Although Siemens has been operating in Egypt for more than a century, the recent completion of a megaproject signals a new era of the German company’s operations in Egypt. Together with the Egyptian government and its consortium partners, Siemens successfully managed to boost Egypt’s power generation capacity by over 40% within just a few years. This was accomplished through the construction of three state-of-the-art combined cycle power plants, powered by 24 Siemens H-Class gas turbines. The megaproject has revolutionized Egypt’s electricity sector, setting a course for the country’s sustainable development and future economic growth. Having completed the megaproject in a record time, Emad Ghaly, Siemens Egypt CEO, explains more about how Siemens is conceiving its future in Egypt
After a distinguished 21-year career at Siemens, you were appointed CEO of Siemens Egypt in 2016. Could you sum up your biggest milestones in this role thus far?
Taking the CEO’s responsibility and driving Siemens in Egypt as the strategic partner of the Egyptian government is a big one, and was definitely a key milestone for Siemens in Egypt. The success of the project was only possible thanks to the outstanding collaboration between the government at large, the Ministry of Electricity, the Egyptian Electricity Holding Company, our consortium partners – Orascom Construction and Elsewedy Electric – and a dedicated and competent Siemens global team. We were continuously making important decisions during the execution of the megaproject, which we carried out very successfully. We had a large team executing the project and, at one point, there were up to 60 different nationalities working on the project team. On top of that, the total number of Egyptian workers involved in the construction of the three power plants reached almost 24,000 during peak times. As you can imagine, the whole organization was working extremely hard to make sure that the deadline was met or exceeded, while maintaining at the same time the high standards of quality that was expected from our partners and customers. The megaproject did not include only the three power plants, which were the icons of the deal, but there were also eight high-voltage substations that we had to build around the country at the same time. On top of that was training for 600 technicians and engineers. Siemens has committed to provide the training for 600 people who are now responsible for the operation of the three plants. The finance was also a key piece of the puzzle. It wasn’t easy to secure the financing for the €6 billion project. In the end, we were supported by the German government (represented by Euler Hermes) and a syndicate of more than 20 international banks. The first financial contract was signed in June 2015; we reached the first financial close milestone in December 2015; and the last financial closes were reached in March 2016. It moved very quickly for such a huge deal, and you can imagine that there were also a lot of environmental and other requirements from the lenders. From then, we connected the 14.4GW in July 2018. So, the execution took exactly 27 and a half months. When I took over as CEO, I had already been the head of power generation, so I had been involved in the run-up to this project as well. For around three years, we had been working on our Trusted Advisor concept to support solving Egypt’s energy shortage.
How would you describe the impact that the megaproject has had on Egypt?
The first and most important impact is that electricity is now available to over 40 million Egyptians, reaching industries, consumers and households. Egypt doesn’t have electricity challenges anymore. Back in September 2014, the country faced a major blackout, something that happened one Thursday morning and really brought the country to a standstill. But if you compare that to the situation today, it has changed dramatically – now we don’t have any more challenges in terms of electricity and power generation. The second is that having an abundance of electricity will attract industries and investors to Egypt. If you look around in Africa, you can see that other nations with populations even larger than Egypt don’t have an installed base of power generation as Egypt now does, to meet their own demands. That’s a boost for Egypt, of course, because without electricity investors can’t do anything.
For Siemens, this was a massive project that CEO Joe Kaeser said will serve as a blueprint for building up power infrastructure in other countries. Why do you think he said that?
Because Siemens has been successful, along with our partners, in solving a major electricity challenge for the country in a very short period. We almost built a completely new electricity infrastructure in less than three years. However, we didn’t only build the infrastructure, but also the technical skills needed for such a megaproject, considering the 24,000 workers who were involved in the project. These local workers learned a lot about our methodology and how to work in such an environment, which involved both time pressure and delivering a very high-quality project. To drive employment opportunities for Egyptian youths and increase workforce localization, Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) and Siemens have signed a strategic alliance agreement to support occupational training in Egypt through the establishment of the Egyptian German Technical Academy (EGTA). We have completed the construction of the EGTA in cooperation with the Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, on behalf of BMZ. This training and occupational center is part of a multipurpose service center, where we will continue to develop skills as well as provide repair and maintenance services to the different rotating equipment in the country. EGTA will provide advanced training courses for engineers and technicians in various fields, which are specific and attractive to the job market today and in the future. This multipurpose and training center makes me and the company very proud because we are not only building infrastructure, but also skills that will help both Egyptian individuals and the country progress. We are supporting other countries within Siemens’ organization to launch similar initiatives.
In 2015 Siemens signed an MOU with Egypt aimed to prepare a master plan to strengthen and develop Egypt’s electricity grid until 2025. How has that been progressing and what else is in the pipeline?
We have finalized the grid study to investigate the efficiency and stability of the country’s electricity grid. For more than two years, we had our experts working jointly with our customer to pinpoint critical bottlenecks and provide scenarios, network performance, and analysis of the transmission grid until year 2025. That took a lot of effort, using very complicated engineering software as we had to ensure that the right substations were at the right place at the right time. We have also constructed eight 500/220-KV substations all over Egypt to transmit electricity from the country’s mega-sized power plants and connect it to the national grid. The substations were built on a fast-track basis because of the trust in our capabilities to execute complex, fast-track infrastructure projects. Beyond that, we also provided gas turbines to Phase 1 and Phase 2 of the power generation projects for the Zohr gas field to supply electric power to the natural gas processing facility. We’re very proud of this project as well because it is important for the economy, and, again, we carried it out over a short time frame. Beyond energy, we have a couple of projects like the Azhar Tunnel – the first urban road tunnel in Africa. We’ve provided the tunnel with control and monitoring systems along with other digital technologies to ensure the safe and efficient transit of vehicles through the tunnel. Also, as the government is now modernizing the different railway lines, we are now upgrading the routes between Benha and Port Said to the northeast and Zagazig and Abu Kebir in the north of Cairo. The 260-kilometer railway network will feature advanced technology for signaling, level-crossings and communications. Of course, in industry we have many other projects. We have been very successful in Egypt, both in terms of the megaproject and in our other lines of business.
What would you say are your biggest focuses going forward?
I think the next big focus is on transportation. The country needs a lot of investment in the transportation sector over the next 10 years. If you look at the number of projects announced by the government – from high-speed lines and monorails to metro lines or additional railway lines – there will be a lot of development going forward. The other sector is industry, where we would like to push industrialization and increase awareness of industry 4.0. We are focusing on supporting industries or factories to move toward full automation, and then to Industry 4.0. In addition, we’re looking into the different possibilities to support the development and modernization of industrial zones. There’s also the smart infrastructure market, where the government is currently building and modernizing infrastructure, and planning to build around 15 new smart cities over the next 10 years. Certainly, Siemens wants to play a key role in providing the smart infrastructure for those cities.
What do you think uniquely positions Siemens to be the Egyptian government’s partner of choice for those projects?
First, our competitive edge is our commitment to the country and the brand which we have strengthened by completing the megaproject. Second, we have proven that we can execute projects on a very fast-track basis, even by international standards. Third, we have a local set-up that is very strong and resilient. Siemens has been in Egypt for close to 120 years, and has more than 1,200 employees. Over the years, we have faced many challenges and have learned how to overcome them. That experience has also given us the confidence that we can support business in other sectors. Plus, of course, we have unique solutions and leadership in technology when it comes to infrastructure, industry and transport markets.
Siemens is a German company and a foreign investor. From your perspective, how would you describe the advantages of investing in Egypt?
From my perspective as both CEO of Siemens Egypt and President of the German-Arab Chamber of Industry and Commerce, Egypt is one of the most attractive emerging markets. It’s a huge market. There are 100 million Egyptians, and if you look at the GDP and Purchasing Power Parity (PPP), they are promising. These positive financial indicators mean that an investor can come to the market and do good business, and that the country is on the right track. Egypt has embarked on a reform program since 2016, and the IMF recently announced that the program is broadly on track and that it is very pleased with Egypt’s performance. Furthermore, the government is announcing new projects, some under execution and others in the pipeline. If you look at those new projects, they really cover the whole economic spectrum – everything from energy to electricity, oil and gas, industry, agriculture, food and beverage, and new urban development. That means there are a lot of opportunities. Perhaps the difference between Egypt and other countries is that those projects are related to a real demand on the ground. The government isn’t announcing them to attract foreign investment or to compete with other countries. They are really needed to take Egypt to the next level. In my opinion, that demand really counts because it will lead to sustainable, not inflated, growth. At the end of the day, you have 100 million Egyptians who are looking for opportunities. Another aspect that makes Egypt attractive is the new investment law, which provided uniquely tailored incentives for big investors from Germany or any other country in the world who are investing in sectors or projects that the Egyptian government has deemed as strategic. I believe that the main obstacle in Egypt’s way in terms of investment is perception. What makes international headlines is very different than the reality on the ground, and our challenge is to correct that perception. Once the perception changes, it will be completely different.