Egypt

Egypt

Cable firm turns turbine supplier -- El Sewedy buys M Torres

A new entrant to the Egyptian wind power sector looks to have hit the ground running, with three strategic acquisitions and partnerships over the past few months to set it up as a fully fledged wind farm supplier. El Sewedy Cables, a global cable and electric products manufacturer, kicked its wind business off by buying a 30% stake in M Torres Olvega, a small Spanish wind turbine manufacturer producing direct drive machines, for EUR 40 million, with an option to buy the remaining 70% by March 2011 if M Torres Olvega "meets set technical targets."

The deal includes buying both the intellectual property and know-how of the Spanish company, which will be rolled into El Sewedy's new Sewedy Wind Energy Group (SWEG) by the end of 2008. SWEG will then start assembling, and later manufacturing, turbines locally and will have exclusive distribution rights for M Torres Olvega-branded turbines in Africa and the Middle East, while the Spanish firm will retain rights in European markets. The two companies will compete freely elsewhere.

"The acquisition will allow us to move very quickly with our plans to enter into this strategic sector," says CEO Ahmed El Sewedy. The partnership enables SWEG to capitalise on Egypt's low-cost structure and M Torres Olvega's technical base, says the firm. M Torres started making its 1.65 MW turbine in 1996. El Sewedy forecasts turbine sales for SWEG of EUR 37.3 million by the end of 2009 and EUR 434.6 million by 2011, given Egypt's target of 20% of energy from renewable sources by 2020, plus a growing regional market.

The second move was to set up a joint venture, to be called SET, with German tower manufacturer SIAG to produce towers locally. Finally, El Sewedy bought PSP, a small Egyptian electrical engineering company specialising in power generation projects. PSP will help SWEG fulfil turnkey contracts.

"The group that we are currently putting together will be able to provide all the products that are required to build a wind farm: turbines, blades and towers," says El Sewedy. Into 2009, the company expects to start producing towers at Ain El Sokhna on the Red Sea, rolling out 111 units a year in 2010 and 256 in 2012. A decision on the location of the turbine facility will be made early in the new year. At first turbines will be assembled locally, later moving to a more vertical integration. The plan is to produce 50 turbines (83 MW) in the first year, ramping up to 225 (435 MW) four years later.

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