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To achieve its ambitious growth targets, ACWA Power International wants to profit from the burgeoning power sector in its native Saudi Arabia, while at the same time expanding its presence in the region, says CEO Paddy Padmanathan.
Exponential growth is not something many companies dare dream off. But by aiming to grow its asset base to 30,000MW and 5 million cubic meters of desalinated water per day by 2014, from a current base of 6,500MW and 2.25 million cubic meters, ACWA Power International is doing just that.
“On the face of it sounds staggering,” admits Paddy Padmanathan, ACWA’s CEO and the man behind the ambition.
“When you set up targets you don’t want to try to overreach but at the same time you don’t want to set up very comfortable targets that you can just achieve in three years and say ‘How clever have I been?’. We think it’s a fairly reasonable target, we’re going to certainly go hard for it and we’ll get there, we hope.”
Padmanathan’s optimism is rooted in the company’s performance so far. He points to the current asset base: “We achieved that from zero within five years. It’s a hell of an achievement given the fact that plants take three to four years to build in the first place so it’s been done at an accelerated pace. It’s always difficult to start, but once you get going, the momentum is there to propel you.”
Saudi Arabia has been, and will remain, the main engine of ACWA’s growth. ACWA Power International is a Saudi Arabian company, owned in equal parts by three Saudi conglomerates, the A.K. Al Muhaidib & Sons Group, the Abdullah Abunayyan Group and the Al Rajhi Group.
The Saudi government has committed itself to private sector involvement in its power infrastructure, and is forging public private parternships (PPPs) in the shape of independent power projects (IPPs) or independent water and power projects (IWPPs).
ACWA is a 30 percent stakeholder in the countries first IWPP, the 900MW crude-fired Shuaibah plant on the coast of the Red Sea (see next article), and has several other stakes in major power projects. It is hungry for more.
The country’s power market represents 65 percent of the GCC’s total, and is growing at a rate of 10 percent per annum, says the CEO. Government plans are to increase installed capacity from the current 42,000MW to 60,000MW by 2020, and Padmanathan believes ACWA are in a strong position to capitalise from this expansion.
And it is not only new plants that offer opportunities to power companies. “Don’t forget that of the existing 42,000MW, 20,000MW need replacement. They’re all very old assets, they’re very inefficient, and today people are much more concerned about efficient utilisation of fuel. We’ve got plants here in Saudi Arabia that are running at 28 percent thermal efficiency, when we can get up to 50 percent.”