Chinese company's power surge

Electricity woes and a desire to be green and clean open many doors

As Africa presses ahead with economic growth and industrialization, electric power - or more precisely a lack of it - has become a big impediment as countries try to realize their ambitious aims.

That lack is fueling efforts by governments throughout the continent as well as companies from outside it to fill those gaps.

The Chinese company CGGC-UN Power Co Ltd sees Africa as a huge reservoir of untapped power generating capacity, and one that will play a role in reducing environmental pollution.

The partly state-owned CGGC-UN Power Co Ltd was set up last year, with two of its top priorities being to save energy and look after the environment.

The company says it does this by efficiently harnessing resources and drawing on advanced technology from around the world. Furthermore, it says, it has been expanding energy power plants fueled by natural gas, biomass gas and other renewable energy sources.

Its services include financing, investment and design consulting on projects, and providing equipment such as generators and operational and maintenance services.

Its first project was in Kenya, and it began work on four others elsewhere in Africa during the year, says Lu Zhiyong, the company's general manager.

"We were quickly accepted by local customers because our technologies and products correspond with market demand. Our ties to Chinese industry and our ability to get finance also helped.

"Although we have not been in Africa long, China Gezhouba Group Corporation has been there for more than 10 years and has had considerable success. It's a brand with a very good reputation, so that has saved us a lot on advertising."

CGGC has a clear focus on infrastructure projects in Africa and CGGC-UN Power will put more effort into marketing energy products and technical know-how to complement the group's business in Africa and benefit local society, Lu says.

With the help of CGGC, the company has set up more than 90 sales and service offices across the continent, in addition to the five big power plants it has built.

African countries in which it is active include Kenya, Liberia, Senegal, Sierra Leone, Nigeria, Madagascar and Niger, with services including industrial and municipal power supply, bio power generation and water desalination.

"Basically we go wherever there is a lack of electricity," Lu says.

"Hydroelectricity and thermal power plants have been our forte, but, depending on which part of Africa is concerned, we can supply services in many new energy sectors such as wind power, solar power, fuel oil and gas power. For instance, gas power generation covers many resources common in Africa like natural gas, biomass gas, landfill gas, coal bed gas, and methane."

Because the African market is both new and huge, the opportunities particular to it are relatively easy to identify, Lu says.

"Many projects are waiting for investment and finance, so Chinese companies have many opportunities in Africa because we enjoy a very solid friendship with it."

The awareness in Africa of environmental protection issues is acute, he says, which is something the company can profit from.

Of the company's investments in Africa, Lu says he is most satisfied with a heavy oil power plant in Liberia.

"It's a 1 billion yuan ($160 million) investment, and we are generating power used in making iron. Before and during investment, we thoroughly researched operating and management issues, and so far everything has gone well, which is particularly good given that it is usually difficult working in an undeveloped market."

Lu attributes the success partly to CGGC's good investment record and, more importantly, its thorough understanding of local rules and laws.

"We give top priority to localization and put a very local team together, so things are running very smoothly. In addition, the quality of our products and technologies is very good, and our services and operations have been very efficient."

Some may think of energy-saving measures and using new energy as expensive, and therefore counter to Africa's aims of rapid economic growth, but Lu says this is not the case, and energy-saving technologies are compatible with the continent's development.

"As with China, energy-saving measures and using new energy was often overlooked in development in Africa, but that has changed significantly, and they are now seen as vital to the future. You now even have tough laws on these things. So as industrialization proceeds, Africa has not only the will but also the wherewithal to ensure that development can go hand in hand with environmental protection."

As an electricity generator, CGGC-UN Power sees itself as having a key role in the communities where it is located, Lu says, so its growth in Africa must be sustainable and pitched to the long term.

"We face many challenges in Africa, for example understanding local laws and religions. Don't forget that that there are 54 countries and 54 sets of laws and various religions, and we have a responsibility to do everything we can to understand them. Government systems vary, too, so we need to learn how to communicate effectively - and with propriety - with the governments in place."

The company's main competition comes from Europe, Japan and South Korean companies, Lu says, "but we are confident our record speaks for itself'.

"One concern for me is that some companies offer unrealistically low prices that result in a vicious circle of price cutting."

To reduce costs and increase competitiveness, Lu says, the company's localization in Africa must be comprehensive.

"Our local staff are fabulous. They know how to promote and publicize our products and technology in a way that non-locals would never think of."

That means that before long the company will have very high brand recognition, he says.

Corporate social responsibility is another issue close to Lu's heart.

"These days you can't live without electricity, but the onus is on us to let local people know that we stand with them shoulder to shoulder not just in providing that power, but in faithfully discharging our social responsibilities as well.

lilianxing@chinadaily.com.cn

(China Daily Africa Weekly 03/06/2015 page14)