The German company Siemens aims to achieve sales worth €85bn in 2016 in the fields of energy, industry, and health care.
CEO of Global Sales in the Power and Gas Division at Siemens Karim Amin and CEO of the Power and Gas Division at Siemens Global Willi Meixner sat down for an interview with Daily News Egypt to discuss the company’s prospects for the future and yearly sales.
What was the company’s sales volume last year?
Amin: Siemen’s sales last year, recorded in 190 countries, amounted to €80bn, which includes €17bn in the energy sector and €63bn from industry and healthcare.
Is Siemens considering establishing a power plant maintenance facility in Egypt?
Amin: Siemens will establish a €60bn power plant maintenance company in Egypt at the end of this year. Cooperation studies between the company and Egypt’s Ministry of Electricity are ongoing to maintain all electricity production units across the country.
The Egyptian government signed a memorandum of understanding (MOU) with Siemens during the Egypt Economic Development Conference held in Sharm El-Sheikh in March 2015 to establish two power plants, in addition to a wind farm with a capacity of 2,000 MW.
In June 2015, the MOU was signed as an official contract in Berlin during a ceremony attended by President Abdel Fattah Al-Sisi. The final details of the contract indicate that the two power plants and the wind farm require $8bn in investment. In December, the government signed another contract with Siemens to ensure provisions for the construction the Beni Suef power plant.
Siemens began shipping the main construction components to Egypt in March 2016, only 12 months after the MOU was issued. The company has also begun training 600 Egyptian engineers and technicians and signed financing contracts for both stations in Borolos and the New Administrative Capital.
What are the energy projects that Siemens is implementing in Egypt?
Amin: Siemens oversees the implementation of the three combined-cycle natural gas power stations. The stations will use 24 H-Class gas turbines, 12 steam turbines, and 36 electricity generators. The company will also establish three gas-insulated transformers stations with a capacity factor of 500 KV. The H-Class 400 MW capacity is equivalent to 10 model A380 aircraft engines.
He added that the combined-cycle power plants using SGT5-8000H gas turbines are perfectly suitable to meet Egypt’s needs, for these turbines combine high productivity with record levels of efficiency.
When will Siemens complete its three projects in Egypt?
Meixner: The company is working at a fast pace to complete its Egyptian projects, and these projects are being established at competitive costs compared to other Siemens projects. The new power plants will initially introduce an additional 4.4 MW to the national grid by the end of December 2016, before increasing to a total addition of 14.4 MW in 2018. The three plants will save EGP 1.3bn annually by decreasing fuel consumption.
What is the current status of the projects?
Meixner: I kicked off the engineering authorities construction of the power plant in the New Administrative Capital is proceeding well. The building crew has already poured concrete foundations for gas turbines and the buildings that will house steam boilers. The plant is already operating a temporary generator with a 5 MW capacity factor. Another gas turbine that is equipped with its own generation and a single transformer of 500 KV will be installed in June.
The company will install a gas turbine and generator in the Borollos power station in May, while two other gas turbines and their generators will be installed in June. The transformers of the four 500 KV generations will be installed over the course of June and July.
How many turbines are listed in Egypt’s contract with Siemens?
Meixner: The company has signed contracts with a number of countries to whom it will provide 78 H class turbines. The biggest contract signed by the company was with Egypt for the provision of 24 H class turbines, followed by South Korea and the United States of America who will receive 15 turbines each.
The company has launched the three projects with investments of €6bn. However, it did not receive any of these sums yet, which is unlikely in any project. He explained that the mutual trust between the company and the Egyptian government prompted the company to begin construction, especially as the state awarded the project to Siemens before the financial closure. Moreover, Orascom and Elsewedy Electric have both begun digging and preparing the sites without their financial closure or receiving any payables.
Will there be any difficulties with implementing the projects in Egypt?
Meixner: The Borolos power plant is a very hard project to implement, as the land needs paving and elevating above sea level to avoid impact of sea tide. All three power plants, Beni Suef, the New Administrative Capital, and Borolos are identical. They all operate on a 1X2 system that includes two gas turbines, as well as a steam. The exhaust from the plants enters a boiler to heat up water, turn it into steam, and utilize it to run the steam turbine.
The company will install 11 turbines in three power plants in December, including 6 in Beni Suef, 4 at the New Administrative Capital, and one in Borolos. The company will install the turbines as well as all related distribution and transmission systems.
The stations are expected to be operational for the next 25 years. Following this period, they are renovated and maintained to operate for an extra period of 10 years. The technology of the three plants will be applied in Egypt for the first time and will achieve 61% higher efficiency.
The political leadership and the people of Egypt are following the projects closely, it seems. A picture of the Beni Suef plant the company published on Twitter saw the reaction of 14,000 followers.
What are the challenges facing the company when investing in Egypt?
Amin: The challenge is implementing the three projects without problems or mistakes while compiling with the timetable. There is no room for mistakes or compensation.
30% of the energy generated in Egypt relies on Siemens’s technology, including the power plants in El-Kureimat, Oyun Musa, Talkha, Sidi Krier, and Damietta. Amin pointed out that in 2018, about 14,400 MW will be added to the national grid, which is about 50% of the total current capacity, making Siemens the leading energy generators in Egypt with a production rate of 80%.
Is Siemens implementing any other projects in Egypt other than the three power plants?
Amin: The water desalination plant that will be implemented in Ain Sokhna will be operated by a new technology.
Siemens has applied for a license to manufacture turbine blades and is awaiting decision. The project is estimated to cost approximately €70m. Siemens will own the factory without having partnered with the government. The produced turbines will be exported to many countries.
The project will produce 100 blades to generate 5.5 MW per year. The civil works will begin early next year.
Amin revealed that Siemens formed an alliance with a number of companies included in the feed-in tariff projects to establish wind farms of 250 MW. The company also plans to establish a wind farm with a capacity of 2,000 MW, as part of the MOU signed during the Sharm El-Shiekh conference. Amin said the company does not intend to invest in solar energy.
