Experience counts

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Tabreed's new CEO, Sujit Parhar, is bringing in the people that will help him boost Abu Dhabi's district cooling capacity.

Sujit Parhar is the newest incumbent in a tough job. As CEO of Tabreed, a district cooling company, he came to office when the company share price had taken a battering and investor confidence was wobbling.

Tabreed might not be the only company having a rough time at the hands of local traders, but it is the only utility listed on the Dubai Financial Market (DFM). A utility's position as a long-term investment, with a steady return, makes Tabreed's recent fluctuations look unjustified. According to Parhar, it is partly down to an issue of communication.

"We're strengthening the management team to gear up for the next chapter of Tabreed, which is to deliver Abu Dhabi 2030, and I think investors are beginning to get that message," said Parhar. "We're spending a lot of effort and energy in talking about the business model, so we're creating awareness."

"The share price came off course as a consequence of the market. It was a very close correlation with what happened on the DFM," he said. "The recovery has been partially due to the market, but we've also been able to demonstrate, I think, in the last few months the board's commitment to bringing in a management team that is more familiar with and experienced in terms of utilities."

Team changes also include a new chief financial officer and managing director. One of their first jobs will be to work on further development of customer relations.

"We are also having a more concerted effort on customer relations," said Parhar. "A lot of our customers are investors as well. To keep them abreast of what the business is exactly about, where their earnings are coming from, and what it means going forward in terms of a forecast.

"I was probably lucky to be exposed to a multi-utility company supplying multiple customers in the same geographical location, with really complex pricing formulae and contract structures. Just because you have got a long-term contract does not mean you have an iron rice bowl," he said, revealing his Singaporean background.

"You have got to constantly focus on engaging with your customers, making sure your customers are satisfied with what they are getting. That's what I'll be bringing here in terms of dealing with customers. Do good deals, but do fair deals.

"Maybe the customers are getting a bit more sophisticated, but essentially district cooling is a very simple utility. We're selling chilled water in the desert. It's an interesting concept, but so simple to understand you can explain it to a five-year-old, and there is no rocket science behind how it is procured."

A reasonable assessment of the company's prospects can be made from the board room window, which looks out across some of Abu Dhabi's busiest development areas. It is development work which Tabreed will be a vital part of as Abu Dhabi heads toward its vision for 2030.

"Tabreed is an essential part of the Abu Dhabi 2030 plan, because district cooling is definitely part of the plan that Abu Dhabi has put together to meet its future cooling requirements," said Parhar.

"We foresee growth within the next 15 years that is going to be quite demanding on us. For Abu Dhabi 2030 to happen, you are looking at an addition of about 1.5 million tons of capacity. It's going to be a big challenge for everybody to reach [the targets], but I think Tabreed has what it takes to deliver."

He should be in a position to know. With 13 years working in privatised utilities, this is not the first time Parhar has been at the helm of this kind of business model. He also reports that business is still good, with the company expecting to commission 16 plants this year, of a total of 17 that are under construction.

This will add to Tabreed's existing installed base of 34 plants. Although the company has seen signs of a slowdown this has translated into work being held back, rather than shelved. But according to Parhar, there are already signs of change.

"As of the last couple of months, it has picked up again," he said. "We have seen developers come back again and say we're back on-stream again and are looking at district cooling for developments."

This is good news for revenues, which mostly come from developers. The company also enjoys a direct correlation between its growing installed base and its billable tonnage. This is primarily because it doesn't spec build its plants, instead building them on the back of contracts and targeting a just in time completion.

"One of our key goals is to basically be there when the customer is starting to fit-out his building," said Parhar. "A lot of our customers come to us and say I'm going to start fitting-out three months before I'm ready to transfer the apartments over to my tenants, so we're ready three months before, to send out chilled water."

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