

Electricidade de Moçambique

beyond US$500 million in both a domestic and regional context. “This will not only be spent on new infrastructure but will also reinforce existing systems (like our Maputo and other main important load centres and distribution network) to help improve reliability and quality of supply,” says Yum. “In fact those issues will be very much the focus of our day-to-day activities and our management and financial decisions. We will also look to connect new distribution points to the network including a second line that connects the Centre to the North system— that is now undergoing a feasibility study.” With so much infrastructure improvement already underway, Yum is conscious that

EDM does not lose sight of the importance of renewable energy, which he feels will play an important role in the future. “The renewable segment is one we have started to look at and is a relatively new issue to consider. We foresee that the need to generate renewable power is inevitable; and we are currently reviewing our options and opportunities. We will need to look at this issue from an economic perspective and also the impact this will have on supply. We also need to focus on developing more hydro. “At EDM we have a saying: ‘With energy we build the future’. With considered investment we will continue to help support and develop Mozambique’s economic future,” he concludes. BE

Energy & utilities




The tiny African nation of Botswana is a use its natural resources wisely to rever 50

Energy & utilities

Botswana Power Corporation


shining example of how a country can rse its fortunes, as Alan Swaby learns Energy & utilities 51


bservers from the West often fall into the trap of lumping all of Africa and its challenges into the same boat. We see violence and/or corruption in one place and project it to anywhere and everywhere. But despite being one of the poorest countries on the globe half a century ago, Botswana has used the revenue gained from its natural resources wisely to develop itself into a stable, democratic and progressive society. It’s not a country without problems. The past few years have seen the economy go into the doldrums; but elections take place like clockwork and presidents don’t raid the piggy bank for their own personal profit. You have to go back to the time of the Boer War to record the last battle that Botswana was involved with. At the time of independence from Britain in 1966, GDP was said to be US$70 per capita. Today the IMF estimate is $14,800. It’s a rise that has ridden on the back of diamonds discovered just two years after independence. Since then, beef has become the country’s second most important export; but the government is all too aware of the need to develop a broad-based economy. Tourism runs a close third and is sometimes second, beating beef exports in the country’s top three revenue earners.


Energy & utilities

Botswana Power Corporation

Energy & utilities


Botswana Power Corporation At the heart of this economic advancement is the Botswana Power Corporation (BPC), a government owned body (or parastatal) charged with generating and distributing the country’s energy needs. In the 1960s, the power supply side was pitiful: a few isolated diesel generator sets served the capital city of Gaborone where the majority of the less than 600,000 population was located. In the early 1970s, the Selibe Phikwe Power Station was commissioned as the first coal thermal power station in Botswana. It was decommissioned in 1996 about 10 years after the commercial commissioning of the first of four units of the 132MW coal fired Morupule Power Station in 1986. BPC’s director of corporate services, Alban Motsepe, has been with the company for over 30 years and as one of the longest serving staff members, he has seen many of the most important milestones. “Our development started,” he says, “with the installation of a power plant to serve the country’s first major copper mining project. It was an isolated 50MW coal burning power station about 350 kilometres from Gaborone. It later also supplied the town of Francistown about 100 kilometres north of Selibe Phikwe through a 66kV power line. It was

Joe’s Electrical Joe’s Electrical is a 100 per cent locally owned company established in 1989, and has been solely operating as an electrical oriented company concentrating on domestic installations and power distribution systems. Our prime clients have primarily been aspiring individuals, government institutions and the Botswana Power Corporation. We are now a bigger and more determined organization that seeks domination in the local market and is ambitious for the international market. In








undertake electrical distribution works both in low and high voltage systems throughout Botswana. All our personnel have successfully completed courses offered by BPC to ensure high level competency and compliance. We have acquired high-tech equipment to enable us to execute jobs in areas where expertise is required.

only from around 1983 when Morupule power station was commissioned that it became part of a national grid.” As well as diamonds and copper, Botswana is blessed with copious quantities of coal. It’s on top of one such deposit that the Morupule power station is to be found, 300 kilometres north of the capital. “Morupule has served the country well,” says Motsepe, “and has supplied the national grid which began to spread out during the 1980s. For a long while the 132MW station was more than sufficient for our needs and helped the inauguration of the Southern African Power Pool, where neighbouring countries could help each through short, medium and long term energy trading and power supply contracts.” Currently, though, demand has outstripped supply. A tripling of the population, as well as more mining and industrial ventures, has led the planners to predict a new peak in demand in 2014. As such, the original Morupule plant has a near neighbour—Morupule B, which will put the first of four 150MW units of the total 600MW into commercial operation on the grid by January 2012. All four units are scheduled to be in commercial operation by December 2012. “The original Morupule A is constantly monitored to ensure that it is not labelled a dirty plant,” says Motsepe. “To get access to the capital loans needed from the World Bank and the African Development Bank, we had to demonstrate that the Morupule B designs would conform to the latest and stringent technologies for reducing pollution and causing minimum negative impact to the environment.” Eventually, Morupule B will replace the original plant but not until such time as the supply versus demand situation stabilises. During times of peak demand, BPC is obliged to supplement supply using expensive diesel

Energy & utilities


Energy & Utilities 56 Energy & utilities

Botswana Power Corporation

We don’t want to be seen as a typical high-handed monopoly generators—something that is neither economically nor environmentally desirable. As a government owned resource, BPC has long had a monopoly on power supply; however, since 2007 it has implemented a new structure, which emphasises good quality service delivery and more efficient operations. “Instead of the traditional vertical structure,” explains Motsepe, “the company has been divided into five value chain business units covering generation, transmission, customer services and supply, rural and corporate services. Each of these ‘self contained’ business units has to operate more efficiently, effectively and profitably in its own right with accountability resting squarely on the particular business unit director.” At the same time, regulations have been relaxed to enable private companies to generate electricity and feed it into the network, although the grid itself will remain in BPC’s hands in a single buyer model. So far, though, despite enquiries and indications of interest, no private energy suppliers have entered the market. One of the problems faced by BPC is living with the government’s concerns on the socio-economic impact of energy pricing. From a purely economical point of view, BPC would like to sell electricity at prices based on true costs. “However in socio-economic terms, this wouldn’t go down well with the poorer segment of our consumers,” says Motsepe. Electricity pricing is therefore being distorted, leaving BPC with liquidity problems in the process. Later this year, a new and independent energy regulator will be appointed to sit between the government and BPC. In the meantime, a recently installed ERP system is revealing a hoard of previously unexpected areas that need to be addressed. “Customers aren’t always pleased with

the service we provide,” Motsepe candidly admits. “Their concerns range from reliability of supply to reliability of billing. For some time, though, we have been collecting and correcting customer data. Now we have a much better picture of the true scale of things and we are currently introducing measures to rectify all our billing problems. We hope the long term benefit will be worth the short term inconvenience suffered by many of our customers.” A year ago, the supply reliability situation was dire, which necessitated the unprecedented introduction of a formalised schedule of load shedding because supply could simply not meet demand. Since then, the supply side of the equation has been performing better and the most recent outages experienced have been caused by network failures rather than supply shortages. It is also worth noting that a recent project to retrofit incandescent bulbs with CFL bulbs has netted BPC savings of over 30MW on the grid. “When there is a failure, though,” admits Motsepe, “customers aren’t much concerned about the finer points of how it happened. Our task is to demonstrate that we care about their concerns and are doing something about them. We don’t want to be seen as a typical high-handed monopoly.” Motsepe is convinced that solutions aren’t far away. With the new billing system stabilising within a couple of months and Morupule B soon to be commissioned, the two main gripes that customers have should soon be corrected. BE

Energy & utilities




Vermont’s power transmission company, VELCO, as it migrates to the smart grid. CEO Chris Dutto Gay Sutton about the challenges of becoming a t


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is preparing for another phase of development on and VP external affairs Kerrick Johnson talk to telecommunications company Energy & utilities 59


Energy & utilities



n April 2010, longstanding energy expert Chris Dutton was called in from retirement to take over as president and CEO of Vermont Electric Power Company, Inc. (VELCO) to see it through one of the most challenging periods of growth in its 60-year history. Owned by a consortium of electricity utility companies across Vermont, VELCO is unique in being the state’s sole transmission company, and until 2005 it had enjoyed a relatively stable and peaceful existence. Its original purpose during the 1950s was to construct a power transmission backbone for the state. Gripped in a post–World War II boom, the demand for power looked set to outstrip the supply generated, and it was perceived that a single state-wide transmission system would enable the state to import much-needed power from a hydroelectric plant in neighboring New York State. Thus, VELCO was created. After the initial construction period, the company settled down to its role as a freestanding transmission company, in some ways a precursor of the current disaggregation of the industry whereby supply, transmission and distribution are performed by separate entities. Its main role for many years was maintenance, though it went through several minor phases of construction that enabled the company to import power across the Canadian border from Quebec and from other areas of New England.

Energy & utilities



This comfortable state of stability continued until the middle of the current decade, when the transmission system began to come under pressure. Interestingly, the strain was not created by a rapidly increasing population or industrialization, nor has demand outstripped supply as it did before. It was precipitated by peaks in demand caused by the increasing use of air conditioning during the hottest parts of the summer months, and heating during the winter. “It then became clear that, even though we had enough power supply to meet the needs of the state, the increased peak demand was putting strain on the transmission system and putting its reliability in peril,” explains Dutton. “We have therefore had to make substantial improvements to the infrastructure of the transmission system simply to keep the lights on.” To some extent taken unaware by this rapid change in public habit, the company had to act quickly. Working in conjunction with ISO (Independent Systems Operator) for New England, which is responsible for overseeing the security of the power supply for the six-state region, the company identified several projects that would strengthen the transmission system. In 2005 work began on the first of these, the Northwest Reliability Project. Costing in the range of $220 million and reaching completion in 2009, the project entailed the construction of a completely new transmission line some 75 miles in length. The southern portion of the project consisted of a 345-kilovolt line linking Rutland to New Haven, where a new substation was built to step the power down to 115kV. A second transmission line of 115kV was then constructed to carry power north to Burlington, the largest city in Vermont. Concurrent with this, a number of smaller projects were also undertaken in the Burlington area to connect outlying towns to the grid. The second major project, the Southern Loop Coolidge Connector, began in 2007 and is now nearing completion. Costing slightly less than the

Northwest Reliability Project, it includes the construction of a new substation in the town of Vernon in southeast Vermont and 52 miles of 345kV transmission line linking it with the Coolidge substation in the town of Cavendish, a major substation that is currently undergoing expansion to handle the extra capacity. These projects—in addition to the many smaller works that have strengthened the network at a local level—have resulted in a considerable expansion of the transmission network. “In the past five years, we’ve gone from a company with an asset base of about $120 million to close to $1 billion,” Dutton says. “And more than half this increase can

Energy & utilities



be accounted for by these two projects alone.” The internal strain imposed by this migration from what was essentially a maintenance company to one initiating and overseeing major construction projects has also been enormous. “You can imagine the logistical challenge that kind of growth has presented to a small company like VELCO,” Dutton says. “We had to increase our employee population significantly, our people have had to acquire new skill sets, and frankly we’ve had to instill a new culture to deal with the exigencies of the construction contracts. It has certainly been quite a contrast to our former 30 years largely as a maintenance organization.” Although Dutton did not hold an executive role at VELCO during this busy period, he was closely linked with executive decision making as a serving member of the board of directors. Moreover, right up until his retirement in 2008, he was CEO of Green Mountain Power, the electric utility company that supplies power to around one-quarter of Vermont’s population and one of VELCO’s largest shareholders. However, Dutton’s retirement didn’t last long. When VELCO’s CEO resigned in April 2010, Dutton was asked to step in as president and CEO and see the company through what is likely to be one of the most exciting and challenging periods in its history. The power industry is moving forward to embrace three fundamental new technologies: the implementation of fiber optic communication across the system, the development of the so-called “smart grid” system, and the connection of new renewable energy generation technologies to the grid system. When Dutton took over in April, the company had a number of smaller construction projects in progress. But planning was already under way for several major projects that will move the transmission system into the 21st century. The first of these is the installation of fiber optic communications across the transmission network. “Planning for the project had been going on for some time, and we foresee finishing the entire ring in the first quarter of 2013,” Dutton says. It’s a massive project costing around $56 million, and it entails

connecting the vast majority of Vermont’s 290 substations across the state via 1,100 miles of fiber optic cable. Once completed, the new system should significantly improve the company’s ability to communicate with substations across the grid. The aim is to make data such as amperage and flow—right down to community and neighborhood level—available to the utility control centers in Vermont and to the New England control center in Massachusetts. By receiving such information in real time, the control centers will be able to see what is happening within the system and to respond quickly to situations that might threaten the stability of the power supply. Such quick reaction will improve the reliability and integrity of the entire system and prevent catastrophic failure. Not only does this benefit the communities of Vermont but, because the grids across all of New England are interconnected and interdependent, and a failure in one state could initiate catastrophic failure throughout the region, the project has considerable significance for the reliability of power

Energy & utilities



delivery across the region as a whole. Once again, the planning was undertaken in conjunction with ISO New England. “But there have been all kinds of challenges,” Dutton says. “First and foremost was aligning ISO New England and the various parties inside the state to agree on the scope and intentions of the project and how it should be financed.” The importance of the system to the integrity of power supply for all six New England states has, of course, played a significant part in the negotiations for funding for the project. As a result, 80 percent of the $56 million will be paid for out of the ISO New England tariff—which means the cost will be borne throughout New England—and 20 percent of the cost will be paid for by the energy consumers of Vermont. The transformation of the network into a fiber optic communications system is an essential element of the long-term eEnergy Vermont plan to install the smart grid system throughout the state. The aim of the smart grid is to enable the energy utilities to communicate directly with their customers, not only to install statewide automated metering but also to control appliances within consumers’ homes and facilities in order to save energy, reduce cost and increase reliability and transparency. “It also gives the utilities the capability, for instance, to control air conditioning, heating and industrial uses in times of peak demand so that system costs are reduced and

system stability is assured,” Dutton explains. VELCO has played a key role in coordinating the applications across the state for federal stimulus funding and has successfully brought together each of the state’s 20 power utilities along with the regulators and the Vermont legislature to create a single application and a single vision and strategy. “I believe this was a unique picture in our nation,” says vice president, external affairs, Kerrick Johnson. “Other states had competing applications. Vermont had one application and everybody gathered behind it. There were 400 applications in total, out of which the department of energy awarded 100 Smart Grid Investment Grants. We were awarded a grant of $69 million in October last year, which is the 16th highest by value.” Bringing together so many disparate interests—and indeed political views and perspectives—was no mean feat, and must have been a powerful advocate on behalf of Vermont’s bid. Meanwhile, the strategy to implement the smart grid is structured around four plans. The first is a very detailed overarching project execution plan that includes a step-by-step timeline detailing exactly what activities and initiatives will be

Energy & utilities



Energy & utilities

VELCO undertaken by whom and when. This has been accepted and approved. The second is a cyber-security plan, which has also been finalized and adopted. “The last two plans are still outstanding,” Dutton says. “We’re currently in discussions with the Department of Energy to finalize exactly what should be included in a consumer behavioral study, and we’re discussing a metrics and benefits plan that will gauge how successful we are with the project.” The consumer behavioral study is one of nine to be undertaken by selected schemes nationwide and will involve running pilot schemes to analyze what works and what doesn’t work, and what customers like and respond to. Information from these schemes will then be shared nationwide and will drive subsequent smart grid investments across the country. Finally, national concern about climate change is driving the national policy to increase the percentage of power being generated from renewable sources. “In Vermont this is largely wind power. Wind turbines, of course, need be sited where the wind resources are greatest—on mountaintops, well away from areas of population currently supplied by our transmission grid. Bringing power from these remote locations to the grid requires a new transmission infrastructure,” Dutton explains. “We’re currently working on some relatively small projects in Vermont, but we believe there will have to be some significant investments in transmission lines in the future to bring this power to the consumer.” Dutton sees two main challenges ahead as the company gears up for these major changes. “With the rollout of the fiber optic project we’re clearly entering an area where we have little experience: telecommunications.” So there is another period of learning, expansion and culture change ahead. “Then there will be the challenge of dealing with the cyclical nature of construction,” he continues. “Six years ago VELCO’s construction budget was $15 million. This year we will spend more than $200 million. Four years from now we may be spending $50 million. To be able to expand and contract like an accordion to deal with those swings in project construction is going to be a challenge.” With Dutton at the helm, VELCO has a leader with considerable experience and knowledge of the industry. But it’s inevitable that the lure of retirement will one day become attractive again. “I think it’s safe to say I won’t be here in 10 years,” he concludes. “Part of the responsibility of any CEO is to find a successor, so how long I stay will in part be dictated by that. It will also be dictated by how interesting I find the work. And right now I find it very interesting.” BE

Energy & utilities




Rob Harris reports on ENMAX Corporation, a C that envisions a future where nothing is wasted


Energy & utilities

ENMAX Corporation


Canadian utility company d and everything is gained

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Energy & utilities

ENMAX Corporation


NMAX Corporation is a vertically integrated utility company completely owned by the City of Calgary, Alberta. Providing Albertans with electricity for over 100 years, ENMAX has more than 640,000 customers and annual revenue of C$1.7 billion. The company is in the midst of four major generation projects. The proposed Bonnybrook Energy Centre is a natural-gas-fired combined heat and power (CHP) facility slated to open in early 2013 that will generate 165 megawatts (MW) of power and provide waste heat to neighboring businesses. CHP is an idea that has been around for quite some time. It’s a process by which power facilities generate electricity and capture waste heat that otherwise would be lost to the environment. This waste heat is then used for heating and/or cooling and industrial processes.

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ENMAX Corporation

DuraBante Companies, today more than ever, must seek creative and innovative solutions to manage critical processes and resources, gaining the necessary efficiency to maximize return on investment. DuraBante’s experienced team of professionals bring a rich variety of multidisciplinary skills and perspectives to provide the solutions needed for today’s complex problems. Contact DuraBante with your next strategic staffing need.

The proposed Shepard Energy Centre is an 800MW natural-gas-fired CHP facility that is expected to provide more than half of Calgary’s electrical needs. This facility will incorporate advanced combustion technology and produce less than half the carbon dioxide per megawatt than a conventional coal-fired plant. This C$1 billion project should begin commercial operation sometime in 2014. Then there’s the Downtown District Energy Centre, a unique heat-generating facility that will supply heat to nearby office buildings and residential customers. The Downtown District Energy Centre began supplying heat to the municipal hall in March and saved the City of Calgary from having to replace its aging boiler system. The new facility has the capacity to heat 10 million square feet of new and existing residential and commercial buildings. This C$31 million project is central to the City’s plan to rebuild the East Village into one of Calgary’s most sustainable communities. The final generation project, which is already operating, comprises several wind farms that together generate more than 600,000 megawatthours of emission-free electricity per year, enough power to service 75,000 homes. ENMAX sees the future of the utility industry as an evolution toward a more localized distributed energy grid. The company is extremely conscious of its relationship with the environment and is constantly looking for ways to improve and minimize its impact. Dave Rehn, executive vice president, generation and wholesale energy, states, “When you switch power generation from coal to natural gas, the estimated reduction in

CO2 gases traditionally is in the range of 50 percent.” Since the issue of greenhouse gases is becoming more urgent, ENMAX feels that it is also important to address the reduction of CO2 through the use of sustainable energy from solar, wind and traditional energy sources. The Distributed Energy Generation model that ENMAX uses is not a new system, according to Rehn. “The European Community has been using this energy distribution system for quite some time. Belgium has been very successful with this model, especially in combination with its use of solar panels. We believe that this model will work very well on the North American continent.” Part of this new model involves what the company calls micro-generation. In a few select homes, ENMAX is currently testing a device called a WhisperGen. This is a micro co-generation plant for the home that recycles the waste heat to create hot water and electricity. Rehn explains, “The WhisperGen uses a Stirling engine to create its electricity. So far in our tests we’ve been very pleased with the results, and almost every unit has created a surplus.” The unit is the size and shape of an average domestic dishwasher and can supplement or replace a central heating boiler system. The units traditionally generate 33 to 100 percent of an average home’s electrical needs, with the potential to sell any surplus back to the electrical grid. With the world’s concern about peak oil and the dwindling of our natural resources, all this conversion to natural gas brings up the question, how long will our supplies of natural gas last? Rehn states that, according to the natural gas companies, “There will be a significant supply at a reasonable cost for the next 50 to 100 years. Let’s assume, though, that it’s 20 years and things begin to run out. The other technology that has been around for over 100 years is gasification. That is, you can take any carbon

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Energy & utilities

ENMAX Corporation

source and run it through a gasifier to produce what is called a syn-gas. Then you have a fuel that you can transport just like you do natural gas. In fact, syn-gas can replace natural gas in any of our naturalgas-fired power plants.� Although the technology for gasification has been around since World War II, longterm pricing on natural gas makes this technology more expensive than current price points. ENMAX is a utility company that envisions a future with fewer power lines. Its philosophy of an energy infrastructure that brings electrical generation even into the home, while perhaps not new, is unique for the continent of North America. By combining this with its sustainable energy projects and its new CHP facilities, ENMAX looks like a company that is well prepared for whatever the future may bring.

You can take any carbon source and run it through a gasifier to produce what is called a syn-gas. Then you have a fuel that you can transport just like you do natural gas. In fact, syn-gas can replace natural gas in any of our naturalgas-fired power plants


Energy & utilities 77

Poweri oppo

The Bujagali Hydropower Project in Uganda wi energy for the Uganda grid, but will also spur 78

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Bujagali Energy Limited

ing ortunity

ill not just provide a reliable source of clean employment opportunities in the future Energy & utilities 79


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Bujagali Energy Limited


he Bujagali Hydropower Project is a hydroelectric project located on the Victoria Nile River near the town of Jinja, Uganda, being developed by Bujagali Energy Limited (BEL). The power plant is intended to provide clean, efficient energy to the local community, which is in desperate need of an increased electricity supply. The project achieved financial close in December 2007 and is expected to start generating power later this year, before reaching full completion in early 2012.

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Bujagali Energy Limited

M+R Spedag Group Key to success in big infrastructure projects is logistics. Over decades, M+R Spedag Group has grown knowledge and experience in project logistics. During that time, M+R Spedag Group has played a crucial role in almost all major projects in East Africa, often as the exclusive logistics provider. The Bujagali Hydro Power Plant is another project led to success by logistics powered exclusively by M+R Spedag Group.

The developer for the project, BEL, is a projectspecific company co-owned by an affiliate of Sithe Global Power, LLC (Sithe Global), Industrial Promotion Services (K) (IPS) which is an affiliate of the Aga Khan Fund for Economic Development (AKFED), and the government of Uganda. Sithe Global is an affiliate of the Blackstone Group. The project is being constructed on an engineering, procurement and construction (EPC) basis with Italy’s Salini as the main contractor. “After the completion of the Bujagali project, BEL will operate the facility for a 30-year term, at which point it will then be transferred to the government of Uganda. Should there be other power development opportunities within Uganda or the east African community, the BEL sponsors, IPS and Sithe Global would consider investing in the new undertakings,” states project director Glenn Gaydar. The Bujagali Hydropower Project is a major undertaking for the country. Uganda is in urgent need of new sources of electricity, as many domestic customers and the business community suffer from rolling blackouts lasting between 12 and 24 hours. The power problems not only impact negatively on the direct quality of life of Ugandan citizens, but also on the nation’s economy. Some businesses and homes have access to oil or diesel powered standby generators, however this alternative is far from ideal, as it is both expensive and heavily polluting. The Bujagali Hydropower Project will produce 250 megawatts of energy, remedying the acute need for electricity in the community as well as providing generation capacity to support economic growth.

Crucially, it will do so in an affordable and clean way, eliminating the need for personal or community diesel fired generators. “Ultimately, Bujagali will supply the country with relatively inexpensive, clean and reliable energy which will significantly reduce the disruptive power outages currently being experienced,” says Gaydar. “This will support growing energy needs for rapid economic growth which in turn creates employment and improves the general welfare of the population. The project will also enhance rural electrification. “It is also important to note that the Bujagali project will generate its power only from the water already released from Lake Victoria through the upstream power facilities at Owen Falls,” Gaydar adds. The environmental aspect of the Bujagali Hydropower Project has been exhaustively addressed. While hydroelectric power is in itself a clean, renewable source of energy, the initial construction of the dam and related structures can cause environmental impacts in the immediate area, which need to be properly mitigated. BEL has taken the view that it should leave the area in a better condition than it found it, so the new riverbanks that will be formed in the creation of the reservoir for the dam will be replanted with native vegetation as well as trees along the downstream river banks. Fish stocks will also be monitored, not just during the construction phase of the project but on an ongoing basis once the power plant is in operation, with native fish restocking taking place as necessary. “Environmental conservation actions— such as tree planting of over 400 hectacres and soil erosion management—have taken place,” says Gaydar. “To address potential social impacts by the project, livelihood restoration programmes that cover

Energy & utilities


Ultimately, Bujagali will supply the cou relatively inexpensive, clean and reliab which will significantly reduce the disr outages currently being experienced

agricultural and animal extension services, construction of markets and a new piped water supply system are in progress. BEL has also supported the establishment of business development centres that train and facilitate local entrepreneurship, including providing the initial capital for a microfinance programme. The extension of the local electricity grid to provide supply to project affected communities is also under active consideration,” he confirms. Alternative water supplies such as groundwater wells and standpipes are being developed for villages in the surrounding area that will have restricted access to the river. Additionally, 308 hectares of the 388 hectares


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needed to form the reservoir for the dam already exist naturally on the Victoria River, which means that flooding of the surrounding area will be minimal compared to similar projects. “BEL has a very robust programme covering social and environmental mitigations which it is implementing alongside the construction of the project,” says Gaydar. “The aim is not only to uplift the welfare of the communities that live around the project but also to make them sustainable beyond the life of the project.” Other social mitigation actions include education— where BEL has helped construct and equip classroom blocks both at primary and nursery school levels— and youth skills training, which has seen over 400 young people acquire formal training in various skills.

Bujagali Energy Limited

untry with ble energy ruptive power

Health and sanitation interventions include the training and equipping of Village Health Teams, communitybased disease prevention/control and sanitation programmes, and the construction and supplying of medical clinics. Many jobs have been created during the construction of the project itself. During the peak of construction activities, about 3,000 workers were employed by the project, most of whom came from the vicinity of the project site. The local community has therefore been upskilled, creating a more attractive workforce for potential investors and start-up businesses. The Bujagali project can therefore be summed up as this: a holistic development that benefits all aspects of the local community in a thoroughly modern way.

BEL has seized the opportunity to develop a reliable and renewable source of energy that is not only relatively environmentally benign but that also promotes the wellbeing of the local community, while providing Uganda with a principal source of power that will catalyse the country’s economic and social development in the short to medium term. There are few power projects that can make such broad claims, which is what uniquely distinguishes the Bujagali Hydropower Project from similar developments. That Bujagali is destined to be the bedrock of Uganda’s future energy production seems a certainty. BE

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Zambia is beginning to benefit as the up to the possibilities of green power— utility ZESCO is at the forefront of the 86

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world wakes —and power e changes Energy & utilities 87


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n a world increasingly concerned about global warming, where companies and nations are under increasing pressure to cut back on carbon emissions, Zambia has a power generation capability that could become the envy of most developed and emerging economies. Completely renewable hydroelectric power accounts for 99.9 per cent of its power. This reliance on renewable energy is long standing, dating back to 1938 when the first hydroelectric power plant was constructed at Victoria Falls—the country’s most famous and spectacular natural attraction.

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Zambia is ideally placed to take advantage of hydroelectric power. Lying landlocked at the heart of southern Africa, and sandwiched between the Democratic Republic of Congo to the north, Tanzania to the north-east, Malawi to the east, Mozambique, Zimbabwe, Botswana and Namibia to the south, and Angola to the west, the country is the source of two of Africa’s mightiest rivers, the Congo and the Zambezi. Many of the tributaries that feed these rivers originate deep in its sub tropical interior. Investment in hydroelectric power got seriously underway in the 1960s, with the construction of the Kariba Dam and hydroelectric plant on the Zambezi. Then in the 1970s, output was increased through the construction of the Kafue Gorge hydroelectric power station located on the Kafue River. The reservoir for the power station is the Itezhi-Tezhi Dam located in the Kafue National Park, about 250 kilometres upstream. Meanwhile, two further power stations were built at Victoria Falls while a transmission network was developed to bring that power to major customers and to the areas of highest population density. Today, some 80 per cent of Zambia’s power is generated and delivered by the national power utility, Zambia Electricity Supply Corporation Limited (ZESCO), which is responsible for the operation and maintenance of all the existing hydro power stations as well as the transmission system, the distribution and supply network, and six small diesel-fired power plants. Managed as a parastatal company, ZESCO maintains an ‘arm’s length’ relationship with government: being overseen by a government appointed board of directors and managed by an executive board. ZESCO supplies power to a customer base of over 390,000 private and industrial customers, and employs some 3,900 staff. Of the 9,450 GWh of power generated, approximately 50 per cent is sold to the mining industry, which has historically been the driver of the Zambian economy.

And the mining industry is currently going through a phase of rapid investment and growth. With the increase in demand for base metals in recent years, metal prices have shot up on the world markets, stimulating expansion in the existing mines in Zambia, and attracting new mining companies to the country. In parallel with this, there has been significant investment in industry and commerce in a bid to diversify the economy and make it less reliant on mining, all of which has combined to create a steady five per cent growth in the economy and an even larger increase in demand for power. One of ZESCO’s key responsibilities is the development of Zambia’s generation, transmission and distribution capability to meet public, business and industry demand. And this has proved to be something of a challenge in the face of this growth. Changes to the political landscape in the country over the past 15 years have also increased this difficulty. There have been nationwide discussions about privatisation of the national utilities and this in turn led to paralysis in investment as ZESCO was forbidden to invest in new power generation projects. By 2008, with generation capacity decreased due to the World Bank-funded Power Rehabilitation Programme, which was aimed at uprating the existing power generation plants, the country was suffering from power deficits during times of peak demand. Realising that demand would soon seriously outstrip supply, ZESCO took unprecedented steps to remedy the situation. The majority of capacity was being generated at Kafue Gorge which produced 900 MW from six generators, and Kariba North Bank, which produced 600 MW from four

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Energy & utilities


machines. Meanwhile, Victoria Falls produced 108 MW from three separate plants and four other small hydroelectric plants located at Lusiwasi, Musonda Falls, Chishimba Falls and Lunzua, between them generating an extra 24 MW. ZESCO’s plan had three elements. In the short term, it encouraged the public, businesses and industry to economise on their use of power: to turn off non-essential equipment particularly during peak periods or to transfer operations to off-peak times, benefiting from off-peak tariffs. Concepts such as low energy lighting and higher efficiency equipment were introduced, along with occupancy sensors which switch off lighting and air conditioning when a room is not occupied. And where these economies did not achieve the necessary decrease in demand,

the company operated a load management plan, rationing supply and maintaining the balance between supply and demand during peak periods. In the medium term, ZESCO changed the scope of the Power Rehabilitation Programme to include expansion of the plants at Kafue Gorge and Kariba North Bank. Although the expansion would delay completion of these projects, it would add an essential 210 MW of capacity at minimal cost. Similar expansions were initiated at some of the smaller regional power generation plants. Looking to the long term, however, it was plain that further power generation capacity would be required, and at last the world is

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waking up to the potential for green power generation in Zambia. The Kariba North Bank Extension Project is being undertaken as a joint venture with Sino Hydro Corporation. Construction began on the US$420 million project in 2008 and is scheduled to reach completion in 2012, when it will begin contributing an extra 360 MW to Zambia’s stretched grid. Meanwhile, construction began this year on a new 120 MW hydroelectric plant at Itezhi-Tezhi as a joint venture with Tata, which should come online in 2014. More recently ZESCO has been appointed by the government of the Republic of Zambia to manage 35 per cent shares on the new 750 MW hydropower plant called Kafue Gorge Lower, where Sino Hydro and China development funds own 65 per cent shares. The construction of this US$1.5 billion power station is expected to start in April 2011 and will be completed in 2015. The future of power generation in Zambia looks bright and the benefits to southern Africa are obvious. There is the potential to generate an estimated 6,000 MW in hydroelectric power from Zambia’s rivers and so far less than 2,000 MW has been tapped. Opportunities for further development exist in a number of areas including Kafue Gorge Lower, Itezhi-Tezhi, Kalungwishi, Mambilima, Batoka Gorge, Devil’s Gorge and Kabompo. Should just a fraction of these reach development, there should be sufficient green power to satisfy the country’s needs, and to export to surrounding areas. BE

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A cleaner stateof

Tarun Kapoor, managing director of H Limited (HPPCL), talks to Jayne Flann imperatives of sustainable power gen


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Himachal Pradesh Power Corporation nery about the social and environmental neration within the state

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ndia is a power hungry nation with a worrying shortfall between projected energy requirements and current capacity. Large untapped hydro potential exists in the rivers that flow down from the Himalayas to the north of the country. This represents a magnificent natural resource— one that is clean, renewable and not dependent on the vagaries of commodity price cycles. The mountainous state of Himachal Pradesh is bordered by Jammu and Kashmir to the north, Punjab to the west and south-west, Haryana on the south and China on the east. The highest mountain reaches to almost 7,000 metres and the landscape is indented by countless gorges and river valleys, making it perfect territory for the generation of power through water. The government of Himachal Pradesh estimates that the total hydro power potential of the state is in the region of 21,000 MW—this gives it a key strategic importance to India’s energy security. The Himachal Pradesh Power Corporation Limited (HPPCL) was formed in the wake of the 2003 Electricity Act, which was intended to facilitate the additional power generation capacity needed to sustain India’s economic growth. HPPCL was incorporated in 2006 with a remit to plan, promote and manage the development of all aspects of hydroelectric power in the state on behalf of Himachal Pradesh State Government (GoHP) and Himachal Pradesh State Electricity Board (HPSEB). These are the joint owners of the corporation, with GoHP holding a majority stake of 60 per cent. “Formerly state-managed boards were in control, but they were too big and inefficient so a decision was made to unbundle them and restructure the sector, allocating management according to competence, not tradition,” explains managing director Tarun Kapoor. “We are fully government-owned, but we manage the corporation along very professional lines and aim to be able to compete with any private sector organisation. We have the flexibility to tender for external projects and also to undertake projects in partnership with other private companies.”

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HPPCL has been set the ambitious target of achieving 3,000 MW of power generating capacity by March 2017 and 5,000 MW by the year 2022. So far, 20 hydro projects fall within its portfolio, with work ongoing in three—Sawra Kuddu, Kashang and Sainj. It has a loan of US$800 million from the Asian Development Bank for four projects. However, whilst the state has a clear desire to see more energy produced, the manner in which this is to be achieved has been carefully prescribed, with a strong emphasis on balanced and sustainable initiatives which take a proactive stance towards the local developmental needs of families displaced or affected by the projects. “At present, our main focus is on hydro-electric power generation, but we are keenly aware of the environmental impact of generating energy in this way,” Kapoor states. “Clean energy is not just about the method of generation, it is also about managing long-term social and economic change. We have a policy to always reinstate any environmental damage, but we also want to understand and alleviate the wider social impact of hydro-electric projects. “The number of people we have to displace is small and there will be compensation, but the indirect effects are much larger,” he continues. “For example, many people are dependent on local forests for fuel or fodder for their cattle, even though they don’t own the land. Major construction work, changes in land usage and a whole new infrastructure means massive lifestyle changes for rural communities.” To address these issues HPPCL has an elaborate Relief & Rehabilitation policy, which goes far beyond monetary compensation. “We want to build community assets and ensure that education improves so that young people can find work in the future,” says Kapoor. “We fund training in state technical institutions and support a number of self employment initiatives. We also try hard to award small contracts to people who have been affected by our projects. If we can place local people in higher level engineering positions we are very happy, but

at present they often lack the skills we need. We have also formulated a plan to include the opportunity for equity participation in our projects in the future, which is another step towards local acceptance and ownership.” Kapoor explains that in the future, HPPCL intends to diversify its power development activities into other renewable energy areas such as thermal, solar and wind power. “The plan to diversify into harnessing other renewable energy sources for generating power is in keeping with our commitment to ensure an environment and ecological balance to support sustainable development,” he says. “We are already looking at a 500 MW thermal project in partnership with the private sector. In wind we will also aim to work with the private sector. On the solar energy side, we have identified a site, but this form of power generation is less economically viable, so we will need to look for additional state funding. However, the relative capacity of these other projects will always be small in relation to the hydro-electric power that we can generate in the state,” he explains. As well as diversifying into other clean power sources, Kapoor is also eager to see the organisation leverage its expertise more widely as it matures. “Although we are a government agency, eventually we want to be able to compete with any private professional operator on a worldwide basis. We already have a very strong civil and electrical engineering capability regarding hydro-electric power generation. Here, we are widely regarded as being amongst India’s best. Gradually we will build on and extend this expertise and then look for external projects which can benefit from our technical and engineering strength,” he concludes. BE

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link cost



Iceland has little in the way of natural resources which it is putting to good use to boost the econ

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s with the exception of clean energy, nomy, as Alan Swaby discovers

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rom an energy point of view, environmentalists must love Iceland: where else do you have 99.9 per cent clean and near zero per cent controversial energy? Up until 30 years ago, electricity was exclusively hydro-generated; these days, one third comes from geothermal— but whichever way you look at it, it’s clean and sustainable. Nor is there any energy wasted in exporting electricity to the outside world. Iceland produces what it needs and consumes what it produces. In a model similar in every way to the pre-privatisation days of the United Kingdom, Iceland once had a number of state and municipal owned, vertically integrated companies that generated, distributed and sold electricity to the end users. Landsvirkjun (the national power company) operated the main grid with a centrally fixed tariff. In 2003, the government brought that to an end when a new energy act was passed, complying with EU requirements to separate the three functions and have them operate independently with as much competition as possible. The idea was not to sell off the family silver, nor to generate revenue for the exchequer; but rather to produce an element of competition and get the various components working with improved efficiency in order to drive down costs and tariffs. There are mixed views within Iceland as to whether these objectives have been universally met, but at least Landsnet can hold its head up high. Landsnet is the middle link of the chain—between generators and consumers—with the responsibility of managing the national grid. All power stations with a capacity of 7.0 MW and higher must be connected to the grid. As such, Landsnet presently receives power generated at 19 different locations. Then, through a network of more than 3,000 kilometres of transmission lines and about 70 substations and transformer stations,

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electricity is supplied to distribution system operators at 57 locations who have the responsibility of transmitting power onwards to end consumers via their own distribution networks. In addition to electricity distributors, Landsnet’s customers include end users with extremely high energy consumption, such as aluminium and ferro-silicon alloy producers. “When Landsnet took over responsibility in January 2005,” explains CEO Thordur Gudmundsson, “the grid was transporting 8.300 GWh per annum. Now, the figure is double that and the new Alcoa aluminium smelter at Fjardaál alone is accounting for a major part of this increase.” In fact, underlying increase in demand for energy is currently a modest one per cent per annum. It had been bobbling along at two or three times this rate until the economy was de-railed by the financial crisis. Nevertheless, the grid has doubled its load in a relatively short time. This has involved considerable investment in new lines and switching equipment but the investment would have

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been considerably more had Landsnet not squeezed the last drop of efficiency out of the network. “We have been working closely with specialist consultants,” says Gudmundsson, “who have, together with our experienced engineers, given us the tools to monitor the grid’s performance and make modifications at the least hint of trouble. By being able to carry out on-line risk assessments by means of a wide area measurement system, we have largely been able to avoid disruptive problems. As such we have increased the grid’s productivity enormously.” In one sense, Landsnet has come a long way in a relatively short period but in reality it had been planning for privatisation for almost a decade before it happened. Landsnet is largely run by the same management team in place before the segregation from Landsvirkjun. As long ago as 1977 they were planning the steps they thought would be needed when the inevitable structural changes came into place. “Of course,” says Gudmundsson, “until the actual details were published, our thoughts were largely hypothetical. Once the official regulator was appointed we were able to work together in a much more productive way. We hadn’t got everything right


By being able to carry out on-line risk assessments by means of a wide area measurement system, we have largely been able to avoid disruptive problems

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We have been working c specialist consultants who have with our experienced given us the tools to monito performance and make modif the least hint

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closely with e, together engineers, or the grid’s fications at t of trouble


but nor were we far off the mark.” The result has been a seamless transition, a huge improvement in capacity and performance—all achieved with only minor increase in its charges since 2005. Iceland is Europe’s second largest island after Great Britain. It’s roughly circular in shape with a diameter of around 400 to 500 kilometres. Its 100,000 square kilometre area is home to a population of not much more than 300,000 people and they are weighted very heavily to the south-west corner, around the capital of Reykjavík. Nevertheless, the whole perimeter of the island needs to be serviced with transmission lines crossing countless mountains and fiords. Despite the benign influence of the Gulf Stream, which helps to moderate the subarctic climate, planners of Iceland’s grid have to design for fierce winds and frequent icy conditions. So much so that Iceland is a key test laboratory for researchers into how best to cope with harsh climatic conditions. Designers and engineers have also had to learn how to cope with the demands of supplying such an energy-hungry plant as the recently completed Alcoa Fjardaál in the east

of Iceland. It’s one of the most modern aluminium production facilities in the world and represents Alcoa’s first greenfield project in 20 years. Since 1900, when the electrical energy required to convert aluminium from alumina was more than 55 kWh per kilogram, technological advancements have driven that down to 13.3 kWh per kilogram at the company’s most productive plants. Even so, the 336 pots at Fjardaál consume 5,050 GWh a year. As part of Landsnet’s commission, it has the authority to set up an energy market where the market players will be able to shop around and get the best deals for themselves. This is expected to help drive down costs, although it’s unknown at this point whether the pain will simply be transferred onto weaker shoulders who have no strength to bargain for a better deal. The mechanisms are in place for such a system to be introduced; but the powers that be have decided that such a new system would be one headache too many in the current financial climate, and its introduction has been deferred until the economy has regained equilibrium. BE

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gree pro


Shaw AREVA MOX Services’ president and COO Dave fueling weapons of mass destruction and converting th 110 Energy & utilities

Shaw AREVA MOX Services LLC

enest oject on


Stinson explains to Gary Toushek the process of dehat fuel for use in commercial nuclear plants Energy & utilities 111

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n the early 1950s, when the Cold War began between the United States and the Soviet Union, massive military reactors went online at the US government’s Savannah River Site (SRS) in Aiken, South Carolina, where workers in five plants began producing plutonium and tritium for thousands of nuclear warheads. The SRS is one of eight facilities that make up America’s Nuclear Weapons Complex, in which programs managed by the Department of Energy’s National Nuclear Security Administration (NNSA) ensure proper surveillance, maintenance, refurbishment, manufacture and dismantlement of the US nuclear weapons stockpile and perform research and development.

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Shaw AREVA MOX Services LLC In early 2000 the Plutonium Management and Disposition Agreement signed by the leaders of the US and Russia declared the nuclear weapons to be “surplus,” and each country agreed to dismantle 34 metric tons of the nuclear material, which accounts for most of the stored weapons. Just prior to that meeting, in late 1999, the NNSA signed a contract with a consortium, Shaw AREVA MOX Services, LLC (MOX Services), to design, build and operate a mixed oxide (MOX) fuel fabrication facility on property at the SRS, where plutonium from dismantled bombs would be converted to mixed-oxide fuel to be used in commercial nuclear reactors to generate electricity. But while planning proceeded slowly in the US, it moved much more slowly in Russia, apparently due to

lack of funding. So Americans offered to help the Russians, at least with workers and contractors, if Russia could find funding to begin construction of the plant. Then both sides became deadlocked on the liability rules for the US personnel who would help build the Russian plant. After much discussion and delays, in September 2006 the US and Russia signed a liability agreement that cleared the legal hurdle for the US workers in Russia. In November 2007 the US energy secretary and the director of Rosatom, Russia’s state corporation for nuclear energy, signed a statement committing the countries to dispose of Russia’s surplus plutonium. And

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Shaw AREVA MOX Services LLC

most recently, at the Moscow Summit held in July 2009 between Presidents Barack Obama and Dmitry Medvedev, both countries restated their readiness to finally implement their previous commitments. At SRS, construction of the MOX facility began in August 2007. The main partners behind the consortium contracted to build it are Shaw—a vertically integrated provider of engineering, design, consulting, procurement, pipe fabrication, construction and maintenance services to government and private-sector clients in the energy, environmental, infrastructure and emergency response markets—and AREVA—the world leader in nuclear power, covering all industrial activities in this field, with manufacturing facilities in 43 countries. The consortium’s board of governors chose Dave Stinson as president and COO of the MOX facility. Stinson began his career in the Air Force and then founded Digital

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Engineering, a software and engineering firm of 300 that developed systems for conducting safety analyses for commercial nuclear facilities. After selling that company, he became the Tennessee Valley Authority’s project manager for the $1.5 billion recovery of the Browns Ferry Unit 3 nuclear plant, which was completed in 1995, six months ahead of schedule and $120 million under budget. Later he joined Intergraph Corporation as president, responsible for developing its 3D CAD business. “Construction of the MOX facility is progressing well,” says Stinson. “We’re in the $355–360 million range for expenditures [fiscal year ending September 2009], but during this past year we actually obligated and awarded procurements of $370 million, on top of the work that was earned. So it’s been a very good year. Next year’s budget is $567 million, and expenditures will be about $470 million, with the balance in procurements. We’re at 1,600 employees now, adding about seven per week on the non-manual side.” The project will be about 38 percent complete at the end of September. Most procurements are domestic; some specialty products are imported. The design of the MOX plant is based on a similar project in France, where the MELOX and LaHague facilities provide MOX fuels to more than 30 commercial nuclear power plants in several countries. Construction of the 600,000-square-foot MOX facility at SRS will require more than 170,000 cubic yards of concrete, 35,000 tons of reinforcing steel, 23,000 electronic instruments, 1,000 tons of heating and air conditioning equipment, 500,000 feet of conduit, 47,000 feet of cable tray, 3.6 million feet of power and control cable, and 100 miles of piping. The plant’s exterior will consist of a pair of 42-inch-thick concrete walls reinforced with a mesh of two-inch steel bars; between those walls will be a cavity filled with boulders. The resulting fortified wall will be built to withstand the impact of a missile attack. Once the facility is operational, the surplus weapongrade material will be cleaned and purified in the sevenlevel aqueous polishing portion of the building. The

MOX area will consist of three levels where the fabrication of the fuel takes place, from formation of the pellets to assembly of the MOX fuel rods for reactor fuel assemblies to be used in commercial nuclear power reactors to create electric power. The facility will be capable of annually turning 3.5 metric tons of weapongrade plutonium into MOX fuel assemblies. Operations are scheduled to commence in 2016 and are expected to remain functional into the 2030s. The total estimated cost of the MOX Project is $4.86 billion. “We continue to get strong support from Congress,” says Stinson. “Our domestic procurements are a kind of small stimulus program for this country, and we continue to do high-quality work. We have a strong partnering relationship with our NNSA staff that has had a significantly positive influence on the project. We’re very proud of our safety program and the way our employees have implemented it. Keeping them safe is my top priority. We’ve worked more than 5.6 million man-hours with only two minor incidents of lost workdays, and since then we’ve gone on to log another 1.4 million safe hours. And that means a lot to us. Our incidence of recordable injuries is low, and we’re looking at first-aid cases to see what we can do to anticipate and prevent those as well.” With the lack of skilled nuclear workers in the US, MOX Services is working with colleges to develop both technical and management training programs. “We’re moving into our second semester of an MBA program for our employees at the University of South Carolina, and this year we’re starting a twoyear program with the local technical college in Aiken. We’ve got strong support from our corporate board of governors to help make that process easier for employee training. We’re offering our people courses in project management and engineering that we pay

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Shaw AREVA MOX Services LLC

for. And we’ve already started the recruiting process focused on middle schools and high schools.” He expects the number of employees at the facility to peak at around 2,400. Once trained for the MOX facility, employees also have a career opportunity with both Shaw and AREVA, which have active projects in the US building commercial nuclear plants. “We’re creating a work environment that’s accommodating to employees by acknowledging their goals and aspirations, providing them an opportunity to challenge themselves educationally and career-wise. We call it our MOX Gateway program, and it’s working well.” Asked whether he intends to stay on in operations once the facility is constructed, Stinson laughs and says, “No, at that point my work will be done. I actually accepted this position when I was officially retired, because it seemed like a great mission. Early in my career as an Air Force Academy graduate, I was in the Strategic Air Command. I’m sure many of these warheads that we’re now taking out of

service and turning into clean carbon fuel energy are ones that I was responsible for 34 years ago. I’ve been a project manager responsible for commercial nuclear plants, and some of the plants that I built are going to use this MOX fuel. “The engineering and safety procedure software we developed in the past is being used here, and I was able to go out and recruit very senior-level people, and I asked them to come in at a lower level than their last job, to build a leadership team and help shape the workforce here. Today we’re hiring and training the leaders for that operational portion due to begin in 2016. So for me, like a lot of the people I brought in to help work on this project, this is an opportunity to go full circle in our careers—to do something that we feel really good about. To me this is the greenest project on earth, from weapons of mass destruction we get clean, carbon-free energy.” BE

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Switched onto alternativep

E.ON UK has successfully seen its design and construction to final op manager Ian Johnson talks to Andr many challenges and rewards invol 122 Energy & utilities

E.ON Climate & Renewables UK: Robin Rigg



Robin Rigg wind farm through peration. Senior project rew Pelis about some of the lved in the project Energy & utilities 123

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E.ON Climate & Renewables UK: Robin Rigg


he wind farm revolution is well and truly gathering pace in the UK, but for E.ON Climate & Renewables UK, the Robin Rigg project has been anything but a breeze. Plans were in place and the design phase for Robin Rigg was complete in 2005, when a paradigm shift in the contracting of wind farms meant that the main contractor in place at the time decided to pull out of the project at the eleventh hour. “The plan had been to construct the site on a turnkey basis, using the EPC [engineering, procurement and construction] method,” explains Ian Johnson, senior project manager for Robin Rigg. “By the summer of 2005, we were ready to sign contracts when a market change saw the contractors decide that EPC was no longer the right route for them. This left us with a big problem, as no-one in the market wanted to do a project that way any more.” The solution required a radical re-think in strategy and for E.ON it was a difficult induction into the offshore renewable energy market. “We had invested a lot of time, money and resources into this for an EPC contract and then had to start again from scratch. We decided to create a multi-lot package and offer contracts on an individual process basis, which required us to take on much more risk. By early 2006, we began to place the first new contracts,” Johnson explains.

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E.ON Climate & Renewables UK: Robin Rigg

Robin Rigg is the third wind farm project for E.ON in the UK, following a pilot project at Blyth, Northumberland and Scroby Sands, near Great Yarmouth in Norfolk. The farm is located on the Solway Firth, on the border between England and Scotland, and lies 11 kilometres off the Scottish coastline and 13 kilometres off the Cumbrian shore. The plan to build two wind farms was originally proposed in the early 2000s; and consent was given to a joint venture partnership between TXU and Babcock and Brown. However, plans were compromised when TXU went into administration and Babcock and Brown, landed with the prospect of financing the project, decided to sell it to E.ON in 2003.

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E.ON Climate & Renewables UK: Robin Rigg

“They had received consent but there were lots of engineering and procurement designs to complete when we took over in 2004,” Johnson admits. “Under the terms of the consent we were limited to building a maximum 30 turbines on each farm which gave us no scope to increase the capacity. There were further limitations on the height of the turbine blades but there was a clear strategic fit with E.ON’s development and construction of offshore wind farms as part of our renewable energy plan.” The consent gave E.ON the capacity to erect 60 three megawatt turbines (30 per wind farm) totalling 180 megawatts, which can service up to 117,000 homes and offset 220,000 tonnes of carbon per year. Given E.ON’s lack of experience in offshore activities, the engineering process provided a real challenge and Johnson says that this led to work being split, with E.ON involving external suppliers like KBR for non-core capabilities such as design philosophy for offshore structures. “We started in mid-2006 with construction of the onshore substation, as it was critical to be connected to the grid system before the turbines went up,” states Johnson. “By the end of the year we had placed contracts for the offshore foundations and turbines and after a delay (due to the need for a transportation vessel) work on the foundation began around Christmas of 2007.” The logistics proved a challenge, not least given the inclement weather. Ironically, the best place for a wind farm meant that the work was often subject to bad weather delays, on one occasion an unbroken run of 34 days’ inactivity. Items were initially delivered on a just-in-time basis but pragmatism eventually had to prevail, with turbine manufacturer Vestas able to use the Harland and Wolff facility in Belfast for storage of equipment and the turbines themselves. “Aside from the weather, our primary challenge has been getting the right vessels at the right time. When we were contracting for Robin Rigg, there were very few suitable vessels available in the market, although that is not necessarily the case

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E.ON Climate & Renewables UK: Robin Rigg

today, given the drive for more wind farms. We actually ended up hiring our own vessel to help mitigate potential delays,� Johnson comments. Although wind farms produce clean energy, there are still environmental considerations that have to be met in the construction phase and Johnson says that the building of Robin Rigg was overseen by the Robin Rigg Monitoring Group, which comprised a number of stakeholders including the Scottish Executive, Scottish National Heritage and the RSPB. At its peak, E.ON’s first multi contract offshore project employed in excess of 200 people, with a dozen or so from the owners and the majority made up of various contractors and wind farm experts from Vestas and other key contractors. Local companies benefited from the project, supplying equipment, materials and boats. To this day, a boat from the locality is used to transport the remaining 40 technicians to the site, as well as to monitor environmental impact.

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There was a clear strategic fit with E.ON’s development and construction of offshore wind farms as part of our renewable energy plan

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E.ON Climate & Renewables UK: Robin Rigg

Upon reflection, Johnson says that Robin Rigg has been a huge learning curve, which he hopes will prove invaluable experience for future projects. “We are a Europe-wide energy company and have a focus now on offshore projects. Our offshore wind farm projects are centralised in Dusseldorf but here in the UK we are in the construction phase of the London Array project.” The London Array wind farm is a joint venture being developed by three international companies with renewable energy interests. The location for the wind farm is the outer Thames Estuary, one of the three strategic areas the UK’s government identified for their Round 2 offshore wind farm developments. Unquestionably, the Robin Rigg project has

given Johnson and his team a helping hand for future work. “We have the processes in place for knowledge transfer and our project set-up is now carried out using a different approach,” he explains. “We talk to contractors about the changes in the industry and we recognise that we have to understand the tone in the market and what people are comfortable with.” Robin Rigg was officially taken over and became operational in April 2010. It has been built on sea bed with a 22-year lease from the Crown Estate but Johnson says that the farm itself is built to allow a much longer life span. “Robin Rigg gives E.ON the ability to combat climate change with cheaper, clean energy while offering a diverse supply,” he summarises. BE

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farm to filling

Genera Energy focuses on advancing biom economics of non-food biofuels. Now the U first-of-its-kind Biomass Innovation Park th the country, as Keith Regan discovers 134 Energy & utilities

Genera Energy LLC


mass-fuels technologies that could help alter the University of Tennessee spinoff is developing a hat it hopes will become a model for the rest of

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Genera Energy LLC


enera Energy LLC was formed in 2008 by the University of Tennessee Research Foundation with a goal of helping to advance the research and commercial development of the emerging cellulosic biofuels industry. Originally founded to carry out the university’s $70.5 million biofuels initiative, Genera has struck commercial partnerships, forged supply contracts with farmers and helped create a farmer-owned biomass supply cooperative. Genera and industry partner DuPont Danisco Cellulosic Ethanol (DDCE) have a demonstration-scale cellulosic ethanol biorefinery in Vonore, Tennessee, a plant that is fueled today by corn cob and stover and is designed to operate on switchgrass and other biomass feedstocks. Over the next several months the biorefinery will begin operating on switchgrass produced on 6,000 acres in East Tennessee. That partnership is aimed at leveraging DDCE’s cellulosic ethanol technology—considered among the world’s best—and the university’s world-class expertise in cellulosic feedstock production and research. With a capacity of 250,000 gallons of cellulosic ethanol annually, the plant went into operation in late 2009. Now, with an eye toward demonstrating the best methods for handling, storing and preparing that biomass to become fuel, Genera has broken ground on a Biomass Innovation Park on property surrounding the demonstration-scale biorefinery, a project aimed at testing and developing methods of using biomass feedstock to create biofuels, biochemicals, bioproducts, biomaterials, biopower and bioenergy.

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Genera Energy LLC

“There are a lot of things that need to happen, from storage and conveyance and handling to grinding, milling, densification, characterization—all these things affect the cost of biomass,” says Genera president and chief executive officer Dr. Kelly Tiller. “This park is designed to demonstrate and scale up all the processes, systems and operations that will be used between producing energy crops on farms and using them in downstream applications.” Cellulosic biofuels can theoretically be made from any plant material but, unlike corn-based fuels, require additional processes before the fermentation that creates fuel for use in automobiles and other energy settings. The approach is often seen as a key piece of a larger energyindependence puzzle by using readily available, sustainable and fastgrowing low-input plant materials for fuel, avoiding the need to divert energy-intensive raw material that could otherwise find its way into human or animal food supplies. Besides the additional processing steps, another economic limitation of cellulosic biomass is the sheer bulk of the raw material used. Whether it’s switchgrass, corn stover—what’s left over after the corn itself is removed—or biomass from trees, “this material is not easy to transport and handle,” Dr. Tiller says. “We think we can develop a model of how to use a value-

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adding aggregation point for material from the surrounding area that will help improve the economics of the approach even more.� Over time, the Biomass Innovation Park can serve as a template for replication in areas near farms that are producing the biomass fuels, Dr. Tiller says, creating a distributed network of such facilities that reduces the need to transport bulky material over long distances. The Biomass Innovation Park sits on about 33 acres in Vonore and is anchored by the demonstration-scale biorefinery, which began operations in January 2010, processing corn cob. In late 2010 the biorefinery was expected to begin using switchgrass from local farms with which Genera has supply contracts in place. Infrastructure planned for the park includes material receiving, two silos with conveyance apparatus and tunnels, areas for storing baled material, a processing building, other

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maintenance, service, and office buildings, and field areas for growing demonstration crops. The first phase of the park buildout will focus on basic infrastructure needed for handling, storing and preprocessing the biomass. The site plan contemplates future expansion for analytical laboratories and to demonstrate other conversion processes. In the fall, as much as 20,000 tons of switchgrass will be harvested in a short time frame, material that will need to be brought into the park and stored before processing can begin. Laidig Systems is supplying the switchgrass truck receiving stations and storage silos. At the same time, Genera will also use the park to carry out a $5 million Department of Energy grant awarded to explore a high-volume bulk handling system for switchgrass. Most such material is currently baled for transportation off-farm, and a bulk approach could cut down on costs. Over time, the park will continue to evolve and

Genera Energy LLC

expand, Dr. Tiller adds. “We see this having a long useful life as the place where all things are integrated with as much flexibility as possible, including the ability to look at a range of other feedstocks with an eye toward figuring out the best approaches for each of those as well.” The park model could be especially well suited for farmers’ cooperatives, in which groups of farmers band together to create a central place to store and process their bulk raw material and get it into the processing stream as quickly and efficiently as possible. “They could use this model to add value to their crops prior to it moving downstream. That’s one way this could work.” Although the park is meant to test and demonstrate processes and help prove the economic viability of the technologies involved, Dr. Tiller believes the time for cellulosic biofuels is now. “We have enough information now about the technology and the economics to suggest that this is not a future dream; this is ready now,” she says. “Of course, there are areas where we could see improvements and efficiencies that could be gained, and those will happen over time. But this is not something off in the distance. We’re ready to scale this up now. When you take all this work together, it serves as very strong validation of an integrated approach that takes material all the way from the farm to the filling station.” BE

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The discovery of a quadrillion cubic feet of natura offshore Ras Laffan in Qatar has propelled the ar itself energy capital of the world. John O’ Hanlon Feisal Saad, manager of Ras Laffan Port, to find o 142 Energy & utilities


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al gas 40 miles rea to declare spoke to Capt. out more

years Energy & utilities 143

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wenty years ago, northern Qatar was a rocky desert and Ras Laffan a remote promontory jutting out into the Arabian Gulf. What happened next was that gas was discovered in what is now known as the North Field, after which a new port was constructed to ship it round the world. The North Field is the largest single natural gas deposit in the world—it will yield gas for a couple of centuries, give or take, and its discovery has placed Qatar ahead of its wealthiest neighbours. In 2009, it was probably the only country in the world to record double digit economic growth. To process all this gas, the Qatar government, through the national oil company Qatar Petroleum (QP), designated an industrial area, the Ras Laffan Industrial City (RLC), to accommodate the processing and distribution facilities that were going to be needed and to provide an infrastructure. The world’s petrochemical majors like ExxonMobil, Shell, Total, SASOL and many more have provided their processing technologies to build gas processing plants here, forming joint ventures with QP and its subsidiaries.

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The sheer size of RLC is perhaps better expressed in terms of people than in fabric or area. Its permanent population—the engineers and administrators—number around 28,000 and every one of them commutes either from nearby communities like Al Khor or from the capital Doha, respectively 25 and 75 kilometres to the south. But this number is dwarfed by the labour camps within the city area itself. In 2008, between the city’s own camps and those run by companies like Shell, camp population rose to 110,000. “The numbers have started decreasing this year as all these projects get completed so it is expected that in another three or four years when we are down to one or two projects at a time, the camps may come down to about 30,000,” explains port manager Capt. Feisal Saad. The operations at RLC had a major impact on the global energy market. Export agreements have been made with Japan, Korea, India, China, continental Europe and the US, where a receiving plant has been built in the Gulf of Mexico. The first such arrangement was made with the UK, where a regasification plant was built in Milford Haven Port to process the Qatari LNG for the UK’s national grid. The first tankers came in last year and as North Sea resources decline, this will fast become a

pivotal part of the UK’s energy strategy, providing up to 25 per cent of its total needs. To ship these huge quantities of gas, Qatar started to develop the Ras Laffan port area in 1996, since when it has expanded rapidly. Within 12 kilometre-long breakwaters, the new port has specialised berths for every type of activity associated with RLC, and plenty of room for expansion. To put the operation into its world context, the second largest LNG port in the world at Bintulu in Malaysia has three LNG berths and ships perhaps 18 million tonnes of LNG annually. Ras Laffan already has six LNG berths and will export 77 million tonnes by the end of 2011. However, that is far from the end of the story. “Qatar Petroleum decided to build an infrastructure that would cope with all our requirements over the next 20 years,” says Capt. Saad. Basic services are all in place: new berths can be added as they are required, he explains. “We have room to build around 25 more berths. At the moment we have six LNG berths with space for a further four. We have six liquid product berths, are building two more and have space for another 14. We have six dry cargo berths. We are building two container berths that will be completed in two years’ time and we have space for three more.” A further 13 berths are reserved for the offshore supply vessels.

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Though the port was started in the 1990s, it is really only since the Ras Laffan Masterplan was implemented from 2006 that the greater part of this infrastructure has been created. Starting from scratch on virgin land and having QP running the whole show made it possible to accomplish in four years what would have taken decades in any other part of the world, he points out. Capt. Saad was previously harbour master at Mesaieed Industrial City, a petrochemical port south of Doha, and at Ras Laffan has four departments under his operational control. The harbour master’s department provides pilotage, towage and controls vessel movements; the logistics department runs onshore logistics for dry cargoes, stevedoring and administration services; the infrastructure department includes facilities management, inspection and maintenance; and the fourth division is a regulatory body within the port making sure ships meet international maritime standards and follow port regulations. After completion of the container berths, the port will concentrate on two massive projects worth a total of $1.8 billion and designed to further establish its self reliance. The first of these is a dry dock and repair yard for LNG and other types of vessels. By 2012, Capt. Saad expects the whole port facility to be used by 5,000 ships a year. All these facilities are like links in a chain, he says. “Since we are the largest LNG producer and exporter we want to have the best support facilities—ships that call here regularly will have a dry dock they can use every two to three years when they need it. We have the largest known reserves so we have to have high capacity production plants. The standard production of energy plants is perhaps 2.4 million to 3.7 million tonnes per annum, whereas ‘mega plants’ produce 7.8 million tonnes per annum, and we have built six of these! We need to ship all this, so the port is a key link in the chain. We decided that rather than chartering, we could be the largest ship owner on the LNG side, so the government created Qatar Gas Transport Company, known as Nakilat [‘carrier’] which owns and

operates the LNG vessels. Why not have the dry dock too? We have a captive trade and it is all part of our strategic chain.” The dry dock is being built on reclaimed land by Qatar Petroleum at a total cost of $450 million, and will be used by a joint venture of the Singapore marine construction specialist Keppel with Nakilat. Spread over 43 hectares, it contains two large dry docks and one Panamax-size floating dock. It will provide facilities to repair and maintain the fast-growing Nakilat LNG fleet and all other types of vessels. A further part of the reclaimed site is devoted to shipbuilding, this time with Nakilat in partnership with Dutch shipbuilder Damen. “We won’t build very large ships here; but we’ll build anything up to 120 metres long, including yachts, tugs, offshore supply vessels, coastal tankers or naval vessels,” he says. Development on this scale is bound to affect both land and sea, but the port was able to address environmental issues from the planning stage. Best practices include common water cooling systems that ensure the water returned to the sea from the plants is clean and at the right temperature. A percentage of investment has been earmarked for environmental studies and remediation, and it is encouraging to find, for example, that turtles breeding close to the port are increasing in number. “They are better protected now than they ever were before,” says Capt. Saad. Environmental Protection was one of three Seatrade awards won by RLC in 2009, the others being Best Port Authority and Best Strategy for Oil & Gas. No organisation had ever bagged three awards in the same year before. The port was also awarded by Lloyd’s List the Best Port Infrastructure Award for 2009. BE

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exploration the hard


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nd gas industry of Pakistan offers entrants eir trade, as Alan Swaby discovers Energy & utilities 151


ry as it may, the Pakistani oil and gas industry has yet to hit the big time. The first oil well was spudded a century and a half ago and there has been no shortage of exploration since then. Part of the problem is that there seems to be more gas than oil in Pakistan; and it was only in the last three to four decades that the demand for gas picked up. “There was a lot of exploration by foreign companies in the 1960s,” explains Aftab Ahmad, executive director, Strategic Business Planning department, OGDCL, “but when they found they couldn’t sell the gas they discovered at that time due to market constraints, one by one they drifted away.” This is where OGDCL stepped in. The roots of OGDCL go back to 1961 when a loan of 27 million roubles from Moscow financed the state owned corporation’s exploration plans. Although many fields have been found, by international standards none of them are particularly spectacular. Nevertheless, OGDCL is the largest of all Pakistan’s producers, with sales last year of €1.25 billion. As of last year, it also held the largest reserves of recoverable hydrocarbons, namely 36 per cent of gas and 45 per cent of oil. In terms of production, OGDCL contributed 21 per cent of Pakistan’s natural gas production and 54 per cent of its oil. However, with the country consuming 383,000 barrels per day and the whole of Pakistan’s production combined amounting to 61,670 barrels per day, the country’s energy needs are well and truly in deficit, which provides incentive for E&P companies operating in Pakistan and also to the new entrants to work towards bridging this gap.

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In 1989, the status of the business was changed from that of state corporation to self funding company, albeit with the government as major stakeholder. In 2003, OGDCL was listed on Pakistan’s three stock exchanges when the government sold five per cent of its holdings through an IPO. Three years later it went public in London through listing of its global depository shares (GDS) and last year another tranche of shares were offered, largely to the 10,000 plus employees, to the point where the government now holds around 75 per cent of shares. Since the corporation was set up with the Russian loan and initial professional expertise came from Russia, OGDCL adopted the Russian model of self sufficiency, made possible through the purchase of Russian made equipment. As such, it has an impressive collection of equipment for both exploration and well drilling. In total it can field five separate, well-equipped seismic data acquisition teams. Back at base there is a team of 20 highly skilled data analysts, some with 30 years’ experience of seismic data processing. Once guided by the seismic data, OGDCL has seven well drilling teams able to operate in shallow depths to 2,500 metres and in deep areas down to 6,000 metres. “Having so much of our own gear,” says Ahmad, “means that we can prospect where others are less willing to go. Yet despite the geological challenges, OGDCL’s finding costs of less than $3 per barrel and finding plus development of less than $6 per barrel are the lowest among its peers.”

The roots of OGDCL go back to 1961 when a loan of 27 million roubles from Moscow financed the state owned corporation’s exploration plans

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There are more than 50 OGDCL operated fields and 37 joint venture fields being managed throughout the full extent of the country, to process the mix of both oil and gas being extracted. OGDCL therefore has enormous amounts of capital tied up in 16 plants around the country, calling for a variety of processes to be used such as gas dehydration, gas sweetening, dew point control, LPG/condensate fractionation and liquid recovery, essentially dictated by the peculiarity of the reservoirs to be produced. Everything about OGDCL’s operation means that the workforce is one of the most experienced and skilled anywhere. However, this is something of a double edged sword. “The great variety of terrain,” says Ahmad, “and the range of hydrocarbon types we handle gives our people the most well rounded training possible. Not surprisingly, many of the best workers have been lured away, not only by other Pakistani operators but to oil exploration centres around the world, and with their performance they work as our ambassadors. However, the attrition is well within the normal range.” An impediment which has held OGDCL back in achieving its targets has been the energy sector circular debt which essentially has arisen due to non-payment of electricity buyers and their distribution companies. All along the supply chain, companies are being short changed. “Many companies have to resort to borrowing to run their business,” says Ahmad, “simply to stay afloat. So far, we have been able to avoid borrowing but of course, it means that our exploration programme is being held back as we have to direct reserves into day-to-day working capital.” OGDCL’s role as one of the top corporate givers is

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recognised and acknowledged by the communities in which it operates—over 60 locations nationwide, in all four provinces of the country. Be it a programme as unique as preserving the habitat of the blind indus dolphin, or partnering with the World Bank as a major donor, OGDCL is always willing to lend a helping hand. As a responsible member of the corporate community, OGDCL also makes an effort to relate its community development initiatives to the Millennium Development Goals. In other words, its CSR efforts are directed towards eradicating extreme hunger and poverty, reducing child mortality, improving maternal health, ensuring environmental stability, empowering women and promoting education. BE

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Based on


Technip KT India is enjoying a period of phenom to Gay Sutton about his strategy for innovation a 158 Energy & utilities

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menal growth. CEO Ram Kishore Iruvanti talks and remaining ahead of the competition Energy & utilities 159

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ome marriages are a matter of convenience while others are made in heaven; and some are destined to produce a long-lasting union of harmony. Just such a marriage took place in 1999 when Technip, a global provider of project management, engineering and construction services for the oil and gas industry, acquired KTI—the chemical process division of Mannesmann. With offices in Delhi, Rome, The Hague, and Claremont, USA, KTI had a worldwide reputation for high temperature reaction process engineering for the refinery and petrochemical industries, and the fit seemed perfect. “We had been working on projects with Technip for many years and knew them very well. In ethylene plants, for example, we would work on the front or hot end of the plant, and they would manage the cold or back end of the plant,” explains Ram Kishore Iruvanti, CEO of Technip KT India. “The acquisition therefore provided vertical integration for Technip. Meanwhile, we transitioned into a project management company and have been able to participate in much larger projects worldwide.”

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Technip KT India Limited This decade has been one of phenomenal growth for the company, so much so that the cold winds of recession which have depressed businesses around the world have hardly been felt. “When I returned from the Netherlands and took over as CEO here about five years ago, we were a €20 million company in terms of revenue,” Iruvanti says. “Today we are a €100 million company. And we have been playing a part in India’s drive to produce gasoline and diesel fuels to meet the Euro IV emissions standards. There has been, and continues to be, considerable investment in new refinery and petrochemical plants in India.” Today, Technip KT India is recognised as a market leader in a range of technologies for the hydrocarbon industry—for example, it has built 16 hydrogen plants in India to date. “Each project is unique,” Iruvanti asserts. “But the core chemistry and engineering remain the same, so you could almost call this a product line.” The company is also market leader in the construction of fired heaters and furnaces for oil

refineries, and has built around 100 in India alone since its inception. It has developed a considerable reputation for sulphur recovery units; and has developed skills in designing and building modular plants in the hydrocarbon industry. “In these areas, which form around 50 per cent of the business, we are well known in the market. In another 30 per cent, we use other people’s technologies and share the market with other EPC contractors. For the remainder of the business, we provide engineering services to Technip worldwide, whenever they require our areas of expertise.” Being part of a large global group has also brought a series of benefits. Not only can the Indian division participate in much larger contracts with its parent company, but it is able to share technology and knowledge with other members of the group. Technip also continuously improves its engineering and

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I want to keep the fires burning so that we come out with some interesting future product lines

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business processes, systems and procedures, and standardises them across the group, only adapting them when necessary to the country in which they are being implemented. As a result, engineers moving from office to office within the group will find project planning and project management systems they are familiar with. “This then gives them confidence to exchange information, and increases mobility between the units. And this is happening more and more as we share knowledge and skills. And for our clients, these standardised procedures mean they can expect the same products and services in India as they have received from us in, say, Aberdeen, Paris or Italy.” To date, the majority of work in India has been for onshore refineries, petrochemicals and gas processing plants. However, Technip KT India’s strategy going forward is to consolidate and grow the home market, first of all bidding for projects as an independent unit, and secondly bidding on larger projects in collaboration with the group. Iruvanti would also like to see the company expand beyond onshore work and to develop its expertise in offshore work. The vibrancy of the Indian economy has not only presented opportunities, but also challenges. Consolidation in the EPC field has resulted in many small contractors folding and larger contractors growing to become more competitive. In addition, many of the international players have been entering the Indian marketplace. Attracted by the strengthening economy, they not only compete for contracts, but also for skilled personnel. “So we’re increasingly finding it important to create a working environment that both interests and challenges our engineers, and meets the growing aspirations of our people.” The company is rising to this challenge in two ways. Firstly, Iruvanti believes that working on large projects such as the Indian Oil Corporation’s isomerisation plant enables the company to manage a project through from concept to commissioning. “And this keeps the interest of our engineers alive,”

Technip KT India Limited he says. Secondly, he is personally driving the activities of an innovation unit in India. “I want to keep the fires burning so that we come out with some interesting future product lines.” The unit is currently looking at a variety of technologies including carbon capture and wind energy. Carbon capture could, he believes, be of

Dresser-Rand Dresser-Rand is a global supplier of custom-engineered rotating equipment solutions. During the last 12 years, Dresser-Rand has supplied process compressors for Technip KT India’s IOCL Guwahati, IOCL Mathura NHTU Revamp, IOCL Gujarat and HPCL Vizag-HGU projects. Dresser-Rand is proud of this relationship and continues to provide Technip with superior value reflective of our



engineered solutions.




great value to the carbon dioxide recovery projects that will be going out to tender in the future. “These technologies will also be valuable from the sustainability point of view.” Looking at the immediate future, the company has ambitions to expand into industries upstream and downstream of its traditional area of focus, and thereby create a bigger footprint in the marketplace. “We already have the technology, although there are still a few technical challenges,” Iruvanti concludes. “But we believe that unless we continue to innovate and develop these new technologies, the competitors will catch up with us.” By personally driving the innovation process, Iruvanti intends to maintainthat forward momentum and stay one step ahead of the competition. BE

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wonder of


J端rgen Hendrich, CEO and MD of MEO A the importance of creative thinking to b through the exploration and commercia

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Australia, talks to Jayne Flannery about build shareholder and environmental value alisation of hydrocarbon resources

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EO, which is listed on the Australian Stock Exchange, manages a natural gas project portfolio centred in Australia’s premier offshore LNG provinces in the Bonaparte and Carnarvon Basins of the Timor Sea. However, for Jürgen Hendrich, who functions as both CEO and MD of the company, discovery means something much more far-reaching than identifying the physical location of gas deposits. “Strategically, we search out angles to apply a different perspective to challenge prevailing paradigms. This is what differentiates us: we look for opportunities that others don’t see. As a company, we want a footprint in areas that are neglected, tired or overlooked where we can apply our technical imagination to create value,” he states.

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MEO Australia MEO relies on a unique blend of strategic insight and technical expertise supported by the finest geotechnical and commercial talent that Hendrich can identify. “From the outset, we have sought to attract the highest calibre staff. It is the collective, intellectual capability that our staff bring to the organisation which creates a whole that is greater than the sum of its parts. Talented people working in a stimulating environment with aligned motivation enables us to punch well above our headcount or market capitalisation weight,” he explains. Last year, MEO introduced the world’s third largest listed oil and gas company Petrobras, as a partner. “Petrobras entrusted us to continue to operate the permit on behalf of the new joint venture. This demonstrates our ability to make an impact on the industry,” he adds. 2011 has started on an equally positive note. MEO is finalising a farm-out of part of its 100 per cent owned NT/P68 exploration permit in the Bonaparte Basin, which contains two significant gas discoveries. Hendrich is reluctant to be drawn on details of the deal’s terms, but confirms that MEO will retain 100 per cent ownership of one of the discoveries. “The deal is important to us, because it introduces risk capital to the joint venture to support appraisal drilling operations which will hopefully lead to a commercial development,” he says. In the same region, MEO has also developed a commercialisation path and secured environmental approvals to install a three mtpa LNG plant (the Timor Sea LNG Project) and two 1.75 mtpa methanol plants (the Tassie Shoal Methanol Project). “Most of the discovered gas resources in the region are economically stranded, firstly because of the remote location from any potential onshore infrastructure,” he explains. “The second challenge relates to the quality of the gas. Natural gas often contains varying quantities of natural gas liquids, which are a bonus as they generate an additional revenue stream. Many of the stranded gas fields are deficient in natural gas liquids. In addition, natural gas can often contain inert components such as nitrogen or CO2. Where gas is

Australian Drilling Associates Australian Drilling Associates (ADA) is a well engineering and drilling project management company. We strive to provide efficient drilling solutions for our clients, delivered safely, on time within budget and with minimal environmental impact. ADA has successfully provided a full range of drilling project management services to MEO over the last two years including all the supporting functions, HSE and logistics for wells drilled in the Carnarvon Basin. Drilling operations were effectively conducted within the cyclone periods without incident or accident. Working closely with MEO and the Joint Venture Partners such as Petrobras, the wells were all drilled within AFE.

low in liquids it tends to be high in these inert gases. The gas in the region contains variable CO2 which needs to be removed from the processing stream, thereby adding to operating costs,” he continues. It is easy to see that the economics associated with this sort of venture can quickly become marginal. But innovative thinking at MEO has addressed these two key impediments. “In the project for which we hold approval, we have identified a natural feature on the seabed that in places comes to within 15 metres of mean sea level. We plan to make use of this natural feature to locate the processing infrastructure in the heart of the stranded gas fields and overcome the tyranny of distance.” The second obstacle is the high CO2 content. The Evans Shoal gas discovery contains approximately 28 per cent CO2, which makes it ideal for conversion into methanol. Methanol synthesis using steam methane reforming generates excess hydrogen. Adding around 25 per cent CO2 to the natural gas stream balances the equation and increases the yield of methanol.

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Methanol has historically been viewed as a poor cousin in the energy business, but Hendrich believes this is an outdated paradigm. “In China, methanol demand is growing very strongly not only as a traditional chemical feedstock, but increasingly as a fuel blending agent. Methanol plants in China use gas derived from pulverised coal as their feedstock. Methanol has myriad applications including plastics, diesel substitution and as an LPG substitute. It is not as deep a market as LNG yet, but we believe it will grow strongly as pressure mounts on more traditional energy sources.” From a commercial perspective, Hendrich prefers to hitch the company’s fortunes to a rising star rather than link them inextricably to the mature LNG market, which as a global commodity, is subject to full exposure to global cost competition. “As far as LNG is concerned, the high quality, easily recoverable, liquids rich gas resources close to infrastructure have been cherry-picked. Increasingly, we must look to develop the more economically challenging resources. That means finding ways to break the traditional mould. I believe that monetising higher CO2 gas resources via conversion to methanol represents another potentially attractive economic alternative,” he states. The company currently has around $100 million in uncommitted cash reserves. Hendrich and the team are actively seeking attractive new projects to add to the portfolio, both in Australia and overseas. “Ultimately, I would like to see us lauded for making a difference to the energy equation on the planet and to achieve that, we need to demonstrate that we possess the intellectual and technical horsepower to view opportunities and challenges from a different perspective. Ultimately to be relevant as a business, we need to deliver value not only for our shareholders, but for all stakeholders. That means continuing to identify and exploit value gaps if we are to remain relevant and become a partner of choice in project developments,” he concludes. BE

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As a company, we want a footprint in areas that are neglected, tired or overlooked where we can apply our technical imagination to create value

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Maintaining growth at a manageable rat the added complications of red tape wh border. Wayne Hartmann gives Andrew strategy behind an ambitious internatio

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te is hard enough, without hen that growth is crossPelis an insight into the onal expansion programme Energy & utilities 175

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s South African businesses thrive in the post-Apartheid era, many companies are looking at opportunities to develop the entire sub-Sahara region. There is no guarantee of success, however, and the ability to adapt to local dynamics and customer preferences is a major challenge. For Engen Petroleum, the challenge of expansion involves international red tape, differing customer expectations, variable transportation networks and often limited IT infrastructure. Despite these considerations, Wayne Hartmann, general manager for International Business Division, has overseen a period of continued growth, as the oil company gathers momentum towards fulfilling its EPIC 2016 Vision.

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“We are a petroleum products marketing company (downstream) operating in sub-Saharan Africa, with our headquarters in Cape Town, South Africa,” he explains. “We operate a refinery in Durban from where we make approximately 40 different products, ranging from LPG through to HFO, which we market across Southern Africa. “We are not involved in oil production; we purchase crude oil from other areas of Africa and the Middle East, which we refine and then market and distribute. The Durban site produces 125,000 barrels per day and employs about 1 500 people (700 of which are contractors). Engen as a group employs in the region of 4,500 staff.” Today Hartmann oversees the company’s extensive network of service stations across 18 countries in sub-Saharan Africa and exports to many other territories, mostly in Africa and the Indian Ocean Islands. “By March 2011 we will be running in excess of 1,650 retail sites with 448 of those based in neighbouring countries,” he says. “We are very much guided by market and customer expectations and feel that our awareness of the cultural differences in each country has given us a commercial advantage—different markets have different needs and our approach reflects that. “Since 2006 our target has been to aggressively grow the business outside of South Africa by eight to ten times and we aim to accomplish this by 2016, which is where the name ‘EPIC 2016’ comes from. We have tripled our income to date and we are on course to meet our target.” The company has been in business for over a hundred years and was formerly owned by Mobil, until it pulled its business interests out of South Africa at the height of the Apartheid era. Engen was then taken over by local mining house Gencor and was subsequently renamed Engen and listed on the Johannesburg Stock Exchange. “In 1996 Petronas bought 30 percent of Engen and took 100 percent ownership in 1999. A subsequent de-listing of the company occurred concurrent with the sale of 20 percent to a local empowerment

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company called Worldwide Africa Investment Holdings,” Hartmann explains. “For many of our non-SA businesses we have local shareholders who better understand what is happening in regards to local policy and also what local customer preferences are. This makes a huge difference and the end result is a richer outcome—I expect we will see more of this approach in the future,” he adds. Engen has two major distribution channels, the first being its retail arm, which concentrates on service stations, offering a variety of services depending on the requirements in-country. “Since we decided to expand

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across the sub-Sahara region we have built 20 to 30 stations each year. They represent our brand through an initiative to train staff and franchise owners.” The strategy continues to work and the recent acquisition of seven businesses from Chevron adds to a list of previous purchases from multinational companies including Shell and Total. The second distribution channel is the business to business sector, where Engen has forged strong relationships with a number of industries including airlines, mining and transport companies. International trade puts extra strain on supply chain management, which is one of Hartmann’s main challenges now. “This is definitely a work in progress for us and we often encounter national regulations that determine where we have to source products from, meaning we can’t always use our Durban production. We have invested over £14 million over the past three years on supply chain infrastructure

and recently opened a new depot in Zambia, which will significantly increase our capacity to support growth. “Another challenge is ensuring that we have enough skilled people for an organisation that wants to grow rapidly. We run in-house training schemes to develop staff with technical skills and we have a targeted personal development programme, which runs alongside a graduate recruitment initiative.” One of the key areas Engen is looking to improve on is its carbon footprint. Hartmann says this is far from straightforward, in an area where other companies can gain an advantage by operating in a less committed fashion. “We have to strike a balance and we are currently rolling out an aggressive growth programme that invests in technology and environmental measures that will stand us in good stead

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for the future. We are trying to reduce the amount of cooling that takes place at each station by using solar and wind power and different building materials. “We are trying to understand the latest best practices and better manage our use of power in areas such as lighting. All of this costs money of course and not every competitor considers their environmental impact in this manner, which keeps their costs down and is sometimes used against us competitively.” Hartmann has been with Engen for 25 years and was formerly in charge of the Durban refinery. He is positive about what happens next. “The next twelve

months will see the transition period for the Chevron businesses we have acquired. We must integrate these sites into our existing operation and ensure the people are motivated to succeed. We will look to make more acquisitions in the future and Kenya, Uganda and Ghana are areas to focus on. “Change must be managed well; we must understand where the customers are and what their needs are—that is where our continued growth will stem from,” he concludes. BE

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On 18 March 2010, NiQ Lai and his col ringing the opening bell: he tells John City Telecom is now in harvesting mod flow and achieving its goal to dominate 186 Energy & utilities

City Telecom (Hong Kong)



lleagues celebrated 10 years on NASDAQ by O’Hanlon how after 10 years of investing, de, being profitable, with positive free cash e the Hong Kong broadband market Energy & utilities 187

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business that sets out to crush its competitors and which annually terminates the lowest-performing five per cent of its workforce could look ruthless. Single minded would be a better description, though. In the 1990s founder Ricky Wong chucked a stone into a local telecoms market dominated by former monopoly incumbent Hong Kong Telecom (now known as PCCW) by leveraging callback opportunities to undercut the competition on international calling. With the cost of outward calls from Hong Kong being higher than inbound calls, reversing the direction of the call created value for the subscriber and made City Telecom a lot of money over the next decade and a half. Taking a 10-year view and investing in its people are two things that distinguish this company, says NiQ Lai, City Telecom’s CFO and head of Talent Engagement. “We have a very distinct way of doing business and we stick to our guns: through good and bad times we don’t falter.” The callback opportunity drove deregulation in Hong Kong and long-distance calling quickly became a commodity, but the battle moved on as data became more important than chat, and bandwidth the Holy Grail. Downloading high definition video or large data files requires fibre optic, so City Telecom started laying down its own network in Hong Kong in the early 2000s, a seriously capital-intensive venture.

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Lai had joined the company in 2004 at a fraction of the salary he was earning as director and head of Asia Telecom Research at Credit Suisse First Boston. However, after over a decade of researching telecom companies, he knew the business well enough to believe it was worth selling his home to give him the capital to buy a share of the equity. Two years later he stepped into his present role as CFO and head of Talent Engagement. The same year City Telecom set its 10-year BHAG, or big hairy audacious goal, to become the city’s largest internet protocol (IP) provider by 2016. In 2007, after seven years in the red, the company became cash-flow positive. Today, it is now free of debt, profitable, with positive free cash flow, over US$50 million in the bank, and positioned to take advantage of the exponential growth of internet traffic driven by online video, gaming, learning, cloud computing and the like. “We are proud to be the provider of the fattest, dumbest pipes in town to the households and then charge a monopoly rent on them,” says Lai. “We are not a sexy technology or content business. We roll up our sleeves, dig up the roads, lay fibre down, and we have been doing this for 10 years now.” None of this was as obvious in 2000 as it is today. “We started 10 years ago, just after the technology bubble burst when the industry was not ready and people did not believe in fibre. In fact, as we started

just after the technology crash, our competitors were looking to cut capital expenditure rather than invest. But we continued to chug away for the first seven years losing money!” Lai admits, “Most companies would have sacked their CEO long before that! But our founders own the majority of our company, which helps them to keep their jobs during the investment period and allows them to invest according to their vision rather than short term market pressures.” City Telecom built the biggest network in town by stealth, putting it in an unassailable position because what it was doing was counter intuitive. The technology is very routine and ‘off-theshelf’, but deployed differently, Lai explains. Standard enterprise routers from Cisco Systems created a LAN (local area network) like that found in any large office, but City Telecom deployed this on a much more massive scale to 1.75 million homes. Telecoms incumbents instinctively avoid commoditisation of bandwidth, he says, preferring to add value by developing sexy content and other applications. City Telecom takes the diametrically opposite view. “A commodity business is a great place to be if you are the lowest cost provider. We want to collapse bandwidth pricing and commoditise

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it to unbelievably low prices whereby 1,000 Mbps becomes the industry norm for the mass residential market. We did this with callback in the 1990s and made lot of money doing it; we want to do it again with fibre. The rest of the industry can’t understand how we run this company. We are paranoid about change, which is why we are constantly changing.” It would be very difficult to start this fibre upgrade process again today for another new entrant, so there’s not much the competition can do to catch up with City Telecom now. “We are the only fixed line new entrant in the world that we know of, with a specific timeframe to overtake the incumbent network,” he says. “Our competitors are responding with short term measures, so they copy our prices but they can’t match our bandwidth. Even if our competitors start to build a similar fibre network now by copying our model, it would still take them a few years to match our coverage, by which time our position will be firmly established.” It’s unusual for a CFO to double as HR director but for Lai, it is a role that comes naturally from the company’s approach to ‘Talent’—a word that is used in preference to ‘employee’. So firing the bottom five per cent is less a Draconian measure as an admission that no company can expect to get its hiring 100 per cent right. And no company takes more trouble to get it right. “We are taking the McDonald’s Happy Meal approach to Talent acquisition. Get them when they are young!” Hong Kong university student Ray Chau, a 2010 intern, was amazed to be taken by Lai to meetings with high powered equity analysts. “Talk flat,” Lai told him, “and think about ways that you can add value to them.” Chau says he will never forget the experience. If he joins City Telecom after graduating Chau may find himself on the aggressive ‘CXO’ management trainee programme. The X can be substituted by any letter, e.g. CEO, CFO, CTO (Chief Talent Officer) etc as participants

are expected to aim for the board. “There are two ways I can find my own replacement—when the time comes in 15 to 20 years time, I could hire a head hunter to search for my replacement; or I can try to groom someone today. I much prefer the latter option.” People who have survived the CXO 18 month programme are Talents indeed. They are stretched intellectually and physically, expected to read a management book a month, run a half marathon and crucially pass Level 1 of the Chartered Financial Analyst exams. “CFA is extremely tough to get through but it gives them the ability to talk the common language of business, and I think that is vital for a future CXO.” While other operators outsource everything they can, he says, “we are very parental to the extent of being paranoid about owning our customer contact points. Our management structure is set up to be customer-friendly. We have broken Hong Kong up into five manageable regions each run by a mini-CEO.” Unlike a traditional corporation with its operational departmental structure, the buck stops with that mini-CEO if anything goes right or wrong in her region. To reach its 10-year big hairy audacious goal of becoming the largest IP service provider in Hong Kong by 2016, City Telecom will need to woo 75,000 customers a year for 10 years from competing networks; in FY2010 it added 132,000! It’s a stretch goal, but City Telecom’s investment in Talent will see it through that and its next goal to provide ‘Free TV via Fibre’, Lai believes. “Disrupting the landscape is something that’s in our corporate DNA.” ctigroup/eng/global/home.htm BE

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Namibia’s telecommunications infrastructure is Andrew Pelis learns exactly why Telecom Namib has had on the creation of a vibrant national bu 194 Energy & utilities

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currently undergoing amazing transformation. bia has been recognised for the impact its work usiness environment Energy & utilities 195

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he telecommunications industry has been through seemingly endless changes for a decade or more now. As technological advances have been introduced to the market, these have improved not only our everyday lifestyles but also the way business is conducted. With that in mind, it is little wonder that in March 2010 the announcement was made that Telecom Namibia’s well-established role and continuing investment in Namibia’s economic growth and development had been emphatically recognised once again at the annual Awards in Windhoek. The national telecommunications operator (which was commercialised in August 1992 having been previously wholly owned by the government of Namibia), was awarded the Golden Arrow Award in the Telecommunications sector. Single companies and institutions in different business sectors were rated on their contribution to the economic growth and development of the country. “The commitment of Telecom Namibia to economic growth and development has been strengthened and a strong common platform is being set up to invest in a new generation of ICT products and services required by a knowledge-based economy,” commented senior manager for Corporate Communications and Public Relations Oiva Angula. Today, Windhoek-based Telecom Namibia runs the largest digital telecommunications network in Namibia and is a leading supplier of voice, text, data and video solutions. The company serves more than 145,360 customers, with a workforce of 1,134 employees and annual revenues in excess of N$1 billion. Telecom Namibia is currently embarking on an ambitious programme to update Africa’s telecommunications infrastructure. Part of the process involves installing

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fibre optic lines into Namibia which will enable faster data transfer and clearer telecoms connections. “This will have a positive impact on bandwidth speed and capacity,” states Frans Ndoroma, managing director of Telecom Namibia. “The direct benefits are affordable bandwidth costs, and access to the rest of the world (connectivity). The indirect benefits are foreign direct investment, business opportunities for online offerings, hosting services and access to the global labour market,” he adds. All of this will result in the company being less dependent on transit countries and allow better service levels. Of equal importance, the initiative will drive down the cost of international bandwidth in Namibia and present regional business opportunities. Telecom Namibia’s strategic plans fall nicely in line

with those of Namibia’s government, which has a policy to accelerate the growth of information and communication technology in the country. In February 2010, the Ministry of Information and Communication Technology (MICT) launched a five-year strategic plan founded on four key pillars, or strategic themes: ICT development growth in the country; the provision of information and media access to government; ICT service delivery by the ministry; and the aim for sound administration and good governance. It is hoped that the plans will bring technology to poorer rural areas of Namibia, which in turn will stimulate better communications and education. The company is now in a position to provide

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both fixed and mobile services to its customers, thanks to investments in ADSL, CDMA, WiMAX and IP/ MPLS infrastructure. This is in line with the company’s strategy of convergence. Telecom Namibia’s current programme reflects its activities over the past five years—a period that has seen the company invest around N$1.04 billion in a network expansion and modernisation programme. The spending has created an advanced IP-based networking infrastructure for the country which has itself generated significant opportunity to drive IP networking for both local and foreign network operators to some of the most exciting and dynamic but so far under-served markets inside and outside Namibia. This, of course, is one of the key reasons why Telecom Namibia won its award. “The next generation broadband networks being created today are the key to keeping Namibia competitive in SADC and the global economy,” comments Angula. “This would make it even easier for foreign companies seeking to establish or expand their operations in Africa to obtain IP-based and mobility services and applications from Telecom Namibia. These include emerging technologies such as telepresence, cloud computing and hosted services.” Angula adds that the role of Telecom Namibia in the broader economic development of the country is receiving increased priority. Preferential procurement is one area where the company is making serious efforts to drive the social and economic transformation of Namibian society—and this ties in well with its Black Economic Empowerment progress. “It is the company’s objective to increase spending on BEE initiatives in the years ahead, in order to create jobs for Namibians in the SME sector,” Angula explains. The awarding of contracts to local BEE companies is very much designed to increase the number of sustainable black-owned companies—Telecom Namibia has invested significantly (to the tune of N$2.13 billion) in BEE over the last five years. From a business perspective, access to telecommunications is critical in the development of all aspects of Namibia’s economy and impacts on

key areas such as manufacturing, banking, education, agriculture and government. “Our future aim is to enhance our national footprint, supporting the tourism and agricultural sector in rural areas and keeping up with the demand for bandwidth, speed and convergence,” explains Ndoroma. “The West Africa Cable System (WACS) will be operational towards the end of 2011.” Since gaining its independence 18 years ago, Telecom Namibia has grown substantially, especially through its voice solutions; however, there is now a strong push to become the market leader throughout the whole information and communications technology (ICT) value chain. “We have adopted a new strategic blueprint that will consolidate the company as the major ICT player in Namibia, not just offering telephone to its customers but the whole value chain,”

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Telecom Namibia Ndoroma reveals. “The diversification challenge is to keep focused and transparent business cases in order not to cross-subsidise services. These often require setting up strategic partnerships.” And the network of partnerships is crucial as the continent receives continued infrastructure upgrades such as fibre optics, putting extra onus on the systems on the ground that have to be able to handle the increased flow of information once the data hits land. Indeed, Ndoroma suggests that Telecom Namibia may well target opportunities within its landlocked neighbours like Botswana and Zambia, depending upon requirements and viability. This process of updating the legacy systems has to be done early and accurately to ensure the foundations are correctly in place before the fibre optics are laid. The process has not been helped by incidents of vandalism which saw some fibre optic cables cut and a need for costly repair work; but the company remains committed to its long-term goals. “Telecom Namibia has invested over N$1 billion into updating the legacy network systems, creating a strong foundation for the infrastructure to develop as the company grows and develops,” Ndoroma says. “This will help us to diversify by eliminating the dependency on voice only and will allow us to add extra services along the ICT value chain.” However, national infrastructure is not just about good telecommunications—to help develop Namibia requires corporate commitment, an area Telecom Namibia is very proactive in, as Ndoroma explains. “Sponsorship for the company is about building relationships by connecting with consumers, building brand awareness and extending our business reach. “Our sponsorship strategy allows us to play an integral role supporting various community initiatives and we focus our sponsorship participation in the areas of education, empowerment of women, sports, health, disaster relief, charity and poverty alleviation, and the provision of telecommunications access to poor communities.” An example of this approach came in April 2010, when the company, in partnership with Dimension Data, announced the introduction of the unique

Detecon International GmbH Detecon








during to



the next





telecommunications operator. Although initially Detecon’s work focused on support with specific topics such as roll out for CDMA, Metro Ethernet, IP/MPLS and ADSL, emphasis was soon placed on more strategic topics including the question, how the steady decline in voice revenues could be compensated for by other revenue streams. Detecon supported Telecom Namibia in drafting a strategy to address these challenges and actively supported Telecom Namibia with its implementation. Internet and broadband services, modern network infrastructure for corporate and wholesale customers were some elements where efficiency gains have been realized by the exploitation of modern technologies and the introduction of improved collaboration concepts. During the execution of the projects a strong partnership between the two companies could be established and Detecon would like to thank Telecom Namibia for the trust shown in us.

e-Thena HIV and Aids Programme from the latter’s partner, Self Empowerment International (SEI). This software package provides essential HIV and Aids and antiretroviral education for the employees of corporations, government departments and organisations associated with the fight against HIV and Aids. For now, Telecom Namibia’s operations are focused on keeping up to speed with bandwidth and broadband developments and securing independent access to international bandwidth. The company is also currently setting up a new billing platform and other operation and business support systems. Customer service is of paramount importance and includes residential support 24 hours a day, every day of the year. Ndoroma believes that the company’s annually-reviewed strategies deliver a

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The next generation broadband networks being created today are the key to keeping Namibia competitive in SADC and the global economy

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sustainable competitive edge, and sees these as a highlight of his time in charge at Telecom Namibia. “We operate extensive staff training and business management that delivers improved performance and we have invested in and developed technical capabilities to deliver ICT products and services. We have established excellent relationships with our customers and owners and we have a committed workforce that is committed to making it happen,” he summarises. “Our plans over the next three years are to grow the company through new products and services, including wholesale, as well as exporting our wholesale model to neighbouring

countries. We also want to protect our brand by focusing on service delivery and quality and to improve cost efficiency. “Above and beyond that, we want to position ourselves in the market as a leading ICT service provider and become a strong regional player— to achieve this we must remain customer-driver and become a lean ICT business. This in turn will create shareholder value.” With its plans in tandem with government feeling and national recognition, Telecom Namibia is on target to achieve its goals and bring the country firmly up to date with the finest 21st century communications. BE

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back the

o t

Investing in technology and innovat appeal, and inspired marketing to u South Africa is unlocking the massiv as managing director Karel Pienaar

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of the

tive services to drive its customer unite football with the internet, MTN ve potential of mobile telephony, tells John O’Hanlon

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t’s hard to think of an industry with more potential for growth than telecommunications, wherever you are in the world. The competition between the likes of RIM, Apple, Google and Microsoft to advertise the technology they are rolling out underlines the opportunities to capture the next generation of users. Telecommunications is certainly one of the fastest growing sectors of South Africa’s economy. The country is the fourth-fastest growing mobile communications market in the world with more than 39 million subscribers, or nearly 80 per cent of its population. MTN shares that market with Vodacom and Cell-C but Karel Pienaar quite likes the challenge. “It’s difficult for me to say this as an old monopolist but competition is good!” Unlike in the United States and Europe, new technology has been as much a tool for development and commercial growth in

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MTN South Africa

Africa as an adjunct to people’s lifestyle. It’s not just the poor state of the infrastructure in subSaharan Africa that makes life difficult—mobile apps have the potential to make a real difference to people’s everyday lives. Take MobileMoney, MTN’s ‘electronic wallet’ service that provides a fast, secure, affordable and convenient way for customers to send and receive money anywhere in Uganda, no matter the network, using their phone. The service launched in 2008 already has nearly a million users and expects that to increase to 3.5 million (a tenth of the population) in 2012. Many people in South Africa also have access to the technology of cell phones, but do not have access to a formal bank account. MTN has not had everything its own way, however. Although group revenues grew nine percent to R111.9 billion in 2009, with 70 per cent earned outside South Africa, the strength of the Rand meant that profits before tax were down 12 per cent. So the company’s performance in its home market in 2010 was critical, and MTN demonstrated its creativity in a drive to feed the national passion for football and Ayobamise (township slang for astonish) them. As part of its global sponsorship of the FIFA World Cup, MTN secured the exclusive mobile content rights for Africa and the Middle East. This allowed subscribers to watch matches on their cell phones, offering gaming opportunities, downloads and plenty of merchandise as well as reduced call rates for the duration of the competition. Ten golden tickets allowed winners and their partners to attend 25 matches around the country, all expenses paid, while Thulani Ngcobo won MTN’s Last Fan Standing competition and attended 38 matches to enter the Guinness Book of Records. South Africa was obsessed with football long before it won the right to host the 2010 World Cup. The English Premier League is eagerly followed by millions; every single premier league match is shown live on South African TV and millions of rand are wagered on the results—increasingly via mobile phones. Against that background MTN signed a sponsorship agreement with Manchester United in March 2010.

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The deal allows MTN to offer exclusive mobile content like match highlights, player profiles and ringtones. “South African football fans from all walks of life can identify with Manchester United,” says Pienaar. And it should be noted that as one of the world’s most exposed brands in the most ‘connected’ demographic—the 1830 range—MU makes strategic choices as to who it associates itself with. In India it has a similar deal with Bharti Airtel. According to United’s chief executive officer David Gill: “The partnership with MTN is a very important step in the club’s plan to get closer to its family of fans based all over the world.” Karel Pienaar was formerly CEO of MTN Nigeria and was instrumental in creating the successful business that exists there today. He understands the pan-African strategy of the group, and ultimately believes in the power of telecommunications to unite the very different economies that MTN serves. Prior to becoming MD of MTN SA in August last year, Pienaar was the chief technology and information officer of MTN Group, but now he is able to focus on the home market. “We are extremely pleased with the results we achieved this year, not just because of the World Cup but with the entire GO! Campaign that we announced in 2009 and rolled out this year with ‘Let’s go 2010’ focused specifically on the football.” It’s tempting to think of 2010 as MTN SA’s year of marketing, but it also seems to have become its year for awards. It started when MTN Business was awarded the Telecoms Risk Initiative Award 2010 by the Institute of Risk Management South Africa (IRMSA). Then at the GSM AfricaCom awards in November MTN walked off with awards in three of the five categories it was shortlisted for. One of the awards went to MTN South Africa for the Best Network Improvement for the Optimal Network Coverage; another for the Ayoba!

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MTN South Africa

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MTN South Africa

marketing campaign. Pienaar says it was a team effort. “This recognition bears testimony to the world class network that MTN South Africa rolled out when it invested approximately R14 billion in its network. The Ayoba campaign went a long way towards getting South Africans excited about the World Cup.” He stresses, however, that creativity and imaginative marketing ultimately depend upon leadership in technology and the service this drives. A couple of days later on November 12 Pienaar received an award of his own, however, this time for engineering and innovation when he was presented with the South African Institute of Electrical Engineers’ (SAIEE) President’s Award, the organisation’s highest honour. Another recent accolade for MTN South Africa was being chosen Best Employer in the telecommunications sector for the second year running, in the CRF Best Employers Survey for 2010/11. MTN also came first in the Top 10 Large-Sized Employers (more than 4,000 employees) category, was second in the Best Empowered Employer category and took third spot overall as South Africa’s Best Employer in the survey. Promoting MTN SA’s commitment to being a responsible corporate citizen, Pienaar has spearheaded the company’s efforts to invest in enterprise development, human resources, skills development and the promotion of equal opportunities, something he passionately believes in. This was acknowledged by independent empowerment rating agency Empowerdex, which recently presented MTN SA with an A rating for Broad Based Black Economic Empowerment (BBBEE). He is also immensely proud of the company’s social investment arm, the MTN SA Foundation, which works to promote four key portfolios: education, health entrepreneurship and arts and culture. “We go into communities in partnership with the local clinics, hospitals and NGOs offering them screening for lifestyle diseases such as hypertension, diabetes and HIV. Those found to be in ill health are referred to hospitals where they continue to receive treatment,” he says.

“In 2010 we opened business support centres at Moretele near Pretoria and KwaHlabisa in KwaZulu Natal to provide administrative development services to 50 selected small businesses in those communities.” This kind of support, he adds, can make a real difference to start-up businesses, enabling them to survive and grow. Looking forward, Pienaar believes that infrastructure investment is the most significant driver for growth. “MTN invested R3 billion in infrastructure over the past year, most of it in rural projects,” he says. Ever the engineer, he is excited by the potential of technology to cut costs and connect more people. “Base station power consumption is down 70 per cent; we’re deploying solar and wind power solutions. The economics for this kind of thing are becoming so much better.” While voice is still the killer app in Africa, one in four handsets sold in South Africa is now a smartphone. Data, whether supporting banking services, shopping or even football is the next big thing. To put it into perspective, says Pienaar, the average contribution of data to revenues across the MTN group is currently just 1.35 per cent*. “We have set a target to grow that to 20 per cent over the next five years.” BE *Jan to June 2010

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Hans Paulsen, managing d communications solutions restructuring programme 216 Energy & utilities


w nnection

director of Zamtel, Zambia’s only total provider, talks to Jayne Alverca about the that is creating the foundation for a brighter future Energy & utilities 217

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amtel dates back to 1913 when the company was a pioneer in Africa’s nascent telecommunications industry and the driving force behind Zambia’s first telephone exchange. Yet despite attaining a unique competitive advantage as Zambia’s only complete communications services provider, years of subsequent management inertia led the company almost to the point of bankruptcy. A seminal point in the company’s evolution occurred in June 2010 when a 75 per cent stake in Zamtel was acquired by the LAP Green Network, which already has a footprint in six other African countries providing voice, data, fixed, internet and business continuity services to over four million customers. The remaining 25 per stake in the company remains in the ownership of the Zambian government. Hans Paulsen was chosen to breathe new life and vigour into the organisation. He believes his 10 years of experience in the African telecommunications industry, including a spell with Uganda Telecom— another government owned incumbent—has proved invaluable.

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Moreover, he can also point to a track record in handling successful mergers and acquisitions on behalf of the energy giant Shell. “My first priority and immediate focus has been getting in place the right team of people needed to take Zamtel forward. The foremost driver of any business is its people,” he states. When he joined the company in July 2010, Zamtel had a headcount of 2,300 people and was literally drowning in the expense of its payroll commitments. “HR costs averaged 70 per cent of turnover. To put it plainly, the company was heading in one direction and that was towards disaster,” he explains. The transformation he is determined to bring about has involved restructuring the organisation in ways that extend far beyond cutting the headcount. “We had to create a more appropriate organisational structure because this is the engine and framework for facilitating change. When I joined the company, it had a very confused pay structure and grading system. People in non-critical positions were receiving more reward than key managers, simply on the basis of their length of service. As a result it had become impossible to attract the right calibre of people. We undertook a review and re-evaluation of all our HR evaluation processes and job descriptions to start putting in place a new performance-orientated culture.”

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The restructuring process has required that all posts be re-advertised with internal applicants applying on the same basis as outsiders. “We wanted to have continuity, but only if it was combined with talent and ability. Where talent existed, we have sought to retain it but with a new purpose and direction,” he asserts. The recruitment drive is almost complete and by early 2011, Paulsen expects all key positions to be filled. “Then we can start to really get to grips with our own internal processes,” he continues. “A review has already begun to look at more efficient ways of working, especially with regard to automation. Now that we have fewer people, we need to eliminate labour-intensive manual processes wherever we can and identify more efficient and productive working practices.” Paulsen’s third priority is the inherited investment programme that Zamtel is pursuing to retain its competitive edge. The company has already begun a project to decommission all old analogue landline exchanges and replace them with next generation network (NGN) exchanges. The modernisation programme will enable customers to get additional features such as fast and affordable broadband internet, audio and video conferencing, as well as

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new features such as missed call notification. The first phase of the migration is due for completion early in 2011 and will see exchanges at Ridgeway, Chinika, Emmasdale and Lusaka Main overhauled and replaced with next generation technology. Phase two of the project will install new and advanced next generation network exchanges country-wide. Another inherited project in progress, again nearing completion, is a nation-wide fibre optic network to provide broadband backbone connectivity. Zambia is a landlocked country and at present is heavily dependent on satellite communications. Zamtel is working to integrate the national network into the international subsea cables that lie off the African coast and that can only be accessed by passing through a number of neighbouring countries. “The aim is to create multiple links that will place Zambia at the centre of a new communications hub, so we are never reliant on any one link. Broadband is one of the fastest growing areas and we

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need the additional capacity that these linkages will give us,” Paulsen adds. Dates have already been set next year for a new service aimed at the Lusaka business community. The Lusaka Metropolitan Optic Fiber Network will have the capability of carrying voice services, data services, fast ethernet (FE), gigabit ethernet (GE), broadband internet, video and multimedia services such as television. The network relies on a connection of strategic access points using high capacity optic fibre technology. These connections are in a mesh formation to provide alternative routing of traffic in case of a fault on any one link. On completion, it will offer a new level of resilience and a future-proof network for many new business platforms. “We are working to complete, but also to enhance all of these projects,” Paulsen comments. “Sometimes we are finding that initial design plans and projections are no longer capable of meeting their objectives and some supplementary expenditure may be required, but we do not see this as a major barrier.” The company will be spending close to US$170 million over the next 30 months, says Paulsen, with


investment aimed at the roll-out of a 3G network in several urban areas; expanding the 2.5G network—the plan is to deploy

450 sites; expanding capacity to handle 2.5 million customers; upgrading of the fixed switches; investing in a state-of-the-art call centre; and automating the current back office processes. “In a year’s time Zamtel will be a different company,” Paulsen says. “We have already made great progress in transforming the company and a great start on a journey that will see us with subscriber growth, an increase in market share and better technology and people. From a financial perspective, it is also very important that we deliver shareholder value and I am confident that our accomplishments will be reflected in a much healthier balance sheet next year,” he concludes. BE

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Dr Vaino Shivute, CEO of Namibia’s water utility rising to the challenge of nearly doubling its wat rapidly expanding uranium mining industry. Gay 226 Energy & utilities


on option

NamWater, explains how the company is ter supply to meet the needs of the country’s Sutton reports Energy & utilities 227


o matter where in the world you live, water is essential for life. But for those living in the desert regions of Africa, the value of this precious commodity is even more deeply appreciated. Covering an area of some 824,000 square kilometres, Namibia is one of Southern Africa’s driest countries, supporting a small population of just 2.1 million people, many of them scattered in isolated rural communities. To the east lies the Kalahari Desert while the arid Namib Desert, one of the oldest deserts on earth, stretches from north to south along the coastline. “Our rainfall is so low that we have no perennial rivers that originate from and flow through our country,” explains Dr Vaino Shivute, CEO of the Namibian water utility NamWater. Only rivers that arise elsewhere, and touch Namibia’s borders, flow throughout the year. The Orange River, which originates from the Lesotho Highlands and flows through South Africa, forms part of the country’s southern border; the Okavango, which travels along its north-east border, originates in Angola and terminates in Botswana; the Kunene River in the north-west is shared with Angola; and the Zambezi river flows along Namibia’s borders for a short distance and forms the border between Zambia, Zimbabwe and Botswana. “Inside Namibia we have what we call ephemeral rivers, which flow only after we’ve had rain, but then they dry up.”

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Our rainfall is so low that we have no perennial rivers that originate from and flow through our country

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NamWater Rain in Namibia, though, is a rare occurrence, and largely occurs during the months of February and March. In the south-west it amounts to 0mm to 10mm per annum but increases in quantity towards the east and north. At the capital Windhoek, for example, it averages around 300mm per annum, and it is highest in the north-east, where between 600mm and 700mm is expected each year. Management of these precious water resources is complex. The country has 11 dams on its ephemeral rivers, which capture the rare rainwater and store it. Water is then purified and distributed through the inhabited interior areas. There are some 18 water treatment plants located on the perennial rivers and next to the dams inland. These plants are linked to a pipe network which supplies clean water to towns and rural communities. Finally, there are boreholes drilled into various aquifers—a water source that is finite and therefore is strictly monitored and managed to ensure that the rate of extraction does not exceed replenishment. Until 1997, water was supplied free of charge in some parts of rural areas and heavily subsidised in urban areas by the Namibian government. But following a resolution to charge for this scarce commodity, the government formed NamWater and tasked it with supplying water in bulk to all those who needed it, at cost. The company took over the existing bulk water supply infrastructure and began operating in 1998, supplying water for domestic consumption, industry, livestock production and several irrigation projects. Initially there was financial backing from government, but today the company is financially self-sustaining. “Since 2000, we have seen very little growth in domestic demand for water,” Shivute says. “In fact, we have noticed that where people are now billed for their water they are less wasteful, and this has had a dampening effect on demand. We currently supply between 65 million and 70 million cubic metres per annum.” However, all that is likely to change. Following the huge increase in the price of uranium in 2007

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NamWater and 2008, there has been a marked increase in exploration in Namibia’s central coastal desert region, and of course mining operations are heavily water dependent. “We currently have two mines in operation in this region and both of these are expanding their production. However, we have a further 10 at different stages of exploration and development, five of which have already approached us to supply their water,” Shivute says. “Our projections indicate that demand for water is likely to rise by between 40 million and 60 million cubic metres per annum in this area alone, almost doubling our national output.”

The problem for NamWater is that the central coastal region relies on extraction from the underground aquifers. “And we have already reached the limit for sustainable water extraction in this area,” he continues. “We are therefore looking at setting up a desalination plant to supply the needs of the mines.” Desalination is certainly not a cheap option. Two-and-a-half years ago the cost of such a project was quoted in the region of N$1.5 billion - N$2 billion, but prices have continued to rise. In the long term, the


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NamWater mines will cover the cost of construction, maintenance and supply. But if NamWater is to fulfil its mandate to supply water where and when required, it will need to source the financing and construct the plant before mining commences. Environmental studies have already been completed, and NamWater is the central authority in a government taskforce set up to deliver and manage the business plan for the project. “We aim to produce the first report in mid-December this year which will argue the business case for the desalination plant,” reveals Shivute. “Next year we will examine the funding and management options, and we expect to award the contracts at the end of next year. Then if things go according to plan, construction will commence in early 2012, continuing for around 24 months.”

If NamWater is to fulfil its mandate to supply water where and when required, it will need to source the financing and construct the plant before mining commences

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NamWater The intention is to install plant and equipment capable of producing around 25 million cubic metres of water per annum initially. However, NamWater does not expect to see the demand for uranium abating any time soon. The estimates it is working on indicate that there are more than 300 new nuclear power stations around the world at various stage of development, all of which will need nuclear fuel at some point in the future. Therefore, the company aims to future-proof its construction work. Structures such as the seawater intake, storage facilities, pipelines and power supply will all be large enough to accommodate future expansion of the plant. The desalination plant can be expanded in modular fashion. NamWater already has a considerable experience to draw upon. Not only has it been refurbishing the old water supply infrastructure that it inherited, but also constructing new reservoirs and pipelines to supply the remote villages. In the census of 1992

only 45 to 50 per cent of people living in rural areas had access to clean drinking water. But after 18 years of investment and construction, that figure is estimated to be 90 per cent. “We are very proud of this achievement if you consider the nature of the country, that our population is scattered over a large area, and that we do not have much water. And we are hoping to be able to maintain and improve on this figure into the future. But of course,” Shivute says, “providing water to this last 10 per cent of the population is likely to be really difficult, because they live in some of the most inaccessible regions of the country.” In spite of this realism about the cost and feasibility of achieving a clean water supply for all, he remains both upbeat and undaunted. BE

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Water affects every aspect of our lives commodity. Dr Cornelius Ruiters, from with helping to improve water quality, s Andrew Pelis about current initiatives t 238 Energy & utilities

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and in South Africa it’s regarded as a precious the Department of Water Affairs, is charged supply and security on a limited budget. He tells o provide safe water for everyone Energy & utilities 239

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he effects of climate change have been acutely felt around the world and water management has become an ever-more pressing issue. In Africa, this has exacerbated an already critical problem and put huge pressure on South Africa to ensure its approach to water can maintain the socio-economic development in the sub-Sahara region. That responsibility falls squarely on the shoulders of the country’s Department of Water Affairs (DWA), one of South Africa’s oldest government departments. “Our department has existed since the beginning of the twentieth century,” says Dr Cornelius Ruiters, deputy director general, “and we cover areas of water infrastructure, maintenance and supply; our focus is very much on water management not only in South Africa but also through partnerships with our neighbouring countries.”

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Department of Water Affairs, South Africa

Ruiters says that the department’s focus spans a number of different uses of water, with agriculture the biggest beneficiary, followed by domestic use, mining, electricity and power generation, forestry, recreation and other users, in a group he calls the “water pie”. At present the DWA is working on seven major projects to build and rehabilitate 25 dams across South Africa, all aimed at improving water utilisation and bringing potable water to everyone in the country. “There is a direct relationship between health and water quality and we aim to prevent illnesses like diarrhoea and cholera, although there are other water-born diseases like malaria that are nothing to do with us,” says Ruiters. “We represent the whole country (serving a population of around 48 million) and we have achieved our Millennium Development Goals. At present roughly 93 per cent of the population receives clean water and we are moving towards 95 per cent. The challenge is to provide for rural communities—the topography and geography often make it technically difficult to implement operations to build the infrastructure needed. We are therefore aiming for universal access to water by 2014.” The department introduced incentive based regulation of the South African municipal drinking water business in 2008. Its Blue Drop standards assess water quality across the country and have helped to identify areas that require further improvement. The initiative has seen water quality standards improve and supplies are now regarded as adequately managed by world standards. The global economic downturn has impacted on the DWA’s funding and Ruiters says that the department is implementing R50 billion of water resources capital projects for the next five to 10 years, funded by the National Treasury of South Africa and by open market financial institutions. “Global meltdown has affected our capability to fund all of the necessary projects and we have looked elsewhere to help fund some of the commercial projects. For example, we might go to the open market to provide funding for power

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industry projects or for the liquid fuel industry, and this has included issuing bonds in the past.” The department has prioritised projects and Ruiters explains that decisions have taken into account a number of factors including the socio-economic impact of each project. “There are areas like the Eastern Cape Province where we need to develop infrastructure and that has an impact on business in the area also. We continue to supply water through the most advanced integrated water systems in the world for the major water users; and the dams we have built and rehabilitated have provided some of the highest stored capacity also (up to 1,000 cubic metres per person).” The work on dams has been intensive and Ruiters says that 22 of the country’s 161 dams to be rehabilitated have been refurbished along with connecting pipelines,

with projects very much ongoing. “These projects can take up to 10 years to plan and five years or more to complete thereafter. The grand scale of these has led to the name ‘Mega Projects’ and there are unavoidably long lead times to complete them.” Plans were announced in June 2009 that South Africa would spend in the region of R30 billion over the next five to eight years on continuing construction and establishing 15 mega water infrastructure projects. The then Water and Environmental Affairs minister Buyelwa Sonjica said that these projects would increase the capacity of existing water resources infrastructure to provide water to strategic installations such as the energy sector, the industrial sector and the mining


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sector, as well as for domestic purposes. “Additional infrastructure programmes include an accelerated programme for the construction of the De Hoop dam, the continued partnership with the government of Lesotho for the implementation of the proposed phase two of the Lesotho Highlands Water Project, implementation of the project to augment the supply of water to Lephalale for use by Eskom and other petrochemicals industries,” Sonjica said. Water sustainability was highlighted as a key focus and a number of desalination pilot projects are underway now, with municipalities from Mossel Bay to Richard’s Bay looking to utilise new technologies to create a viable freshwater option. Additionally, projects such as the Mokolo Crocodile Water Augmentation Project will provide water supply for thermal-electric (coal-fired) power generation. However, pilot projects are now underway to improve acid mine drainage in the coal and gold mining regions of the country. Ruiters says that at present the department has around 12,000 employees but feels more people are needed to fulfil all of its goals. “We work on a one-to-eight ratio, with one support staff individual to every eight technical people. We do have a problem attracting and retaining the right skilled professional engineers and there are lots of vacancies to fill here,” he admits. Employment also takes into account the Black Economic Empowerment and Employment Equity initiatives which Ruiters describes as “part of the whole suite of attacking inequalities in South Africa.” This approach means the company utilises the services of black-owned supply chain partners, although projects are publicly tendered and contractors have to meet stringent requirements before they are awarded.

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Department of Water Affairs, South Africa

So with funding in place for the future, Ruiters has a clear mind on what the next few years will hold for the DWA. “For operations and maintenance we want to provide better infrastructure and maintain systems properly, so there is water for everyone. “On the infrastructure side we have to unlock the social economic development for areas such as mining, agriculture, industries, forestry, nuclear, etc., and because our work affects those economies, it affects the whole sub-Sahara region. This is one of the issues that the World Bank recognised when it helped supply a loan for our work with Eskom on the Mokolo Dam.” BE

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