- ACWAs Chief Executive Paddy Padmanathan says the company wants to expand its presence in the renewables sector and make a push for fuel diversification.
Saudi Arabia-based water and power project developer ACWA Power has recently received a $100 million equity investment from the International Finance Corp (IFC), a unit of the World Bank. The investment is aimed at funding renewable energy projects to help meet the increasing demand for power in the Middle East and Africa. The Wall Street Journal sits down with ACWA’s Chief Executive Paddy Padmanathan to discuss the investment and the company’s future projects.
WSJ: What is the significant of this investment from IFC?
Mr. Padmanathan: In terms of capital, it’s meaningful, but we have not done this to attract more capital. It’s because we see IFC as an extremely valuable development partner with whom we already established a very solid partnership on previous projects. It’s an investment that’s extremely important because it allows us to progress in our shared visions as we grow into countries like Egypt, Morocco, Mozambique, South Africa, Botswana, Namibia and markets in South East Asia like Vietnam and Indonesia. These are places where we can very much benefit from multilateral participation. Also as we continue to expand our presence in the renewable platform, and fully push forward to push for fuel diversification. We can work together and bring innovative products.
WSJ: The IMF, IFC’s parent organization, has been calling on countries in the region to revise energy subsidies. What’s your view on this issue?
Mr. Padmanathan: Any economy, be it extremely well developed like the U.S. or Germany or Japan, or the poorest of the poor economies, there is a need to subsidize such a basic commodity vital for life for segments of society, if not society as a whole. It’s just depending on where your economy is in the state of transition. I’m not at all convinced the Saudi government doesn’t want to revise subsidies because the implications are complicated. The Minister of Electricity and Water has routinely said that we have to move towards a cost-recovery tariff for both water and power. The question is how to get there and over what time period? There’s clear intention on the part of the government that that’s where we need to go at the end of the day.
WSJ: What renewable energy projects are you currently working on?
Mr. Padmanathan: We have significant solar business. We already have photovoltaic plant in Bulgaria that is operating 60 megawatts and we have another upcoming project in South Africa. We have submitted offers for bigger plants. We just submitted a proposal for an 850 megawatts wind project in five sites, the largest wind projects in the world in Morocco. We are busy preparing a proposal for the 100 megawatt PV tender that DEWA has put out. We are deeply embedded in renewable energy and the more we get involved the more convinced we become of its viability, sustainability, efficiency and value.
WSJ: In addition to your presence in Jordan’s energy sector, you made a proposal to the government there to rehab some power plants. Have you made any progress on this proposal?
Mr. Padmanathan: We continue to be in intensive dialogue. We remain confident that the necessary approvals will be given for us to start re-powering some of our assets…I think 2014 is the right ETA for Jordan to move on and make important decisions. They are very busy focused on this sector. We believe the re-powering decisions will get taken this year. We have continued to keep the project preparation work ready in order to start very quickly. It should go forward this year. The year is coming to an end, but we’re still confident.
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(via WSJ Blogs)