“These are exciting times for East Africa. The market has grown significantly over the last 10 years and local demand for natural gas continues to grow.”
You are speaking at EAPIC as MD of Songas in Tanzania but are part of Globeleq which has many power projects in Africa – how important is Songas in the Globeleq portfolio?
That’s correct. Whilst I am the MD of Songas and manage the business on a daily basis, I also am the Head of Asset Management for Globeleq, Songas Limited’s majority shareholder, and therefore responsible for the performance of their other African assets.
Globeleq invested in Songas in 2004 and therefore was involved during its construction phase and commercial operations in July 2004. Next month marks the 10th year as majority shareholder of Songas and we are really excited about celebrating with our team to mark all their hard work and dedication. Songas has therefore been an important and enduring part of Globeleq’s story and is a good demonstration of how we achieve world class standards at of our operating facilities.
How important is this project for the region?
Songas has been in operation for 10 years. Originally Songas’s Ubungo power plant was supposed to provide shoulder load generation to support the baseload generation provided by the hydro power plants. Instead, Tanesco has continually dispatched Songas and it truly has become an essential baseload generator for the country.
Songas is Tanzania’s cheapest thermal power plant and provides reliable and economical electricity to TANESCO at less than US$6c/kWh.
Songas has also been instrumental in helping grow Tanzania’s energy sector and by using the country’s own natural gas resources, it is estimated that the Songas facilities have saved Tanzania more than US$3.0 billion by avoiding the high costs of importing liquid fuel.
Other opportunities in the region that you are excited about and can share?
These are exciting times ahead for East Africa. The market has grown significantly over the last 10 years and local demand for natural gas continues to grow. We are particularly excited about opportunities for renewables and gas fired generation throughout east Africa.
On the thermal side there has been a number of very large gas finds that will hopefully help secure the energy needs of the region. On the renewable side these markets have excellent resources that are so far relatively untapped.
Globeleq is ideally placed to benefit from these with extensive experience with these types of technology, proven experience in developing project and a large appetite for growth.
Since 2012, the company:
- Has reached financial close on six projects;,
- Has completed construction of 238 MW of new generation;
- Is currently constructing a 139 MW expansion of an existing asset in May 2015; and
- Recently acquired majority interest in an additional 302 MW of generation.
What in your opinion are the main challenges to getting power projects in Africa off the ground?
In some countries there is a continued focus on developing government owned projects rather than prioritizing private sector led projects – It is essential for Governments to promote and grow the role of the private sector if sufficient capital is to be mobilized to meet the region’s needs.
We also think there is a need for governments to improve the way in which they negotiate with the private sector on large infrastructure projects. These projects are often delivered under demanding timescales and can be very complex. It is therefore very important that countries focus on building capacity within their negotiating teams and getting good quality external advisors if projects are to be delivered successfully.
The good news is that we have seen many good examples of countries doing just that; for example both Kenya and South Africa now have excellent track records of concluding private power projects.
This is what makes us so excited to be in the sector at this important stage, looking ahead we see a real trajectory of growth for the private sector in energy.
You are managing to develop economically sustainable projects that generate power in emerging markets where energy is an expensive commodity – what is your secret?
Our great team and our hard earned experience.
Globeleq has been investing and developing generation for the emerging markets since 2002 which makes us one of the most experienced independent private power producer/developer in the sub-Saharan African region. Our professional team of developers has a strong track record in the development of solid, liquid and gas fired thermal plants and renewable power projects.
Our operating teams are very proud of their own achievements and focus on delivering world class performance at all of our assets. Globeleq is extremely focused on developing local talent and make sure all of our team members share in the success of our business.
What is your advice to prospective foreign investors in the energy industry?
It is important to build relationships with the decision makers, government and key industry participants. In addition, you need to have a strong local team.
Look for countries that demonstrate commitment to private power producers through a transparent procurement process which is backed by a coherent energy plan.