With the new legal framework that was established in Nov. 2000, the tendency is to open the electricity sector to Independent Power Producers (IPP). Could you brief our readers on this issue and particularly on the limitations the investors may find in the areas of generation, distribution and selling of electricity?
Sudan experienced electricity from 1908 with small generators, and it has grown from that time until now. During the colony of the British it was a private company. After independence it became a state company, the National Electricity Corporation. In the last couple of years, the demand has been growing very fast while our capacity is limited to meet the demand. The government realized that within the free market everything should be free even electricity - free market is a complete policy. In 1998, the government realized that also the electricity should work like this, and started from that time to make constitution and act of investment especially for the electricity to be only in one company national electricity corporation and to encourage investors to share this responsibility. The act of 2000, which has been signed by the president in December last year, is an investment act for the electricity. This act opens doors for all investors to work in all aspects of the electricity industry. That means that they can invest in generation or also in distribution and they can build a transmission line. In this act many facilities and exemptions have been given to investors to come and invest in this sector. Only 30% of the population has electricity. This means that 70% of the country is to be electrified. There is a market but huge investment is needed to build power stations so as to supply the country with electricity.
Eng. Makkawi, you have said that you will produce 5000 megabyte by 2010. Could you tell us if this program is going according to what you have planned, and what is exactly the power needed for the country in terms of generation capacity?
We have a long term power plan done by Acers, a Canadian company, which is until 2015. This plan was done in 1993, and at that time this plan was aiming at creating 5000 megawatt. The government realized that it needed a huge amount of money. In 1993 Sudan was an importing oil country, and if you build thermal power station that means that you need more oil to be imported and that means you need more hard currency to be taken from the government, and that's why our capacity was limited until today. In 1999 a big change happened: Sudan became an oil exporting country, and from that time the government started to fill this gap. The emergency action plan implemented by the government, which has been approved last year in 2000, says that we need to build a 1000 megawatt thermal power station as soon as possible and to start building more after this. We are experiencing severe blackouts during the year because the demand is very high. From this 1000 megawatt until now we have contracted about 600 megawatt: 50 megawatt were commissioned today in Khartoum north, 120 megawatt will be adopted by August at the end of this year, 30 megawatt will be done by Moise & Vine in west area; we have contracted 210 megawatt to China this month and we have also witnessed a contract of 257 megawatt with Malaysian Dar Ikhtisas after one year and a half of negotiation. And if you add all these together it is 700 megawatt. The present negotiations are related to the building of a 180 megawatt in an existing power station called Elshaheed or Khartoum north power station. We are setting finance on it, and we are also negotiating with Bristig, a British company to implement 150 megawatt. If you add all this together, we are reaching the 1000 megawatt, which is the emergency program we have planed. Once completed, we will move on the development program, to utilize our resources in the hydro power station. We have already finished the design of 3 dams El Shirik, Kajbar and Merawi, in north Sudan, with a total of 2000 megawatts. The government is now thinking on how to finance this huge project and if we do this the total will be 3000 megawatt.
What is the concrete plan to bring all the isolated power plants together and connect them to the general system?
The isolated power stations are built only in the capitals of the states, and in the Sudan there are 26 states. What I have told you is about the generation. We have also plans for the transmission line and now we are thinking of financing this transmission line that goes from a power station from east called Elroseris, a hydro power station. There is a transmission line which goes to Alrank in the south and returns back to Raback in the west. This is a 220 kilovolt transmission line and it returns back to Khartoum. This will take about 500 kilometers; we also have a transmission line connecting the north to Atbara, which is about 300 kilometers and it will be about 220 kilovolt, this also falls in the emergency plan of the 1000 megawatt.
For the development plan after the hydro in those 3 dams there is a plan also to connect the isolated power station with a 500 kilovolt transmission line. Lamirn international, a German consultant, has also studied this, and in the long term power plan we will find how the isolated power stations are connected. Some of them will be connected by 500 kilovolt and others will be connected by 220 kilovolt. Also the distances between the isolated power station are tabulated in the long term power plan. The main reason why we are starting from Elroseris, Alrank, Rabak, Khartoum is that now we are negotiating with the Ethiopian government for the interconnection between Sudan and Ethiopia. We already had a meeting last month here in Sudan and this month the meeting will be in Addis Ababa. For the mutual benefit of the two countries we need to interconnect the countries.
| The power produce agreement you mentioned before is definitely a milestone in the history of power generation in Sudan. Since some other negotiations are on the way, one of the main obstacles they are facing is that the Malaysian are reluctant to sign the agreement without having guarantees in return. Have you finally found a formula for that?
The negotiation started in 1999, although we had some contacts before. The negotiation started in many aspects: technical, contractual and financial. On the technical side, we agreed in the low speed in their engine which will be about 257 megawatt - I think it is the biggest power station with their engine. On the contractual side, the negotiation started one and half year in 8 rounds, some of them were in Kuala Lumpur and some of them were in Sudan. It was a very tough negotiation and you know that the investment need concrete guarantee as agreed. It was encouraged by the investment act that was done in 2000, and also in the legal framework Everything they need we have to make it available to them: security. The guarantees started in many aspects. First of all there was a negotiation on tariff, the main part of the tariff you know is the fuel for any thermal power station, and the government accepted to take decision that the fuel would be delivered by the government - this represents more than 60% of the cost of any thermal power station. After that, we started to negotiate on how to build a structure for the guarantee and security and what they have proposed after many negotiations the government accepted it. One of them is the government's guarantee and also the escrow account , i.e their revenues will be put in an escrow account in a bank there and at the time NEC will not give the money, they will take it from the escrow account directly; these are the securities which were given to them. And you know that if you want to contract with anybody you have to know him, who are you contracting with, is he capable to pay for you or not capable? You need some kind of visibility about this, and NEC has many certificates from abroad companies that NEC is 100% committed to its obligations.
Do you think the signing of this agreement will further encourage foreign investors to get involved in power generation ?
I think yes, because the main problem is the tariff. If you accept the tariff and the costs then the other will go on. For the investors the capital cost is high. Maybe we will go on co-finance with many of the investors to invest in this. The low speed of the engine is because the consumption is lower than any other thermal power station and the lifetime is higher. This contract is for 25 years From experience I know that if it is well maintained and everything is ok and you rehabilitate it in its time, it will live the longest time, maybe more than 40 years. And that's why the low speed diesel engine has been selected from other thermal power station to use it, and if it is 25 years this project we can calculate how much he will benefit from it within the tariff we have agreed upon it.
Do you expect more Asian countries to get involved in power generation, particularly the Chinese ?
I expect so, for two reasons. One of the reasons is that they are nearby Sudan. Asia and Sudan are very nearby. The other is that from the revolution in 1989 until now European people, according to the sanctions, were afraid of coming to Sudan. Asia has taken the risk because they know how many resources we have in Sudan and they know many things about Sudan. They took the risk and came to work, especially in the oil field. As I told you I have signed a contract with China for this power station which has about 210 megawatt and it will be implemented in Elgayli. The government of China has given the company the loan to implement it, and 150 million US dollar will be taken from the government's bank from China. Anyway we will be happy to open doors for many companies all over the world whether it is from Asia, Europe, US, Canada and from South America to come and work in this side of the world which is called Sudan, the biggest country in Africa, the biggest in Arab world and may be the biggest also in Islamic world. Sudan has huge resources in cultivated lands, water, mineral resources, hydro power station with about 9000 megawatt potential, and we also have two big rivers white Nile and blue Nile, and people can come here and start different kind of investments.
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