Siemens, the global powerhouse in electronics and electrical engineering operating in the energy, infrastructure, industry and healthcare, will demonstrate the future of IT sector through its participation in the Economic Summit. In an interview with Daily News Egypt, Joe Kaeser, President and CEO of Siemans AG, talks about the company’s plans in Egypt and the region, its activities in the energy sector and difficulties faced as investor in Egypt.
How big are Siemens investments in Egypt?
How big is this amount invested in Egypt compared to the region? Siemens has been doing business in Egypt for more than 100 years and has played a major role in a number of the country’s key infrastructure projects. We currently employ more than 550 people locally and plan to expand our footprint in Egypt. Our long history of partnership here shows how committed we are to the country’s sustainable growth, which we really like to support even more with our solutions going forward. For that we are in intensive talks with the Egyptian government on many levels. Personally, I have met with President Abdel Fattah Al-Sisi as recently as last month in order to discuss fields of further cooperation. We would really like to intensify our activities in and also with Egypt. And we are not alone: This is also echoed by the German government, especially Chancellor Angela Merkel.
Which sectors are Siemens investments in Egypt mostly focused on?
Energy is probably Egypt’s biggest challenge right now. We know that the electricity grid is under tremendous stress especially in the summer months, that the country’s population is growing rapidly, and that the country is industrialising at a brisk pace. Egypt urgently needs a reliable, efficient and sustainable energy system to drive economic growth. And Egypt needs partners with the knowhow, the technology and the local footprint to develop and build that kind of a system. We’ve proved again and again that we deliver what we promise. Our technology is deployed at the Nubaria, Talkha, Damietta, Midelec and El-Kureimat power plants and we are even proud of our employees who built them and that our customers are satisfied with our work. We have thus carefully analysed Egypt’s energy landscape. We know what needs to be done to upgrade the country’s energy system. Just to give you one example: We are also now engaged in the Fast Track Project through the rehabilitation of Attaka Power Plant. As a leading global technology provider with a portfolio that covers the entire energy value chain, we have the right technologies for every country’s energy system, no matter at what stage of development it happens to be. We do everything from highly efficient fossil-fuel power generation, to efficient power transmission and distribution and the integration of renewable sources of energy. We believe that the energy sector is where we can contribute the most to Egypt’s sustainable development, where we can deliver the greatest value right now. The mission is clear: to build an energy system that supports Egypt’s long-term economic development.
How much is Siemens planning to invest in Egypt in the next five years?
In which sectors will these investments be? That will depend on the scope and duration of individual projects currently under discussion. In the next five years, there will certainly be a strong focus on energy as the government plans to put the country’s power generation and transmission capabilities on a secure footing. Since we offer technology along the entire energy value chain, our investments are likely to be in the energy sector, at least at first. In fact, our experienced experts have carefully analyzed Egypt’s energy system. The result: the country currently has an installed capacity of 31 GW. Over the short and medium term, however, Egypt will need an additional
12 GW to meet its demand for electricity and to keep power failures from paralysing life during peak use periods. Over the long term, the country must double or even triple its installed capacity. Looking a bit farther ahead, a reliable and affordable supply of energy will spur further industrialisation in Egypt, and as a technology leader in industrial automation, we can support the country’s development in this area and in other areas that are critical to sustainable development, for example, transportation, healthcare, building technology, intelligent urban infrastructures. In any event, we will invest in the training and education of people. Operating an efficient energy system, advanced industrial production facilities, and modern urban infrastructures requires a large, highly qualified local workforce. And if anything sets us apart from other international companies, it’s that we at Siemens have always invested in people at the local level. We are at the same time also involved in the country’s commercial training programmes and universities. One focal point of our proposals for new infrastructure projects remains employment and the training and further education of Egypt’s women and men. Together with the German government, we will expand upon the world-famous “dual education system” that we’ve developed in Germany, and thus provide Egypt’s youth with outstanding prospects.
What are Siemens’ expansion plans in the region? Will it be tapping new markets in the Middle East, North Africa or Africa?
If yes, which countries will these be? And what time frame are these plans set for? With a workforce of 7,000 employees, we already have a large footprint in the Middle East. There is great demand for the products and solutions we offer, and that opens up a wide range of opportunities for us in the energy, transportation, construction, healthcare and manufacturing sectors of the region. Every country develops differently: every country has a different energy mix, a different mix of industries, and different needs as far as infrastructure is concerned. As a local company, we are close to these developments and close to customers and as a global company we have the capability to provide the technologies needed. That’s a winning combination. What is exciting for us at Siemens is the dynamics and diversity of development in Egypt and the region. It’s a great time to do business here.
Will the current drop in [oil] prices affect Siemens AG’s strategies in the upcoming period?
If yes, how so? We believe that the drop in oil prices is temporary. It’s not the first time that we have seen dramatic fluctuations in oil prices, and it won’t be the last. At Siemens we are focusing on the growth fields of electrification, automation and digitalisation. Fluctuating oil prices will have an impact, to greater or lesser extent, on some of our businesses. We cannot rule out that some oil-producing nations may temporarily reduce their infrastructure spending, but we also expect to see further growth in emerging countries with high demand for infrastructure. We have a clear strategy, and we believe it’s the right strategy to achieve long-term growth regardless of short-term fluctuations in oil prices.
In recent comments you made, you said you plan for Siemens AG to be the ‘go-to’ company with regards to energy. How is your strategy to bolster the company’s stake in the energy sector?
Will Siemens focus on offshore drilling? Siemens is unique because it’s one of only very few companies with a portfolio that covers every aspect of the energy value chain. From solutions for fossil fuel extraction, large-scale power generation from traditional sources and renewables to transmission and distribution, energy storage and the efficient use of energy at the consumer level, the opportunities for Siemens to leverage its portfolio of technologies are extensive. That makes us the go-to company. However, we can do even more. We have capabilities within the company that we will be leveraging to a much greater extent in the future. Digitalisation, for instance, is increasingly relevant outside of the manufacturing sector. We have capabilities in data-driven services, software and IT solutions – and we will use them to make our operations in energy more efficient.
Siemens is constantly looking for profitable ventures – is the company considering another M&A following the takeover of Dresser-Rand Group?
If yes, can you share more information on the company, value and timeframe? We wouldn’t be doing a good job if we stopped looking. That’s all I can say about that, I’m afraid. The recent acquisition of the Rolls-Royce aeroderivative gas turbine business is fully in line with our strategic direction and enables us to leverage our existing expertise in other fields. For example, with Dresser-Rand – once final approval is granted by authorities – we will be able to bring our technology and knowledge in electrification and automation to the oil and gas sector, which will broaden our already extensive offering. Our installed base is increasing significantly. This drives our services business, which in turn generates a steady flow of revenue.
Which projects marketed by the Egyptian government during the summit is Siemens AG interested in venturing in?
Let me start first by commending the Egypt vision 2030 Sustainable Development Strategy that provides the right roadmap for making Egypt a strong and stable economy over the long term. The Egypt Economic Development Conference in Sharm El-Sheikh is the right starting point. There are many projects that are designed to strengthen Egypt’s energy system, and obviously these are of significant interest to us. But our portfolio is extensive enough for us to be receptive to opportunities outside the energy sector.
What obstacles, difficulties are faced by Siemens as a foreign investor in Egypt? What does the government need to do in order to smooth out these obstacles? I don’t see any major differences between Egypt’s investment climate and that of other countries. We executed our first turnkey project in Egypt in 1859, and we’ve been here ever since. In fact we are a long term partner who have known, loved and understood the country for more than a century; and we are an established part of society; and we are familiar with the regulations and market conditions that apply in Egypt. You could say that we feel at home in Egypt.
How do you see the investment environment in Egypt, and investment opportunities? Do you see an improvement?
Yes, I see a definite improvement. As important as revolutions are for a country’s social and political development, they do destabilise and therefore have an adverse impact on the investment climate. After two revolutions, the country has been remarkably resilient in regaining stability. And from the point of view of a multinational company, the government’s clear vision and plan for the country’s long-term development of Egypt is a sign that the future holds further improvements.
How do you see the prospects of renewable energy in Egypt? How big is Siemens’ interest in being part of it?
The potential of renewable energy is great in Egypt, and the government clearly supports this. Egypt’s geography presents good prospects for a significant proportion of the country’s electricity generation to come from onshore wind farms. Siemens has substantial global experience in the wind power sector and offers world-class technology in this field. We are therefore very interested in the development of wind energy in Egypt. So while there is no doubt that wind power could play a significant role in the future, Egypt will need fossil fuel power generation to cover the base load. Here, highly efficient, combined-cycle gas-turbine plants are ideal.
During recent talks with Government officials, which projects have been the focus of discussions with Siemens AG? As mentioned, the focus has been on the energy sector. However, as the pace of economic development accelerates, Egypt will need technology, expertise and investment in other sectors as well – sectors in which Siemens can contribute to Egypt’s development as it has for over 100 years.
