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End-user Analysis of the Gas Turbines Market in Sub-Saharan Africa
Frost & Sullivan, Dec 2009, Pages: 74
Africa has access to various gas reserves and yet it remains a highly under utilised electricity generation feedstock - mainly as a result of poor distribution infrastructure. However, advances are being made to improve the utilisation of gas as an important feedstock in Africa. This research service looks at how end-users of gas turbine technology view their equipment suppliers and what criteria are used to select equipment. It provides insight into the procurement process in Africa as well as the development of the industry as a whole.
Research Overview
This Frost & Sullivan research service titled End-user Analysis of the Gas Turbine Markets in Sub-Saharan Africa provides end-user original equipment manufacturer (OEM) ratings, market drivers and restraints as well as the industry challenges faced by end users. In this research, Frost & Sullivan's expert analysts thoroughly examine the following applications: oil and gas, utility and industrial power.
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Market Overview
Sub-Saharan African Gas Turbine End-user Market Gets up Some Steam through Quality and After-sales Service
The existing power crisis in Africa due to insufficient power generation capacities has made a robust case for gas turbines technology because the gas turbines can operate on more than one type of fuel, thereby providing a feasible alternative to the power problems in the region. Sub-Saharan Africa has abundant gas resources; Nigeria, for example, has gas resources of approximately 186 trillion cubic feet (tcf), which can power the whole of West Africa for 20 years. Even regional countries without adequate gas resources rely on gas turbine technology to generate power using diesel or heavy fuel oil. “Ongoing gas exploration activities in East Africa and a number of key countries in Southern Africa will provide the gas resources required for future power generation,” says the analyst of this research. “End users prefer this technology due to its rapid turnaround time and higher efficiency levels compared to other technologies.” In the wake of this amplified demand, gas turbine manufacturers have to raise their game, as customers are increasingly demanding high-quality products designed for African conditions with supportive after-sales service. End users in sub-Saharan Africa value the cost competitiveness of an OEM and tend to gravitate towards quality equipment at competitive prices.
The rising cost of key equipment such as turbines is compounding the issues of market participants, especially the cash-strapped African utilities. Apart from the prohibitive equipment costs, the prevailing low electricity tariff does not encourage industrial power end-users to make significant investments in owning generation facilities, which considerably lowers the number of gas turbines ordered. To survive in this relatively fragmented market, OEMs need to focus their expertise on issues that end users consider pivotal to their choice of an equipment provider. “These include the provision of reliable and good-quality equipment, exemplified by the OEM’s long track record of good performance in the region and beyond,” notes the analyst. “The supplier’s industry experience is also crucial, as it enhances the OEM’s ability to offer feasible solutions for end users’ unique requirements.”
However, despite the high costs of building and operating power plants, gas turbine companies are hopeful because the African governments and utilities will have to invest more in their products to support their economic growth initiatives. The market is poised for strong growth in the long term, even in countries with few gas reserves such as South Africa, who are increasingly exploring opportunities to import gas from neighbouring countries such as Mozambique and develop mechanisms to obtain gas from coal.
Application Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Oil and gas
- Utility
- Industrial power
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