Power Rental in Africa to Double by 2014, Reveals Frost & Sullivan

CAPE TOWN, South Africa, July 1 /PRNewswire/ — The use of power rental equipment is becoming increasingly important in sub-Saharan Africa to alleviate the current electricity crisis affecting the region. Despite customers’ preference for buying gensets rather than renting them, power rental companies that are able to provide rental services at a competitive price with robust after-sales support can expect to gain significant returns.

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New analysis from Frost & Sullivan (http://www.energy.frost.com), Power Rental in Key African Markets, finds that the markets in Angola, Botswana, Egypt, Kenya, Nigeria, Mozambique, and South Africa together earned revenues of $79.3 million in 2007 and estimates this to more than double by 2014 to reach $164.2 million.

If you are interested in a virtual brochure, which provides a brief synopsis of the research and a table of contents, then send an e-mail to Patrick Cairns, Corporate Communications, at patrick.cairns@frost.com, with your full name, company name, title, telephone number, company e-mail address, company website, city, state and country. Upon receipt of the above information, a brief brochure will be sent to you by e-mail.

“A combination of limited generation capabilities, robust economic growth and more attractive payment models will support market expansion,” notes Frost & Sullivan Industry Analyst Jeannot Boussougouth. “In addition, a strong pipeline of infrastructure development projects will keep the market bullish over the long term.”

The power rental market is set to remain robust despite a lack of a rental culture in many African countries. The below 100KVA range, which accounted for 46 per cent of the total demand in 2007, is poised to continue as the most important power range.

Governments or utilities constitute the largest end-user segment, accounting for 64.5 per cent of the total demand. This trend is anticipated to continue in the foreseeable future, as increased demand for housing, telecoms expansion and the boom in construction projects in countries such as South Africa and Egypt is set to persist.

“However, market penetration will not be easily achievable due to the lack of available stock, persistent skills shortages, the difficulty in providing strong after-sales support, the lack of a rental culture, and the perception that rental is still expensive due to increasing fuel prices,” cautions Boussougouth. “The combination of these would make it harder for entrants to become disruptive forces in markets with established participants.”

One of the key reasons why companies have preferred to purchase rather than hire gensets in the past has been the high cost of renting generator sets. This has been compounded by the continuous rise of fuel prices. This will need to be urgently addressed if market potential is to be maximised.

Power rental companies will need to increase the number of machines available, adopt more flexible payment terms, develop strong relationships with key customers, such as the public utilities, and ensure product availability and reduced lead times.

“Several public utilities link the quality of equipment with brand awareness, which they correlate to the experience of the selected rental suppliers,” says Boussougouth. “As a result, supplying reliable equipment is critical to establishing long-term relationships with these key customers.”

Power Rental in Key African Markets is part of the Energy & Power Growth Partnership Service programme, which also includes research in the following markets: Key African Power Plant Service Markets, Strategic Analysis of the Botswana Electricity Industry, Strategic Analysis of the Cameroonian Electricity Industry, Investment Opportunities for Independent Power Producers in West Africa and, Investment Opportunities for Independent Power Producers in East Africa. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

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Power Rental in Key African Markets

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    Patrick Cairns
    Corporate Communications - Africa
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SOURCE Frost & Sullivan