Aggreko Wins 140 MW Emergency Power Deal In Kenya Worth $30M Aggreko PLC (AGK.LN), a provider of temporary power and temperature control systems, said Tuesday that following a public tender, it has signed a contract with the Kenya Electricity Generating Company Ltd to supply all 140 MW called for in the tender; the minimum period of the contract is 12 months, and the value of the award is estimated to be over $30 million. MAIN FACTS: -This will involve the installation of an additional 80 MW at Aggreko's existing site at Embakasi, outside Nairobi, and 60 MW at a new site near Naivasha. -Kenya's requirement for additional power is a result of low rainfall in parts of the country. This drought has resulted in reduced output from the country's hydro electric power stations leading to power shortages which are having a damaging effect on the country's economy. -A critical consideration in the tender evaluation process was speed of delivery, and Aggreko has undertaken to supply the first tranche of 40 MW within five weeks of the contract becoming effective, and the balance a few weeks later. -By London Bureau, Dow Jones Newswires (August 18, 2009) But, Reuters on Sept 3rd, 2009 reports this: NAIROBI (Reuters) - Kenya hopes to bridge a 68 megawatt electricity supply deficit that has caused daily outages by the end of the month, and have a surplus of 24 MW by the first week of October, the energy ministry said on Thursday. At the moment, the country is generating only 861 MW during the daytime whereas peak demand stands at 929 MW. It is conserving the little water available in three of its dams to provide peak power in the evenings when demand is above 1,050 MW on week days, the government said in a statement. "The power demand gap ... will be bridged by commissioning of additional 33 MW by Aggreko New High Speed Diesel and 35 MW by Rabai Power Medium Speed Diesel," the ministry said. The bulk of Kenya's electricity is generated at hydropower dams but a prolonged drought there has shrunk water quantities and forced plants at five reservoirs to be shut down. By mid-October, the country will have a surplus of 88 MW and this should increase to 99 MW at the end of that month. This will be achieved by increasing the capacity of the two thermal plants. "This surplus supply situation will be sustained for the rest of the year and is even expected to improve sharply with the arrival of the short rains," the ministry said. Kenya Electricity Generating Company signed a deal with Britain's Aggreko for the provision of an extra 140 MW of oil-powered emergency power capacity last month. Note that: Aggreko's core products are diesel generators housed inside 20ft shipping containers. On its own, a single generator costs £120,000-£140,000 to build and can generate 1MW of power. Chain dozens together, and you have a medium-sized power station that can be built as quickly as the containers can be shipped to the site. The bulk of Aggreko's fleet - capable of generating 6,000MW, equivalent to 9 per cent of the UK's generating capacity - has been assembled from mostly off-the-shelf parts in Dumbarton, before being shipped out to depots round the world. The standardised nature of the product, and the global nature of the business, means that excess capacity can quickly be moved to where it is most needed. Half of the 140MW being sent out to Kenya at the moment has been taken out of the more sluggish local business, which provides emergency backup for utilities and off-grid power to building sites and events such as the Glastonbury festival and Beijing Olympics, Mr Soames says. The company is staking a lot on the growth of the international power business. Unlike the local business, where Aggreko faces a host of competitors including the network of dealers affiliated with $50bn-revenue (£30bn) Caterpillar, the international power market is all but untapped. Management have invested accordingly. Capital expenditure has risen from £55m in 2003 to £256m last year, when Aggreko added an extra 800MW of capacity to its fleet. The entire fleet size of its nearest international power competitor is estimated at only 150MW. That said, the business is not without risks. International power's order book has decreased from 22,000MW last year to 18,000MW at the end of June - to about 10 months' worth of revenue, as contracts have ended and new clients have switched to shorter-term deals. Further off, any developing countries that can turn round their ongoing energy supply deficits will also have less need for Aggreko's expensive emergency power (see box). In Uganda the much-delayed Bujagali Dam, designed to provide 200MW of power, is expected to come onstream in 2011.