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Rahul Wadke

Both the regions could be spending about $ 20 billion in next four years on power transmission and distribution infrastructure

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Mumbai, Feb. 19 Indian power transmission companies are gearing up to go on an African safari.

With Africa poised to make significant investments in power projects in the next four years, the Indian companies are increasingly flocking to the continent to win multi-million dollar transmission contracts.

Apart from Africa, the Middle East has emerged as yet another destination for bagging transmission contracts, industry sources say.

According to an industry estimate, both the regions could be spending about $ 20 billion in next four years on power transmission and distribution infrastructure.

In the current fiscal, three to four major Indian players in this segment alone have bagged orders worth over $ 400 million from the two regions. Overall, the value of orders received by Indian companies would be much more, according to the sources.

For example, Kalpataru Power Transmission Ltd has already executed contracts worth $ 50 million in Qatar, Algeria and Zambia and another $ 100 million worth contracts are under execution. The company expects to bag another major contract of $ 35 million from a Northeast African country.

Says Mr Ajay Munot, Director of Kalpataru Power: "All these countries are rich in resources such as oil, gas and metals. Therefore when global prices of the resources increase, these countries make more money. Their investment in infrastructure projects has also increased exponentially. Even a sparsely populated country such as Algeria with abundant hydrocarbon resources is connecting all its regions with a power grid."

One of the oldest transmission companies in India, KEC International Ltd today has an order book of $ 665 million of which $ 530 million worth orders are from Africa, Middle East and Central Asia. About 80 per cent of its orders are from overseas market and only 20 per cent from India.

It has presence in Algeria, Tunisia, Libya, Kenya, Zambia, Nigeria, Ethiopia and Ghana in the African continent and Oman, Kuwait and United Arab Emirates in the Middle East.

Mr Shreeram Phanse, Dy General Manager, Corporate Monitoring, at KEC Ltd, says that Middle East countries want to develop their power infrastructure before their oil reserves dry. "They want to invest in power infrastructure in a big way and create capacities, which will serve them for coming three decades," he points out.

However despite the big bucks being spent for the power transmission projects, it is not always easy to do business in Africa. Mr Pradeep Dhamdhere, analyst with ASK-Raymond James Securities says that political instability, closed economy, and payment in local currency are the major hurdles while doing business with Africa. On the other hand, the Middle East countries have strong economies and better political stability, but here Indian companies face stiff competition from other international players and rapidly emerging local players, he said.

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