Aggreko eyes number of new depots in Mideast
Power demand is creating demand for short-term solutions, says CEO.
Power supply business Aggreko has invested at least US$30m in new equipment in the Middle East in the last 12 months and is mulling a number of new depots for the region, the firm’s chief executive has said.
“It is a major focus for us in terms of new fleet – there is virtually a ship a week going from [head office] down to my colleagues in the Middle East bringing them new equipment. We continue to invest very heavily and we are expanding our service centre networks,” said chief executive Rupert Soames.
“In the last couple of years we’ve built a new depot in Dubai, we are considering opening others elsewhere. In the last twelve months we have probably put $30 to $40m worth of fleet into the Middle East.”
Business in Aggreko’s largest market, Dubai, more than halved in the global downturn, Soames said.
However, the decline has been offset by robust regional growth, including a contract announced in February to provide 115MW of power to Oman.
“Despite the drop in demand in Dubai, we have more on rent now across the Middle East then we had a year ago,” he said.
“Clearly if you have your largest market in the Middle East, being Dubai, drop by over a half, that’s not what you might call helpful. But we were able to mitigate that by finding other sources of demand.”
The Middle East accounts for approximately 15 percent of Aggreko’s global revenue. Yemen is the firm’s largest single regional market, accounting for 200 megawatts of power.
Soames said he foresaw strong growth prospects from the region, as economic growth continues to outpace conventional power generation.
“The rate of economic growth of many countries in the Middle East is phenomenal and there has then been an increase in base industry that is growing. The sorts of industries that are growing, steel and petrochemical industries, they have very, very high demands for power and use a lot.
"Then you have desalination plants that consume enormous amounts of power. Many Middle Eastern countries have very significant investment plans to add more power into their grids. What we provide is a bridge between today’s demands and tomorrow’s supply,” he said.
The FTSE 100 firm, which is the world's biggest supplier of temporary power, last month said it expected its full-year performance to be significantly better than anticipated, bolstered by wins such as the World Cup.
Aggreko has supplied 300 temporary generators, 500km of cabling and some 360 staff for the event to power the screening of its 64 matches.
“We used to do just do the power for broadcasting, but for the World Cup at the moment we’re doing a lot of power around the stadium, and we’re doing a lot of the cabling and distribution so our capability has expanded,” said Soames.
In a June trading update, Aggreko said it planned to spend around £265m this year on capital expenditure, £45m more than it previously expected.