Egypt's El-Sewedy launches wind energy subsidiary

RENEWABLE ENERGY: Egypt has been slow to adopt wind and solar alternatives. (Getty Images)

El-Sewedy Cables has launched a wind energy group to build turbines in Egypt in line with the government's plan to increase renewable energy use, and expects sales of 434.6 million euros ($584 million) by 2011.

Sewedy said on Monday it had created the Sewedy Wind Energy Group after buying a 30 percent stake in Spanish wind energy equipment manufacturer M.Torres Olvega for 40 million euros. El-Sewedy retained the option to buy the remainder by March 2011.

"We believe that as Egypt's energy needs grow, wind energy will play an increasingly important role," Chief Executive Ahmed El-Sewedy said in a statement.

"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," he said.

He added that the purchase of the M.Torres Olvega stake would "allow us to move very quickly with our plans to enter into this strategic sector".

But El-Sewedy, one of the biggest cable manufacturers in the Middle East, would still maintain its focus on utility companies that constitute its main customer group.

El-Sewedy said it was entering the wind sector in line with Egyptian government plans to generate 20 percent of Egypt's energy needs from renewable resources by 2020.

"Wind power, which is particularly well-suited to Egypt's climate and terrain, is expected to constitute a significant percentage of the target figure," the Sewedy statement said.

Officials say Egypt's combined oil and gas reserves will last the most populous Arab country for roughly three more decades, pushing the drive for more reliance on renewable energy. Egypt has also said it wants to build several civilian nuclear power stations to help avoid an energy crunch.

El-Sewedy said it expects sales of 37.3 million euros by end-2009 from its wind group, expanding to 434.6 million euros by 2011. EBITDA would reach 5.3 million euros by end-2009 and 54.4 million euros by 2011, it said.

The firm said its initial investment in M.Torres Olvega included buying intellectual property and know-how, and El-Sewedy said it would have exclusive distribution rights for M.Torres Olvega-branded turbines in Africa and the Middle East.

M.Torres Olvega would retain exclusivity for European markets and the two firms would compete freely in other regions.

El-Sewedy said it had also recently established a joint venture with German wind tower manufacturer SIAG to build wind towers, and had acquired a small Egyptian electrical engineering company that specialises in power generation projects.

The Egyptian engineering firm PSP would help the El-Sewedy energy group with the execution of turnkey wind farm projects. "Our competitive advantage in this sector is that we will be able to provide full solutions for wind farms," Sewedy said. "We will also be very well positioned to take on turnkey wind farm projects both in Egypt and the region."

Sewedy shares ended the day 1.45 percent lower at 85 Egyptian pounds ($15.22), well off a year high of 150 pounds set in February. (Reuters)

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