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Targeting the strong power performers
Electricity and Water Authority (Dewa) is planning
to invest US $13.6 million (AED50 billion) on power,
sewerage and desalination plants between now and
2012. Sayeed Mohammed Al Tayer, managing director
and CEO of the state-run utility made the
announcement during Wetex 2007 - the Dubai-based
water, energy and environment exhibition - in March.
Dewa is expected to increase its electrical capacity
to 13,250MW and desalination to over 2.6 million m3
per day over the five-year period. The demand for
desalinated water grew by 13% in 2005, while
electricity demand rose by 17%. Currently, a surplus
of both is available, but demand is forecast to rise
further when a vast wave of construction projects
complete in 2007-08.
In bid to keep up with these projections, Dewa
recently rolled out its latest power grid expansion
project - H Station (phase three) - which was won by
German power giant, Siemens.
million turnkey contract is to build a 400kV/132kV
substation in Al Awir. And with 24 gas-insulated
switchgear bays at 400kV, and 28 bays for 132kV, the
substation is the largest of its kind that Siemens
has undertaken worldwide to date.
The project will link H Station with the country's
power supply network, and the substation also
completes the Emirates National Grid, by providing a
link between the power plant and the power supply
systems of Abu Dhabi.
"This project is important for both companies. Dewa
is a key account for Siemens, and, having worked
with them in the past, we believe that we fulfill
their demands," says Michael Jesberger, vice
president - high voltage substations, Siemens AG.
He adds that the Middle East, specifically the UAE
and Qatar, has long-been the largest market for GIS
projects for Siemens and that the speed of growth
requires careful coordination of utilities.
"The development of this country is amazing,
especially when compared to Germany, where things
are going more slowly. But to build at this pace,
you need to have a reliable power supply, and Dewa
has done a great job."
But in a market where contractors are kept extremely
busy, the tendering of power and water projects in
the past has presented certain challenges to Dewa,
which had to re-tender its M Station project towards
the end of last year. The size of the plant had to
be downgraded from 2,000MW to 1,200MW and split into
two phases in order to attract firms.
"The plant will still produce 2,000MW but this will
now be done over a two-phase construction period,"
says Sayeed Mohammed Al Tayer, managing director and
"After we only attracted one bidder [Doosan] for the
project last year, before re-tendering we found out
from contractors that this was because the plant
size was too big. It was also because most
contractors are too busy; so time is a problem, as
are the financial risks associated with such a
Despite the pressure to find bids on the market,
Jesberger says that Siemens faces tough competition
in the region.
"There are the Japanese firms - Mitsubishi and
Hyundai, and a lot of Indian contractors including
Larsen & Toubro and Tata Industries. Then there are
the Saudi Arabian contractors, which are doing more
higher voltage contracts. So the competition is
He adds that Siemens has changed the way it works in
the region in order to give it the best possible
chance of winning projects.
"What we are doing now is building up local
competencies. In the past we largely had an export
business out of Germany. But we found that it took
time to communicate with the customer and get
approval for our designs, for example. By building
up our local engineering competence we are getting
closer to our customers and reduced our project
execution times by up to 60%. So we have sped up the
process by having a local presence.
"Siemens is present in a lot of countries - more
than the United Nations. And we are growing in all
areas: people, location and competencies. And we are
shifting our production facilities around the world
to be closer to the markets, the customers, and
to meet local requirements. It is better to have a
Chinese member of staff talking to a Chinese
customer than an Austrian, for example. It's
As well as developing its local competencies,
Siemens has also carried its German reputation for
precision and delivery, which has attracted other
European firms to carry out subcontracts on its
Shad Asif Khan, general manager - Gulf, Keller
Grundbau, which has carried out deep soil treatment
for power projects for Siemens, says that working
for with them is preferable for Keller.
"Let's put this way, Siemens is our favourite
client; they like us. Last year we did three jobs
with them, in Qatar, Bahrain and Saudi Arabia. The
Saudi job was a power generation plant in Shuaiba on
the west coast. And our Saudi Arabia branch had a
record year last year.
"There is no denying that we have a good
relationship with Siemens as we are both German
companies. But of course, we have also delivered. It
is a good client but it is very demanding. The time
schedules are not easy but we have managed to
deliver. And that is the secret as to why they were
coming back to us, and not the competition."
But even with reliable subcontractors, a reputation
for meeting deadlines, and delivering high quality,
it is impossible for Siemens to escape the
increasing steel prices being seen in the market.
"We are of course affected," adds Jesberger. "The
increase of steel prices is a global issue and the
whole industry is facing the same problems. If you
source a transformer, for example, the factory will
have already had to compensate for the cost.
"We are suffering, but more on the capacity side
than the financial side. It's a matter of how clever
you are and how you balance the load."
And in a market where balancing the load is
imperative, it is no surprise that companies who can
rely on each other, stick together. By investing in
its local competencies and partnering firms with
reputations such as Keller, Siemens has developed
its operations in the Gulf into a reliable source
for Dewa and other utility clients.
But project re-tenders and unpredictable shifts in
steel prices are keeping the market on its toes. And
as large numbers of construction projects come
online this year and next, the question will remain:
can the necessary electrical infrastructure be built
quick enough to meet demand?
shines the light on solar energy
As part of its evolving presence in the Middle East,
Siemens launched its turnkey solar solutions into
the market at the Wetex 2007 exhibition in Dubai.
Its expansion of the solutions into the Middle East
market is in response to a growing interest in the
technology throughout the region.
Jos Schlangen, business development manager, Siemens
Solar Projects, says: “There is a lot of interest in
solar coming up; the demand is not there yet because
there is not a framework in government for this type
of application. [For the market to take off] it
needs funding from universities and utilities firms
and to get renewables placed next to other types of
energy solutions to be part of the total energy
Siemens produces its own inverters and will provide
a turnkey solution of the entire project including
sourcing of solar panels from the market.