Heading in the right direction

An ABB transformer is on its way to a substation in Kuwait.

The transformer market is set for growth, and local producers are looking to play their part in the success story.

Electricity distribution is a subject even the least technically-minded residents of the GCC cannot hope to avoid, as power failures have plagued the region for years. Recently, one of the major steps taken towards securing a stable supply of energy has hit the headlines when the first stage of the GCC interconnection grid became operational.

In the face of rapidly developing industrialisation and urbanisation of the Middle East, the need for an expansion of transmission and distribution networks is apparent. Generators, a vital component of these networks, are in demand.

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But it has not all been plain sailing for producers and service providers, as the global economic crisis slowed the pace of infrastructure projects across the region.

A storm in a tea cup?
While things are looking up, the pace of recovery differs. “Key challenges to our business in the region include relatively reduced market demands in some countries due to the effects of the global economic recession to meeting rapidly increasing demands in other countries, “says Mohammad Megdad, business unit manager at ABB in Saudi Arabia.

Nevertheless, for some the downturn has been little more than a storm in a tea cup. “There was a bit of a blip but generally in the Middle East things carried on pretty much as normal,” say Andy Hedgecock, general manager at Omicron, a provider of diagnosis and evaluation services for transformers.

“Counties have pretty healthy bank accounts because of the oil revenues, so the infrastructure plans slowed a little bit, in some markets in particular. Dubai has seen quite a dramatic slowdown. In contrast, Abu Dhabi went on quite normally.”

Yet even the wealthy Abu Dhabi Water and Electricity Authority has been dragging its heels on new projects, according to Manu Domen, general manager at Brush Transformers Gulf. “ADWEA has not done much for the last year of so, and now suddenly they are starting up again.”

Overall, the market favours the customer, as producers are fighting for business. “Our order book is reasonable enough, but it is not as good as it was in 2007. We are still almost 30 percent off those levels,” says Suresh Madhav, regional manager at Tesar, a manufacturer of dry transformers. “It is still very much a buyer’s market,” says Domen, “Prices for transformers have come down dramatically.”