Yocean Group powers into transformer market

Kenya's first transformer manufacturing plant, which opened on Oct 5, is set to save the nation millions of dollars lost from electricity theft and leakages caused an aging power grid.

The plant, built by Chinese company Yocean Group on the outskirts of Nairobi, is also expected to speed up the procurement process, and thus accelerate plans to upgrade the power network.

The demand for transformers in Kenya has grown rapidly since the government rolled out ambitious plans to connect more homes to the national grid.

"Yet for about six months, most of our projects have stalled as we waited for delivery of imported transformers" from Europe and Asia, says Charles Keter, cabinet secretary for the Ministry of Energy and Petroleum.

Sourcing transformers locally will help cut costs and lengthy waiting times, he says.

The government also plans to buy more electrical equipment locally from next year, as part its Buy Kenyan campaign, and Keter says three firms have expressed an interest in setting up electrical equipment manufacturing factories in the country.

According to estimates by Kenya Power, the state-owned enterprise that manages transmission and distribution, $173 million a year is being lost due to theft and leakages.

In addition, the company's Last Mile Connectivity Project aims to connect more than 70 percent of Kenyans to electricity supplies by 2017, with a view to universal access by 2020.

The first phase, to connect customers within 600 meters of 5,320 selected transformers, will benefit 1.5 million Kenyans, the company says. For phase two and three, additional transformers will be installed and the low-voltage network will be extended to connect 2.5 million people.

Yocean Group, registered in Kenya in 2011, began looking into different markets in 2014 on the back of government policies to boost manufacturing.

Dylan Yu, the company's CEO, says he saw an opportunity in the demand for transformers, but felt the business environment was not conducive for investment.

"There was a lack of a procurement process and supporting industries," he recalls. "Clients were also not ready for a local manufacturer."

Undeterred, he looked deeper and discovered that Kenya Power and the Rural Electrification Authority had stored many faulty transformers. So, he offered to repair them.

Last year, the rural authority agreed to let Yocean Group fix 120 transformers, a task it completed in two months.

The company has invested $1.2 million in the Nairobi plant and plans to inject another $2 million to buy comprehensive testing machines.

"In the next two months, we'll be fully established, after which we'll officially start making transformers locally," Yu says, adding that the goal is to reach a turnover of $20 million by the end of next year and expand to other East African countries.

He says he is banking on quality as a market penetration strategy as well as compliance with local and international standards.

"As an electrical engineer, I fully understand the quality and specifications, so I'm confident of penetrating the market," the CEO adds.

(China Daily Africa Weekly 10/14/2016 page26)